Aggregate Spend Pre-Disclosure, Certification,
and Disputes Management Survey Results
April 3, 2014
YOUR MISSION | OUR SOLUTIONS
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Huron is a management consulting firm and not a CPA firm, and does not provide attest services, audits, or other engagements in accordance with the AICPA's Statements on Auditing Standards.
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Introduction
Today’s Speakers
LEANNE DIDOMENICO I Philadelphia, PA
• Manager with 13 years of experience working with global life sciences companies
• Current focus is assisting companies to address behavioral change across their organization and
the supporting tactics needed to make a business transformation successful, including a special
focus on transformation required from regulations and compliance driven initiatives
• Recent accomplishments include developing and executing a comprehensive change management
strategy for a global pharmaceutical company with several affiliate businesses; aligned businesses,
vendors and employees to a single process for accurate spend data capture; included development
of a disciplinary model
JOSEPH MORRELL I Washington DC
• Manager with 10 years of experience working with global life sciences companies
• Current focus is working with pharmaceutical and medical device clients to identify and address
compliance issues related to state and federal aggregate spend reporting, off-label monitoring, &
government-mandated needs assessments
• Recent accomplishments include assisting a top 5 global manufacturer with operational issues
related to clinical data transparency; including implementing systems and processes to create
greater efficiencies across the organization
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Agenda
Today, we hope to provide insights into Huron’s 2014 Aggregate Spend Pre-Disclosure,
Certification, and HCP Dispute Survey.
Specifically, the agenda is comprised of the following:
SURVEY OVERVIEW & METHODOLOGY
REPORTING OPERATIONS
CLOSING REMARKS:
Long Term Strategies To
Mitigate Risk And Improve
Operations
INTERNAL CERTIFICATIONS
PRE-DISCLOSURE PRACTICES
PREPARING FOR INQUIRIES & DISPUTES
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Why Survey Now?
Benchmarking Drivers:
• #1 factor was to respond to client demand; through our own
experience working with clients we were seeing common struggles and
themes
• Our intent was to provide real insights and data to support our clients
when they make decisions across the industry as they prepare for
Open Payments disclosure
• Our goal is to continue to provide “quick” benchmarking as a service
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Survey Overview and Methodology
Survey Overview and Methodology
•
•
Huron Life Sciences surveyed 38 life science companies in the first
quarter of 2014.
We asked respondents to answer questions about their aggregate
spend program across five primary areas:
–
–
–
–
–
Company Revenue / Industry
Reporting Operations: Organization, Personnel, Expected Volume
Internal Certification: Frequency and Methodology
Pre-Disclosure
Dispute Readiness: System, Process, and Sales Involvement
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Survey Overview and Methodology
•
Responses were received from 38 companies; respondents crossed both
pharmaceutical and medical device manufacturers and were of a variety of
sizes:
What Size is Your Company
(Revenue)?
26%
32%
Is Your Company A
Pharmaceutical, Med. Device
Manufacturer or Both?
Is Your Company a Manufacturer
of Branded or Generic Products?
32%
31%
53%
13%
68%
13%
29%
3%
Small: <$1B
Medium: $2B - $10B
Small-Medium: <$2B
Large: >$10B
Pharmaceutical
Medical Device
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Other
Both
Branded
Both
Discussion of Detailed Results
Detailed Results: Reporting Operations
•
The number of Covered Recipients (CRs) each company expects to report
on increases dramatically with company size.
How many covered recipients (healthcare
professionals, teaching hospitals, etc.) do you
estimate reporting spend for annually?
11%
6%
1 - 5,000
5,000 - 20,000
Annual Revenue
25%
5%
20,000 - 50,000
50,000 - 100,000
100,000 - 150,000
Over 150,000
22%
31%
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Approximate Average
Number of CRs
<$1B
9,000
$1-2B
34,000
$2-10B
22,500
>$10B
>100,000
Detailed Results: Reporting Operations
•
•
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The number of employees dedicated to reporting increases with size.
There is a great deal of variation within each size group and no direct
correlation with expected number of covered recipients.
Average: 6
Average: 11
Average: 9
Average: 23
40
35
30
25
20
15
10
5
0
Small
Small - Medium
Medium
10
Large
Detailed Results: Reporting Operations
•
Responsibility for transparency reporting continues to typically reside with
Compliance:
Under what department is the collection and reporting of
aggregate spend (Open Payments) organized?
3%
8%
11%
Compliance
Finance
Sales Operations
Other
78%
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Detailed Results: Internal Certification
•
73% of respondents indicated that business units outside of the core
aggregate spend function will review data prior to reporting. Of those
conducting an internal review, only 5 (out of 22) were required to do so by
CIA obligations.
Do business units outside of the core aggregate spend function (e.g. sales,
marketing, clinical/R&D, etc.) review aggregate spend information prior to
Compliance review?
No
27%
20%
Yes: 73%
17%
36%
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Yes, Once Per
Year
Yes, Once Per
Quarter
Yes, On Another
Frequency
Considerations: Internal Certification
•
When setting up a program for internal certifications, companies need
to consider:




If employees from the core reporting functions will be assigned to be
“relationship owners” with certain business areas.
Whether or not a live review will be conducted with senior business
leadership.
The scope of transactions that will be reviewed (e.g. if T&E transactions
have already been reviewed by line management, do they need to be rereviewed?)
Dashboard-style trend reporting that may be useful for senior leadership.
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Detailed Results: Internal Certification
How many levels of review are transactions subject to
outside of the core aggregate spend team prior to
Compliance review?
How is this review conducted?
4%
3%
15%
38%
59%
Manually
81%
Separate Tool
One
Aggregate spend solution automatically routes transactions for review
•
Four out of five respondents rely on
a manual process to complete their
internal certification.
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•
Two
Three
Typically, only one level of review
is completed. Over 40% of
respondents complete at least a
second level of review beyond
that.
Detailed Results: Pre-Disclosure Practices
•
Only 30% of respondents currently have firm plans to pre-disclose
transparency data; another third have plans not to pre-disclose, and the
remainder are still undecided.
Are you pre-disclosing transactions to covered recipients prior to
CMS submission, and, if so, how frequently?
18%
Plan to Pre-disclose:
30%
37%
12%
No plans to pre-disclose
Have not decided
Pre-disclose every quarter to
all recipients
Pre-disclose twice annually to
select recipients
33%
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Considerations: Pre-Disclosure Practices
•
For those companies undecided on their approach to pre-disclosure,
consider…



•
Would business or R&D functions support a limited pre-disclosure to
customers with a higher volume of transactions, or total transactions over a
certain dollar amount?
Will pre-disclosure potentially reduce the workload on your team during the
CMS inquiry and dispute period?
How will the company respond to requests that may be received from
teaching hospitals for a comprehensive pre-disclosure report?
The additional time now available before the line-item report is due to
CMS may offer your company an opportunity to “pressure test” its
dispute systems and processes prior to the formal CMS dispute
window.
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Detailed Results: Preparing for Inquiries & Disputes
The dispute management system/solution your
company uses is:
Do you currently have policies and procedures
in place to manage disputes and inquiries?
Not applicable
32%
Fully
Developed &
implemented
undergoing
12%
Acquired &
implementation
undergoing
35%
implementation
21%
•
Acquired &
implemented
6%
45%
Yes
No
55%
Developed &
implemented
6%
Only 12% of respondents have fully
implemented
a
technological
solution for managing HCP inquiries
and disputes
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•
However, around half of all
respondents have a documented
process in place
Considerations: Preparing for Inquiries & Disputes
•
When preparing for inquiries & disputes, consider…





Have all potential sources of inquiries (call centers, adverse event reporting
area, sales representative help desk) been identified? Are they equipped to
at least document inquiries or disputes that may come in outside of the CMS
framework? Where will incoming calls from the media, lawyers, the public,
and other sources be routed to?
Have FAQs or key talking points been developed and approved?
Should HCPs that dispute a transaction this year automatically be added to
your company’s pre-disclosure list for next year?
How can you track and identify potential “dispute themes” (research related,
regional, etc.)?
How will the company manage inquiries for transactions that may not have
detailed documentation (educational items, meals, etc.)?
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Detailed Results: Preparing for Inquiries & Disputes
How many dedicated individuals have you assigned for potential disputes?
5
4
3
2
1
0
Small
•
Small - Medium
Medium
Large
Respondents have typically allocated one or two resources to manage HCP
inquiries & disputes and typically expect less than 5% of transactions to be
disputed.
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Detailed Results: Preparing for Inquiries & Disputes
How much sales team interaction do you anticipate in
the inquiry and dispute process?
3%
High: sales team manages
all research and
communication related to
disputes
38%
59%
•
Medium: sales team
assists in difficult situations
or those involving key
accounts
Low: sales team has
limited involvement, may
occasionally provide
supporting information
related to a dispute
Most respondents have indicated they expect relatively little involvement
from the sales force in resolving HCP disputes.
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Long Term Strategies To
Mitigate Risk & Improve Operations
Steps You Can Take Today - Assess High Risk Areas
•
Aggregate spend data, combined with other internal data sources,
can help identify areas of risk across different parts of your company’s
operations, for example:
Risk Area
Metric
Promotional Speaker
Programs
Meals Above Per HCP Meal Limit (Per Program)
Unapproved Attendees (Per Program)
HCP Payment Cap Violation (Per Speaker)
Expense Submission Violation Per HCP (e.g., exceeding contract terms, meal limit, etc.) HCP Consultant
Via Third Party Using Purchase Orders or Check Request
Arrangements (Exclusive
of Promotional Speaker HCP Not Contracted Prior to Start of Meeting or Engagement
Programs)
Failure to Submit Reconciliation/Meeting End Document
Sampling
Inventories Reported as Irreconcilable
Field Audits Reported as Irreconcilable
Signature Audit Cases Based on Negative Responses
T&E (All Interactions with Out of Office Meals in Violation of Policy (Exclusive of Meal Limit Violations)
HCPs)
Inappropriate Activities with an HCP (e.g., entertainment)
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Implement Monitoring Tools For Real Time Risk Tracking
HCP Not Contracted Prior to Services
Meals Above per HCP Meal Limit
HCP Spend ($)
Policy Limit ($)
Timeliness
Company Source
Company Source
Signed Before
Signed After
Expense Report
Data vs.
HCP Meal Limits
Date Services
Provided
vs.
Contract Signature
Date
δ
“Rep A reported over
HCP meal limit ($7)”
Signed After
Signed After
Signed After
Inappropriate HCP Spend (e.g., entertainment)
Irreconcilable Sampling Inventories
Track Sampling Outliers
Company Source
Company Source
Spending Patterns
Travel
Grants
Expense Report Data
Sampling Reports
Entertainment
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Leveraging Open Payments Data to Add Value
Building Sustainable Compliance Operations
How can your team leverage available data to bring value to the rest of the
company?
• With Procurement: Identify total company-wide spend per vendor
• With Sales Operations: Establish total spending on, for example,
meals compared to competitor spending levels
• With Clinical Ops: Compare per-subject spending with per-subject
spending of peer companies (based on Aggregate Spend and
ClinicalTrials.gov data)
• With Sales Leadership: In conjunction with other publically available
data, identify other key opinion leaders that may not have been
considered by your company before
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Challenges Facing Our Industry Today & Future Surveying
SHORT TERM HURDLES:
• Setting up sustainable processes to
capture external vendor’s spend data
• Research Payments
• Data Verification and Proactive Risk
Mitigation
LONG TERM HURDLES:
• Alignment of compliance and transparency
processes across continents to meet the
demands of a global healthcare and
regulatory environment.
• Maintaining valuable KOL relationships to
support research and innovation.
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We want to hear
from you!
Submit your benchmarking ideas to
transparency@huronconsultinggroup.com
by April 30 to be considered for our next
benchmarking analysis.
Thank You and Contact Us
Thank you to all the organizations who participated in Huron’s Benchmarking Survey. Your
input is greatly valued, and provides critical benchmarking data for establishing best practices
in an ever-changing regulatory landscape.
Please feel free to reach out to us if you have questions about the survey or if you have
additional items you would like to see in 2014.
Speaker Contact Information:
Leanne DiDomenico, Manager
Phone: 267.250.9434
Email: ldidomenico@huronconsulting.com
Joseph Morrell, Manager
Phone: 312.731.7469
Email: jmorrell@huronconsultinggroup.com
For Consultation Services Contact:
Manny Tzavlakis, Managing Director
Phone: 312.532.1504
Email: mtzavlakis@huronconsultinggroup.com
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