As part of Washington D.C.’s National Disclosure Summit, PwC presented on “Compliance Data Metrics and Analytics.” The presentation spoke to how companies can successfully utilize the mountains of aggregate spend data they collect to comply with the Physician Payments Sunshine Act.
David Wysocky and Bharathram Lakshmivarahan, who represented PwC at the Summit, stressed the importance of leveraging spend data to provide business insights. “There’s a lot we can glean from this data,” Lakshmivarahan stated. Companies can monitor sales and marketing activities and use the data to strategize on future investments with healthcare professionals (HCPs) and healthcare organizations (HCOs).
Aggregate spend data is overwhelming, and companies can be tempted to invest valuable resources into categorizing metrics of all kinds without a clear plan. The presenters urged companies to think through why they want to analyze a certain metric. PwC believes the initial question should be about what kind of key performance indicators (KPIs) and metrics a company first wants to measure, and coming up with the rational for each of those, and only then thinking through the technology aspect. Companies should establish KPIs to provide the compliance department (or owner of the aggregate spend) visibility into (1) Operational Excellence, (2) Compliance Monitoring, and (3) Business Insight.
Operational Excellence Metrics
Operational excellence refers to the “capture” aspect, in which a company elects to gather important, useful data, and then follows through by gathering that data accurately. Effective data collection procedures can offer the company insight into existing business and aggregate spend processes, as well as the opportunity to improve these processes.
For example, a company can gather data along a number of metrics. PwC offered a variety of examples:
- Total spend by payee (by expense type)
- Number and percent of transactions that fall into dollar intervals ($0-100, $100-200, etc.)
- Total dollars spent per source system / third party vendor
- Number of HCPs that exceed an annual speaker program cap
- Average travel costs per HCP
- Range of fees for service provided by specialty
- Number of occurrences when HCP is paid above the average fee range for a tier (or above FMV) for fee for service activity
PwC believes the goal for companies in the next year or two should be to have these analytics streamlined and the business processes working smoothly. Operational excellence would allow companies to observe and organize their data sets and then be able to notice anomalies in the data.
Compliance Monitoring Metrics
Compliance monitoring involves checking for compliance or corporate violations within the aggregate spend data. This monitoring involves not only collecting meal data, for example, by grouping meal transactions based on dollar intervals, but also digging into compliance issues within that data. Compliance monitoring would include first tallying the number and percentage of submitted meals for HCPs, and then inspecting the number of these meals that fall outside of the corporate policy meal limit.
Other examples include:
- Percent and number of speaker programs where number of attendees is under a certain predefined threshold
- Number and percent of submitted expenses for HCPs over a predefined threshold
- Number and percent of submitted meals for HCPs over corporate policy meal limit
- Number of MA licensed covered recipients that received an out-of-office meal
- Number of VT licensed covered recipients that received a meal
- Number of HCPs exceeding CA annual spend limit
- Number of HCPs exceeding annual MN gift ban ($50)
- Number of HCPs exceeding annual spend limit for other states / geographies
- Percent of HCP expense compliance violations vs. submitted HCP related expenses
- Number of physician disputes of external disclosure reports (by reason)
- Percent of physician dispute amount to aggregate spend amount reported
- Number and percent of HCPs in specialties not in your company’s therapeutic class markets
- Non-HCP to HCP ratio for speaker programs
PwC focused on the physician inquiry data set, a topic many compliance departments are worried about. Compliance metrics would allow a company to monitor how many physicians are coming back to dispute data, and to see what type of spend generates the most disputes.
The presenters encouraged companies to begin to think about many of these compliance metrics now to make the dispute and resolution process more streamlined when it finally arrives. In this way, as physician complaints arise, companies can observe their data in real-time and take appropriate responsive actions.
Business Insights Metrics
Business insights are broader than the operational and compliance metrics. Business insight metrics give the company an understanding of how the data is trending over time. Furthermore, the presenters believe that integrating other data sets into aggregate spend will unlock even more value. Some examples include:
- Payments made to HCPs not in expected therapeutic areas
- Total HCP and HCO population
- Percent of events where a third party vendor was used
- Number of third party vendors by activity type
- Average number of advisors per advisory board
- Percent and number of events where number of participants are above number approved (by a predefined threshold)
- Percent of HCPs having increase from prior year in average fees per fee for service activity
- Percent and number of speaker programs where % of attendees that are licensed HCPs is below a certain predefined threshold
- Number of occurrences where speakers are engaged in multiple events per day
- Percent of investigators where promotional payments vs. investigator payments is above a certain threshold (ratio and dollar)
- Average and median grant amount
- Number of clinical trials where a CRO was used
Certain business insight metrics could be more beneficial to one company over another. This data can be especially useful for companies that change their operational processes. For example, data could expose whether a company’s decision to switch vendors was an investment that is paying off.
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What question are you trying to answer?
It is important for businesses to consider the rationale before spending time and resources tracking down a certain metric. PwC offered an example chart.
Some final considerations to ponder before launching into full-fledged data analysis include the fact that metrics and KPIs can only be valuable with complete and accurate data. Metrics offer limited value if they are used on incorrect, incomplete numbers. Companies should also consider that starting September 30, 2014, industry spend transparency data will be publicly available.
Thus, not only will companies have the challenge and opportunity to sift through their own data, but the aggregate spend of competitors as well. That is a lot of data to consider!