What is Aggregate Spend Reporting?
Aggregate spend is a process used in the U.S. to combine and monitor the total expenditure by health care manufacturers on individual healthcare organizations and personnel through payments, honoraria, gifts, travel and other methods. It is also known as the Physician Payment Sunshine Act and was passed in March 2010. The Sunshine Law Tracking and Reporting Market is a growing body of state and federal legislation who intend to address some or all of the following objectives:
• Provide transparency with regards to who in the medical industry contributes what benefits to which medical professional.
• Make statutory mandatory at least on an annual basis.
• Limit total spending per physician.
The organizations monitored in the Life Sciences Aggregate-Spending market are pharmaceutical, biotechnology and in some U.S states and cases, even medical device organizations.
Aggregate Spend reporting requirements have forced life science companies to create a patchwork of programs to deal with the reporting requirements and feed data to vendors of spend reporting solutions. Even when selecting a fully functional Aggregate Spend reporting solution, there are still a lot of responsibilities and deliverables assigned to the organization to meet compliance regulations.
Companies in the medical industry filed 6.38 million payment records for publication under the Sunshine Act in 2020. If you’ll be reporting payments made in 2021, you need to know about important changes to the reporting requirements.
More transactions now fall under Sunshine Act regulations. These changes affect how you calculate your aggregate spend for health care professionals.
Find out more about aggregate spend and how the new regulations will impact your reporting.
Aggregate Spend in the Open Payments Program (aka The Sunshine Act)
Congress passed the Open Payments program as part of the Patient Protection and Affordable Care Act in 2010. The regulations came into effect in 2013. The goal of the Open Payments program was to make the financial relationships that drug and medical device manufacturers have with doctors and teaching hospitals more transparent.
Certain life sciences organizations must report their annual spending on covered recipients. They file these reports with the Centers for Medicare and Medicaid Services (CMS).
CMS publishes the reporting threshold each year. Reporting entities must report individual payments that are higher than the threshold.
If the total annual value is higher than the aggregate threshold, the reporting entity must report it. Reporting the aggregate spend is required even if the individual payments fall below the individual threshold.
To calculate your aggregate, spend, you’ll need to know:
• Which of your products the Open Payments Program covers?
• Who the covered recipients are?
• What types of payments you need to report?
• You can see if your annual spending is above the reporting threshold. Then you can file the appropriate reports.
Who Needs to Report Under the Open Payments Program?
Two types of organizations need to file reports under the Sunshine Act. Type 1 manufacturers are companies that produce or prepare a covered drug, device, or biological or medical supply.
Distributors and wholesalers that hold the title of a covered device or product must file reports. The reporting requirement also applies to distributors or wholesalers that provide product support. Reporting applies if they’re under the ownership of a covered manufacturer.
Type 2 manufacturers are under common ownership with a Type 1 manufacturer. The type 2 company provides support to produce or distribute products that the Sunshine Act covers.
Which Types of Medical Products Does the Open Payments Program Cover?
To calculate your aggregate, spend, you’ll need to be sure you’re using the right data. First, you should verify which of your products are subject to Open Payments reporting.
Covered products are products that Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP) covers. In addition, the product must require a prescription for use or need FDA premarket approval or notification.
Changes to Covered Recipients and Nature of Payments
The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act) changed the definition of a covered recipient for the Open Payments program. The SUPPORT Act also changed the categories for the nature of the payment.
These changes take effect in 2021. Companies and healthcare manufacturers who file reports under the Sunshine Act must record data under the new requirements during 2021 (January 1, 2021, through December 31, 2021). They will report this data in 2022.
Covered Recipients
The original definition of covered recipients in the Sunshine Act included healthcare professionals (HCPs) and healthcare organizations (HCOs). The definition of healthcare professionals covered:
• Medical doctors
• Doctors of osteopathy
• Dentists
• Podiatrists
• Optometrists
• Chiropractors
As the number of licensed physicians declines in the US, the number of NPPs is growing. They have a larger scope of practice and prescribing authority than in the past.
Medical suppliers often interact with NPPs the same way they interact with physicians. For this reason, payments to NPPs are now subject to reporting under the Open Payments program.
Natures of Payment
The original definition of the types of payments that needed reporting was rather broad. It included many types of payments, gifts, and other transfers of value. The list included:
1. Consulting fees
2. Compensation for services other than consulting
3. Compensation for teaching an accredited or unaccredited continuing education program
4. Charitable contribution
5. Education
6. Entertainment
7. Facility fee or space rental
8. Food and beverage
9. Gift
10. Grant
11. Honoraria
12. Ownership or investment interest
13. Research
14. Royalty or license
15. Travel and lodging
The new regulations add three payment categories:
• Acquisition
• Debt forgiveness
• Long-term medical supply or device loan
The categories of teaching an accredited or unaccredited continuing education program are now combined. They were previously two separate categories.
The Open Payments program excludes some natures of payment from reporting. For example, educational materials for the benefit of patients or product samples for patient use aren’t subject to reporting.
What to Report for an Aggregate Spend?
The data to report for an aggregate spend identifies the recipient, identifies the product that’s related to the payment, and gives information about the transfer of value. The required data includes:
• Recipient’s name and address
• Recipient’s National Provider Identifier (NPI) and state license
• Date of the transfer of value
• Amount of the transfer of value
• Form and nature of the payment
• Marketed name of the product, including the Device Identifier when applicable
The reporting requirements vary somewhat depending on if the payment was connected with research or not.
The Benefits of Aggregate Spend
Aggregate Spend is not only about enforcing monetary transparency. It’s trying to help the people as well. To increase cost-effectiveness and provide a better understanding of how the industry works. And even though its rules may be complicated, there are tools out there to help companies process the new regulations without issue.
Sunshine Act Reporting Process
After an organization collects its payment data for the calendar year, it must submit the data to the Open Payments system. All reports are due by March 31 each year.
Recipients can then review the data and dispute the HCP spend if necessary. The reporting company should resolve any disputes with its recipients. After that, the payments data becomes available to the public.
Complying with the Open Payments Program
Complying with Open Payments regulations can be complicated. Reporting entities have many types of data to track, collect, and report.
Accurately reporting your aggregate spend for each covered recipient is critical. It helps ensure that you’re in compliance with these important regulations. Now that you know more about the new reporting requirements, you can take steps to be sure your aggregate spend calculations are up to date.
Aggregate Spend Reporting and implementation challenges
Some of the Aggregate Spend Reporting and implementation challenges include:
• Existing source systems of the spend data were not designed or developed to handle this detailed reporting at the accuracy level required.
• The regulations, data sources, interfaces, data mapping, HCP validation and reporting requirements are difficult to bring together.
• Compliance and IT departments in most small to mid-sized pharma companies are not adequately sized to deal with these complexities and deliverables in the timelines required.
• On-going changes to regulations, source systems, business processes and HCP location information exponentially increases the challenge.
What are the challenges faced in 2021 reporting?
Every business faces its own challenges for transparency reporting. Aside from what’s already mention above, here is a list of challenges faced while reporting, this year - 2021, below are few important items:
• Duplicate meeting data loaded - Meeting transactions got loaded multiple times causing duplicates.
• Health care professional merge/unmerge issues (Master Data Management).
• Handling refunds, negative expenses (spends).
• Nevada state reporting, uploading NV state sales representatives license no., spend must be tied to individual reps.
• HCPs populating to CMS report are not aligned to VPL list (State licenses and NPIs)
• Vermont reporting - state licenses formatting. State licensing formatting challenges in CMS/State reporting.
• Audit trail of data changes.
• CMS record locator not available in system.
• Editing HCP or expenses information.
• Workbook (List of values etc.) configuration delays.