With little fanfare on June 30th, the Centers for Medicare & Medicaid Services (CMS) published Program Year (PY) 2022 Open Payments data. A total of 14.11 million records were published, accounting for $12.59 billion in payments or other transfers of value to teaching hospitals, physicians, and non-physician practitioners. Unlike in previous years, CMS did not issue a related press release.
PY 2022 marks the second year of the reporting of payments or transfers of value provided to non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and anesthesiologist assistants, and certified nurse midwives), as required by the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act of 2018 (SUPPORT Act). It is also the second year with new/updated reporting categories (acquisitions, debt forgiveness, compensation for serving as faculty or as a speaker for medical education program, and long-term medical supply or device loan), the requirement to add the identifiers for certain medical devices and medical supplies, and the covered recipients’ National Provider Identification (NPI) in the published data set.
PY 2022 data shows that the industry appears to be back to normal following the lifting of COVID-19-related restrictions.
General Payments
The general payments category contains 17 natures of payment, such as consulting fees, honoraria, food and beverage, and entertainment. Overall, the general payments accounted for over 29% of all spend ($3.71 billion out of $12.59 billion). Compared to PY 2021, the total dollar amount reported increased by over 18% (from $3.13 billion to $3.71 billion) and the total number of payments reported increased over 13% (from 11.51 million to 13.15 million).
One of the main contributors to the increases related to food and beverage expenses that showed more than a 27% increase in the total dollar amount (from $250.07 million to $319.25 million) and over a 14% increase in the number of payments reported over the previous program year (from 10.7 million to 12.2 million). Overall, food and beverage also accounted for over 91% of the number of payments reported (12.2 million out of 13.4 million) but represented over 8% of the total dollar amount ($319.2 million out of $3.71 billion).
Based on prior years of data submitted, it is a category that reporting entities continue to struggle with the most. For example, a medical device manufacturer, with years of prior data submission experience, reported two $100,000 food and beverage transactions to two covered recipients. It is highly unlikely these payments were accurately reported and the highlights the importance for reporting entities to thoroughly review the data prior to submission and attestation. Once submitted, CMS has the authority to issue civil monetary penalties (CMPs) for late, inaccurate, and/or incomplete reporting. In the CMS Open Payments Report to Congress for Fiscal Year 2022, CMS disclosed it sent pre-demand letters to eight entities to come into compliance and issued one CMP to an entity for failure to report completely, accurately, and timely. The example further shows that covered recipients are not taking advantage of the 45-day pre-publication review and dispute period.
The food and beverage category can also lead to scrutiny from the government and journalists. In 2020, the Department of Justice announced that Medtronic USA Inc. agreed to pay $8.1 million to resolve allegations that it violated the False Claims Act by paying kickbacks to a physician and an additional $1.11 million to resolve allegations that it violated the Open Payments Program by failing to accurately report food and beverage related expenses. Following the publication of this year’s data, STAT News published an article highlighting how Novo Nordisk reported more than 457,000 food and beverage expenses with 193 expenses attributed to one covered recipient. The article also highlighted 310,000 food and beverage expenses reported by AbbVie and 184,000 reported by Eli Lilly. Five companies reclassified reporting payments in 2022 from payments other than consulting to compensation for serving as faculty in a continuing education program, including dental, surgical and emerging drug companies, when added up they accounted for $25.9 million in additional payments providing the bulk of that categories increase.
Research Payments
The research payments category continues to remain the “king” of expenditures. In PY 2022, research-related payments accounted for over 60% of total spend ($7.58 billion out of $12.59 billion).
In analyzing the amount of research-related spend disclosed by over 1,700 companies, the top 10 entities accounted for over 56% of all spend within this category ($4.23 billion out of $7.58 billion). Pfizer Inc.’s research-related payments alone accounted for approximately 10.6% of spend with over 18% ($164.5* million out of $807.5 million) attributed to the Pfizer-BioNTech COVID-19 vaccine, COMIRNATY®, and over 6% ($55.4 million out of $807.5 million) to its COVID-19 medication, PAXLOVID™. The most spend attributed to a drug, device, or medical supply was the Moderna COVID-19 Vaccine ($392.1 million) followed by Merck’s KEYTRUDA® ($373.8 million). While a large portion of spend can be attributed to diagnosing or treating COVID-19, the data shows that oncology-related research dominates with the “oncology” category representing over 26% of spend ($1.9 billion out of $7.58 billion) with over 35% of spend attributed to the top 3 oncology-related products: KEYTRUDA®, IMBRUVICA®, and CALQUENCE®.
*Note: BioNTech SE separately attributed $3,465,387.27 of its research-related spend to COMIRNATY®.
Ownership or Investment Interest
In PY 2022, spend decreased by less than 1% compared to PY 2021 (from $1.30 to $1.29 billion). Overall, physician covered recipient spend accounted for over 59% of the total spend within this category.
Midmark Corporation, a global manufacturer and supplier of healthcare products, equipment and diagnostic software for medical, veterinary, and dental markets, accounted for more than 21% of the total spend within this category ($280.86 million out of $1.29 billion). The company disclosed that an immediate family member of a physician covered recipient held common stock valued at over $260 million, the largest value of interest reporting by all reporting entities. This was followed by stock/stock options valued at over $204 million to a physician covered recipient made by ICU Medical Inc, and investment Class A shares valued at over $174 million to an immediate family member made by Medline Industries LP. Altogether, the three payments accounted for nearly 50% of the total spend within this category.
The Open Payments Program requires reporting entities to report ownership or investment interests that are held by the physician or the physician’s immediate family members.
Non-Physician Practitioners
PY 2022 marks the second year of the disclosure of payments and transfers of value provided to physician assistants and advanced practice nurses (nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and anesthesiologist assistants, and certified nurse midwives). The data clearly shows that physicians remain the primary target by companies. However, the number of non-physician practitioners receiving general payments increased by 15.6% compared to the number of non-physician practitioners who received general payments in PY 2021 (271,682 vs. 235,011). Despite the increase, non-physician practitioner spend accounted for approximately 4.5% of the total general payments ($168.52 million out of $3.71 billion), a marginal increase compared to non-physician practitioner spend that accounted for 3.9% in PY 2021 ($122.12 million out of $3.13 billion).
Drilling down into the non-physician practitioner general payments data further, spend attributed to the nurse practitioners accounted for over 64% of all spend ($108.61 million out of $168.52 million), followed by 33% attributed to physician assistants ($56.2 million out of $168.52 million), and the remaining 3% spread out amongst the remaining advanced practice nurses. Food and beverage were the top category of spend amongst all non-physician practitioners followed by the compensation for services other than consulting nature of payment.
In other Open Payments news on July 14th, CMS released updated FAQ’s for 2023 which only deleted one question (8378) dealing with reporting stock options given prior to August 2013 when the open payments reporting system started and according to our analysis no new FAQ’s were issued.
We expect future program year spend will follow similar trends, August 1, 2023 marks the 10 year anniversary of the Open Payments Reporting System.