Let the sun shine: most Americans in the dark about payments to physicians

Physicians self-report payments from members of the pharmaceutical and medical device industries at an average rate of 40 percent; however, many of the lower rates are for providers who have fewer contacts with fewer patients. According to a study published in the Journal of General Internal Medicine, 65 percent of patients saw a provider who had received industry payments in the previous 12 months. Additionally, almost no patients know that the provider had received such payments, despite the information being publicly available.

Physician Payments Sunshine Act

Section 6002 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), known as the Physician Payments Sunshine Act, increases transparency of physician ownership and investment interests by requiring the disclosure of payments made to providers. Such payments include consulting fees, honoraria, gifts, food, entertainment, charitable contributions, and other transfers of value. This information is reported to CMS, and published online at https://www.cms.gov/openpayments/.

The purpose of this provision was to make patients aware of payments their providers received which may influence the provider’s decision-making process. However, the study notes, if patients are unaware that this information is available, they cannot make informed decisions.

Open Payments data

According to the Open Payments data, the prevalence of industry payments among physicians is around 40 percent, with variation across specialties ranging from 20 percent (pathology) to 80–90 percent (cardiology and orthopaedics). Exposure of patients to doctors who receive payments, however, is not measured by the data. As a result, individuals may incorrectly interpret the data to believe that they have a lower chance of visiting a physician who has received payments than they actually do. If patient contact with physicians who receive payments is significantly higher than the overall average, it would show that industry payments reach more patients than expected.

Study methodology

The study, the first of its kind, took a population-based approach to estimating the reach of industry payments. It used a nationally representative survey to ask patients about their knowledge of the Open Payments data and about the physicians they most often visit. The researchers then linked the physicians named with the data using National Provider Identifiers (NPIs) to determine patient-based industry exposure.

Findings

In the subgroup of respondents for whom the researchers could identify providers–matching 1971 physicians to 1987 respondents–the study found that 65 percent of patients, or almost two-thirds, visited a physician who had received industry payments, a much higher percentage than the 40 percent of physicians overall who receive such payments. The highest rates were among patients who visited orthopedic surgery physicians, with 85 percent of patients seeing an orthopedic surgery physician who received industry payments. In addition to patients visiting doctors who received payments at a higher rate than overall physician payment rates, the physicians that patients frequently visited who received payments, received amounts greater than were typical of physicians reported in Open Payments.

Patients reported some level of knowledge of industry payments to physicians, with 45 percent being aware that such payments are sometimes made. However, only 5 percent of patients knew whether the physicians they visited had received industry payments. Most believed that their providers had not received any payments, but 41 percent of them were incorrect.

Overall, the study found that although a minority of physicians accept industry payments, physicians who accept payments are caring for 65 percent of the adult patient population, while very few of the adult patient population is aware of industry payments or possible conflicts of interest.

Dollar signs tip the scales of medical judgment, physician-owned distributorship study finds

Physician-owned distributorships (PODs) will most certainly continue to be subject to increased government scrutiny after a recent Senate Finance Committee (SFC) investigation confirmed its suspicions that “PODs present an inherent conflict of interest that can put the physician’s medical judgment at odds with the patient’s best interests.” The report, “Physician Owned Distributorships: An Update on Key Issues and Areas of Congressional Concern,” provided more fuel for the argument that PODs have a distinct potential to violate fraud and abuse laws.

Kathleen McDermott, a partner at Morgan Lewis’ Washington, D.C. office, commented, “the findings of the SFC update are not a surprise but are important. PODs pose classic fraud and abuse risks for companies, physicians and hospitals and the SFC update shows most of all that the heat is on and should be to assure protection to the Medicare program and patients.”

Focus

The SFC requested the report based on its concerns that physician ownership of and self-referral to PODs result in:

  • anti-kickback statute (AKS) (42 U.S.C. §1320a-7b) and Stark law (42 U.S.C. §1395nn) violations;
  • physician conflicts of interest;
  • evidence of overutilization and higher health care costs;
  • danger to patients; continued medical industry confusion over legality; and
  • lack of transparency of physician ownership, including failure of PODs to meet their legal obligations to report under the Sunshine Act.

The report focused on PODs operating in the field of spinal surgery, but noted, “the POD business model could be used to market any type of medical device, and there are indications that PODs have started to appear in other fields beyond spinal surgery.”

Overutilization

The SFC reports a significant amount of overutilization by PODs, noting that “POD doctors see more patients, perform more surgeries, and perform more complex surgeries . . . [which] come at a cost, not only by increasing costs for the entire health care system, but also by harming patients who receive unnecessary treatment.” Having identified the continuing trends, McDermott said, “The Senate Finance Committee’s update assures continued scrutiny because it has confirmed over-utilization trends.”

Risks

According to the report, although a POD is taking some steps to try to mitigate the risks associated with its business model does not mean that the risks no longer exist. Hospitals face serious risks when they do business with PODs, and the only way to completely eliminate those risks is to not conduct business with any POD or any entity like a POD. This may not be as easy as it sounds. McDermott noted, “more troubling is the transparency findings where it appears many PODs are not disclosed to hospitals, preventing hospitals from managing a clear conflict of interest in the interests of patients.” She recommends that “hospitals should pro-actively collect information from its surgeons on participation in PODs and undertake policies that manage the conflict as well as the fraud and abuse risk. Some hospitals manage the risk by prohibiting PODs.”

Recommendations

The report recommended that the Government Accountability Office (GAO) evaluate the costs and benefits of requiring hospitals that purchase from PODs to perform enhanced utilization review. It also noted that CMS should consider withholding reimbursement from hospitals that have not adopted POD-specific policies and do not document that they consider the Sunshine Act database in making procurement decisions involving medical devices. Larger scale recommendations involved revising federal law to require doctors to disclose any interest they have in a POD to the hospital where they practice and to patients and expanding law enforcement efforts to investigate and prosecute hospitals and PODs that violate the law.

Still No “Sunshine” – in the Name of Lighter Regulatory Burdens

Centers for Medicare and Medicaid Services (CMS) Administrator Don Berwick said on October 31 that the agency would delay further rules implementing a provision in the health reform law that requires drugmakers and device companies to report all payments and gifts to physicians.

The Physician Payment Sunshine Act was included in the health care reform law enacted last year (Patient Protection and Affordable Care Act, P.L. 111-148), as a way to reduce healthcare costs through greater transparency. PPACA requires pharmaceutical, medical device, biological, and medical supply manufacturers to track and report to the CMS all payments to doctors above $10. Non-compliance may result in fines of up to $10,000 for inadvertent non-compliance and up to $100,000 for knowing non-compliance. The first reports will be due March 31, 2013 for the calendar year 2012 reporting period which begins in three short months.

The effort is meant to “shine light” on the industry’s gifts to physicians, which critics maintain can improperly influence patient care and treatment decisions, as explained here.

CMS missed the statutory October 1 deadline for publishing the regulations that would clarify certain definitions and provide detailed instructions on how these reports are to be compiled and submitted, but not because the rules are controversial – which they are – but because the agency is trying to lighten the burden of red tape.

In an October 28, 2011 letter to Senators Herb Kohl (D-WI) and Charles Grassley (R-IO), Berwick cited a presidential order from last January that calls on federal agencies to minimize regulatory burdens. “I believe we can implement the statutory goals of (the Sunshine Act) while minimizing burden on the regulated parties. In that vein, CMS is carefully reviewing this statutory requirement and working hard to ensure we meet these goals.”

[Earlier this year, President Obama instructed federal healthcare agencies to streamline regulations that impede flexibility, unnecessarily burden resources, reduce efficiency, increase costs and decrease quality of care. In that vein, CMS recently released three new rules intended to remove or revise outdated, duplicative, overly burdensome and unnecessary regulations, thereby saving the healthcare system an expected $1.1 billion per year and more than $5 billion over five years. Whether the expected savings and efficiencies called for by the Obama administration will actually be achieved through these new rules remains to be seen.]

In his letter to Senators Kohl and Grassley on the Sunshine Act rules, Berwick gives no explanation for the delay and no indication of when CMS may actually issue the guidelines. The irony, of course, is that this is the same administration that wanted to enact the Sunshine provision in the first place.

On November 1, Senator Grassley responded in a statement, “The administrator’s response doesn’t tell us anything new. There’s no explanation for the delay and no indication of when to expect completion. It’s an inadequate response any way you look at it.”

The Pharmaceutical Research and Manufacturers of America (PhRMA) and other groups have advanced a proposal that the initial reporting period, scheduled to begin January 1, 2012, should be delayed for the same amount of time that the rule is; e.g., if the rule is 6 months late, the first reporting period would not be January 1- December 31, 2012 but July 1- December 31, 2012; they would leave in place the requirement that the first actual report from pharma and device companies to HHS would be due the 1st quarter of 2013, but would shorten the time period to be covered in that first report. CMS has not commented on the PhRMA request.

The PhRMA proposal sounds only fair. After all, the longer CMS waits to publish the rules, the more time companies will need to comply, i.e., “minimizing [the] burden.”