Billions in ‘transfers of value’ to physicians, hospitals by industry get DOJ attention

In calendar year (CY) 2015, over $7.5 billion in “transfers of value” were made by pharmaceutical companies to physicians and hospitals through the federal Open Payments program, which in turn has caused the Department of Justice (DOJ) to focus on this area while investigating fraud in the health care system. In an HCCA sponsored seminar titled “Sunshine, Open Payments, and Potential Conflicts of Interest,” Senior Compliance Executive C.J. Wolf, M.D., of Healthicity, noted that under the Open Payments program, CMS has now accumulated over 28 million records of transfer of value. Within this vast repository of data, CMS uses it to uncover outliers in payments, and as a result, industry and providers, alike, are very interested in how the open payment system affects their operations.

Open Payments

Under Section 6002 of the Affordable Care Act (ACA), manufacturers must disclose to CMS payments made to physicians and teaching hospitals. Manufacturers and group purchasing organizations must also report ownership and investment interests held by physicians. The HHS Office of Inspector General (OIG) included these aspects into its list of priorities in its 2017 Work Plan, with Medicare and Medicaid payments high on the list (see Focus remains on Medicare, Medicaid payments in 2017 OIG Work Plan, Health Law Daily, November 10, 2016).

The 2017 Work Plan also stressed that the OIG will also determine how much Medicare paid for drugs and durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) ordered by physicians who had financial relationships with manufacturers and group purchasing organizations.

Wolf noted the DOJ has taken a keen interest in this area of open payments, as evidenced by actions such as Teva Pharmaceuticals USA, Inc., and its subsidiary IVAX, LLC, agreeing to pay a total of $27.6 million to the federal government and the State of Illinois in a settlement regarding allegations of false billing practices under the False Claims Act (see Teva Pharmaceutical to pay federal and state government $27.6 million to resolve false billing allegations, Health Law Daily, March 11, 2014).

Conflicts of interest

There are 11 payment “categories” that must be reported under the Open Payments program: (1) consulting fees, (2) honoraria, (3) gift, (4) entertainment, (5) food and beverage, (6) travel and lodging, (7) education, (8) charitable contribution, (9) royalty or license, (10) grant, and (11) research.

As part of the transparency initiatives under the ACA, the dollars that physicians receive from industry is reported and documented. Physicians and providers should be aware that these categories touch upon even compensation for serving as faculty or as a speaker for a non-accredited and noncertified continuing education program.

Because the Open Payments program also includes ownership interests that physicians or their immediate family members have in various companies and the data is then made available to the public each year, reporting often is paramount.

Open Payments program reveals $7.52B paid to physicians, teaching hospitals

According to the 2015 financial data for the Open Payments program, manufacturers of various health items paid $7.52 billion to physicians and teaching hospitals. These payments are broken up into three categories: general, research, and ownership or investment interests held by physicians or their immediate family members. The program was created by section 6002 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), also known as the Sunshine Act.

2015 results

A total of 11.90 million records attributed the payments to 618,931 physicians and 1,116 teaching hospitals and were spread out as follows:

  • $2.60 billion in non-research payments;
  • $1.03 billion in ownership or investment interests; and
  • $3.89 billion in research payments.

The dataset identifies physicians by name, practice location, and specialty. The manufacturer or group purchasing organization (GPO) is identified, the amount and date of payment is specified, and the names of the product or products are listed. The payments range from as low as a penny to as high as $30 million.

The Open Payments program is intended to promote transparency regarding financial relationships between companies and physicians. The public is able to easily search for their physician’s name or the name of a teaching hospital or company. The data also allows CMS to observe various trends.