While everyone is busy analyzing the final Physician Payment Sunshine Act final rule, and beginning to prepare for reporting, Cegedim recently released a report discussing US trends in aggregate spend and disclosure reporting for 2013, based on responses from 56 companies—71% pharmaceutical;15% medical device; and 14% biotech. Twenty-two percent of respondents had over $40 billion in revenue; 38% had less than $1 billion; 40% had between $1-20 billion in annual revenue.
All individuals who participated in the survey are either very involved (75%) or somewhat involved (25%) in ensuring their company complies with aggregate spend, disclosure laws, and regulations. These include roles such as gathering and/or entry of data; processing data; report generation; report review and approval; and vendor management and selection. 42% of respondents worked in the compliance department. Below is a summary of some of the findings from the report.
- 68% of respondents have moved to an automated solution to satisfy reporting requirements, most in response to the Sunshine Act.
- Only 20% of respondents say they are still using manual efforts (via spreadsheet) to satisfy reporting requirements; about half say that practice will continue as more laws are enacted with 88% of those respondents from companies with less than $1 Billion in revenue
Most respondents (89%) expect to comply using either an internal or third-party solution as more requirements are implemented, with the majority saying that a third party system is ideal. For respondents who implemented a third-party solution for aggregate spend and disclosure reporting, about three quarters of them say they spent less than $1 million.
The majority of respondents expect investment in aggregate spend and disclosure compliance to increase over the next year, with over 40% saying it will stay the same in 2014. Respondents note the final Sunshine Act and increasing global transparency legislation will be the primary drivers for the increased investment. “However, a notable reason for any decrease in investment was that solution implementation was nearing completion and the ongoing investment would not be as high.”
While half of respondents currently manage their aggregate spend and disclosure reporting and compliance solution fully in-house, 20% of those people would prefer to outsource part of that activity. “One reason is the enormous effort required to keep track of the ever-changing legislation while ensuring manual, internal, and custom solutions comply with the requirements,” the report notes.
About half of respondents are still using internal resources to monitor new and pending legislation. Additionally, most companies report their compliance or legal departments have this responsibility internally.
The Sunshine Act will prompt companies to outsource their transparency reporting compliance. Of those respondents who mentioned they currently use a spreadsheet solution, 86% plan to move to an automated solution in response to Sunshine, up from 80% in 2012. Companies not moving to an automated solution have less than $500 million in annual revenue. “Their decision to maintain a manual solution could be due to budget issues or the fact that they have low transaction volumes that may not warrant implementation of a fully automated system,” Cegedigm wrote.
Top Concerns with U.S. Sunshine Act
When asked what their top concern was surrounding the Sunshine Act, half of respondents cited the integrity of the data, while a quarter mention the collection of all the data. Respondents also mentioned concern over proper identification of spend recipients (13%) and handling inquiries after spend is posted (11%).
The majority of respondents (67%) prefer their aggregate spend and disclosure solution include a pre-integrated customer data solution. “Selecting a solution that is integrated with a high-quality customer data source and an integrated data service to keep the customer data up-to-date will increase the overall accuracy and quality of the spend reporting solution,” Cegedigm maintains.
- 52% of companies require their third party vendors to utilize data from their customer master, including unique customer ID.
- Even fewer companies, only 43%, require CRO’s to utilize customer master data and the unique ID.
Companies continue to feel more confident in the ability of their internal customer master management system to identify, match and create unique recipient records across all spend data sources, with only 9% of respondents saying they are “not very” or “not at all” confident in 2013 compared to 20% in 2012.
Respondents are split almost 50/50 on whether they are planning on a “pre-submission review” by covered recipients (providing covered recipients relevant spend information prior to report submission).
Poor recording keeping (30%), system/process shortcomings (26%), and lack of understanding of policy (20%) are cited as the main causes of lack of compliance within respondent companies.
Global Issues and Trends
Western Europe and Asia Pacific are reported as the top ex-US priorities in terms of transparency compliance, with France, UK, Germany, and China being the countries of most concern, “which is in alignment with the countries that are implementing transparency laws,” Cegedigm reports.
While 60% of respondents indicate that global aggregate spend and transparency initiatives originate in US offices, a greater percentage indicate the decisions originate from local or regional offices (31%) compared to 14% in 2012. “With the implementation of transparency regulations across the globe, it seems that local offices and regions may be starting to take control of the decisions in their area rather than relying on their U.S. counterparts,” Cegedigm wrote. This is consistent with previous European Cegedigm compliance surveys that found that while EU compliance departments were watching the U.S. legislative environment, they would likely not follow the U.S. model entirely. “Instead, EU compliance teams would rather satisfy compliance requirements their own way.”
Slightly fewer respondents say that it’s an absolute requirement (~35%) for them to implement an aggregate spend and transparency reporting solution that can be used in other countries, however more respondents vs. 2012 see an overall need for a global transparency solution (~55% said it would be nice but not necessary).
While 37% of respondents say that their solution will be centralized regionally (in which data integration, business rules, and reporting is defined and controlled by regional governance), 27% say that the solution is centralized globally, in which data integration, business rules, and reporting is defined and controlled by corporate governance; 7% don’t think global transparency is important and 29% said its inapplicable because solutions are to the local country only.
Over 50% of respondents indicate they have already implemented a global solution for aggregate spend and transparency reporting, up dramatically over the 8% of respondents who said the same in 2012.
Additionally, only 4% of respondents say they have not yet defined when they will move forward with a global solution, dropping from 41% in 2012; leaving 44% to move forward with a global solution between now and 2015. “This shows that while some respondents may not think it’s a requirement to implement a global versus local solution; companies are indeed seeing the benefits and moving forward with solutions that can be used across countries.”
Capturing HCP and HCO Spend
Companies are using spreadsheets less (only 20%) and are using automated systems that have data feed uploads and/or vendor access for data entry. In fact, about 60% of the companies who report only using spreadsheets are still ensuring compliance with manual data entry or spreadsheet solutions, while 30% are using a third party solution.
Respondents are varied in how they obtain spend data from Clinical Research Organizations (CROs). Of the companies that collect spend data from CRO’s,
- 20% use a combination of methods,
- 16% use spreadsheets,
- 11% use data file transfer, and
- 9% use an application for the vendor to enter data manually.
- 25% don’t know
- 16% don’t currently collect spend data from CROs
Respondents indicate having more data sources than last year, with only 51% of respondents having less than 10 data sources; versus 76% in 2012. In addition, more respondents report having greater than 30 data sources to capture spend information (16% versus 7% in 2012). The companies that report having no data sources are companies with less than $500 million in revenue and are either using a manual system to report or are avoiding promotional spend.
Over half of respondents use SAP and Concur as their Enterprise Resource Planning (ERP) and Travel & Entertainment (T&E) systems respectively, but the majority of respondents do not have their customer master integrated into their ERP system. Cegedigm noted that “Having internal systems, including T&E and ERP, integrated with your customer master will allow data to be consolidated and validated automatically ensuring better data quality for compliance reporting. In addition, when choosing an aggregate spend solution, using a vendor that offers preintegration with the most common systems can beneficial and make the process more efficient.”
Travel
Similar to 2012, the majority of respondents capture physician payments for U.S. reporting when the physician travels abroad on behalf of foreign affiliates. About eight out of 10 respondents pay HCPs in the US (in US dollars) for any work done abroad on their behalf. “For the 25% that pay physicians in foreign currency, it would be beneficial to have a solution in place that handles currency conversion to avoid performing this process manually,” Cegedim writes.
Consolidating Data
The number one concern when consolidating spend data sources from multiple data sources is matching and establishing the identification of HCPs reinforcing the importance of utilizing customer data master management as part of the solution. Othert consolidating spend concerns include:
- Identifying all data sources (~30%)
- Incomplete spend information (~26%)
- Disparate formats and standards (5%)
Identifying HCPs
Utilizing an enterprise customer master is a major asset to ensure accurate spend reporting for an HCP. “Companies with multiple business units using different customer databases and third-party vendors are often faced with complex challenges trying to integrate and consolidate the customer and expense data. Not only must companies be sure to capture data in a consistent way across the organization, but there needs to be a unique identifier for all HCPs so when data sources are merged HCPs can be easily identified, merged and validated. Otherwise, companies end up with a record for Dr. John Smith and a Dr. J. E. Smith when they are actually the same person.”
This year, there was a slight decrease in respondents reporting they don’t have a customer master (13%). About half of companies (46%) integrated their customer master with third parties via flat file integration with ongoing updates. Thirty-two percent of respondents use web services and 14% sent files via email.
Only 52% of companies require their third-party vendors to utilize their customer master data, including the unique customer ID. For the other companies, “this means that every time they receive customer and expenditure data from their vendors, they will need to take an extra step to pre-process, identify, match, merge, and validate the customer data in their customer master in order to ensure accurate reporting. The companies that require third parties to use their customer master data and unique customer ID are more confident they are receiving vendor data that is clean and ready to be integrated for compliance reporting.”
Only 43%, require CRO’s to utilize customer master and unique customer IDs than compared to non CRO vendors. Of the companies that require customer master integration from their CRO’s, respondents favor flat file integration with ongoing updates (52%) and web services (35%) to integrate their customer master with the CROs who are required to submit spend data to them.
Companies have continued to feel more confident in the ability of their internal customer master management system to define the unique recipient across all spend sources, with only 9% of respondents saying that they are “not very” or “not at all confident” in 2013, compared to 20% in 2012
Reporting of Samples
Only a third of respondents (34%) are using the same system for aggregate spend/transparency reporting and sample reporting. Since samples reporting is required per Section 6004 of the Affordable Care Act and per Vermont state reporting, “there are some significant advantages and efficiencies that can be realized by having this information all in one place, particularly if the data is being fed into an automated system for consolidation and validation,” the report notes.
While most companies report having 1-5 data feeds for sample reporting, some respondents report having many sample reporting data sources. “Utilizing the same system for sample and spend reporting can be a particular benefit for companies with many sample data sources because they can avoid the extra steps of needing to aggregate and consolidate those data sources for reporting while leveraging customer master data within the same system. Additionally, a company could benefit from a holistic view of each customer across spend and samples.”
Conclusion
Given the time and effort to build a customized solution (whether internal or third-party), Cegedigm recommended that companies who have not implemented a solution to strongly evaluate a SaaS-based solution. “SaaS-based solutions can be implemented faster and have proven to be a costeffective way to leverage third-party compliance expertise, while also staying up to date on local, national, and global regulations as they change.”
“Complete and accurate customer data is essential for compliant reporting. It is recommended for companies to adopt a holistic approach to tracking and reporting that uses as a foundation of high quality healthcare practitioner and organization reference data. All internal department databases, third-party vendors, and internal business applications ultimately need to be integrated and validated to a single source of customer data. Having one customer master with unique identifiers that are used for all HCP and HCO data sources can make the data collection process more efficient and ensure accuracy. Integrating external systems, such as Concur, with your customer master and your aggregate spend solution mean that data is accurate upfront, as it is entered in the system rather than having to match and validate it later in the process.”
Cegedigm also noted that “relationships with the media, patient associations, and special interest groups should also be examined. Communications and public relation action plans should reinforce the benefits of legitimate interactions between life science companies and healthcare practitioners/organizations. Taking advantage of the new comment field attached to expenses per the final rule, manufacturers have the opportunity to explain the details of certain expenses, leaving less questioning and scrutiny from the public.”