What Is Aggregate Spend (HCP) And How Does It Work in Practice?

Companies in the medical industry filed 6.38 million payment records for publication under the Sunshine Act in 2020. If you’ll be reporting payments made in 2021, you need to know about important changes to the reporting requirements.

More transactions now fall under Sunshine Act regulations. These changes affect how you calculate your aggregate spend for health care professionals.

Find out more about aggregate spend and how the new regulations will impact your reporting.

Aggregate Spend in the Open Payments Program (aka The Sunshine Act)

Congress passed the Open Payments program as part of the Patient Protection and Affordable Care Act in 2010. The regulations came into effect in 2013. The goal of the Open Payments program was to make the financial relationships that drug and medical device manufacturers have with doctors and teaching hospitals more transparent.

Certain life sciences organizations must report their annual spending on covered recipients. They file these reports with the Centers for Medicare and Medicaid Services (CMS).

CMS publishes the reporting threshold each year. Reporting entities must report individual payments that are higher than the threshold.

If the total annual value is higher than the aggregate threshold, the reporting entity must report it. Reporting the aggregate spend is required even if the individual payments fall below the individual threshold.

To calculate your aggregate spend, you’ll need to know:

• Which of your products the Open Payments Program covers
• Who the covered recipients are
• What types of payments you need to report

You can see if your annual spending is above the reporting threshold. Then you can file the appropriate reports.

Who Needs to Report Under the Open Payments Program?

Two types of organizations need to file reports under the Sunshine Act. Type 1 manufacturers are companies that produce or prepare a covered drug, device, or biological or medical supply.

Distributors and wholesalers that hold the title of a covered device or product must file reports. The reporting requirement also applies to distributors or wholesalers that provide product support. Reporting applies if they’re under the ownership of a covered manufacturer.

Type 2 manufacturers are under common ownership with a Type 1 manufacturer. The type 2 company provides support to produce or distribute products that the Sunshine Act covers.

Which Types of Medical Products Does the Open Payments Program Cover?

To calculate your aggregate spend, you’ll need to be sure you’re using the right data. First, you should verify which of your products are subject to Open Payments reporting.

Covered products are products that Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP) covers. In addition, the product must require a prescription for use or need FDA premarket approval or notification.

Changes to Covered Recipients and Nature of Payments

The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act) changed the definition of a covered recipient for the Open Payments program. The SUPPORT Act also changed the categories for the nature of the payment.

These changes take effect in 2021. Companies and healthcare manufacturers who file reports under the Sunshine Act must record data under the new requirements during 2021 (January 1, 2021, through December 31, 2021). They will report this data in 2022.

Covered Recipients

The original definition of covered recipients in the Sunshine Act included healthcare professionals (HCPs) and healthcare organizations (HCOs). The definition of healthcare professionals covered:

• Medical doctors
• Doctors of osteopathy
• Dentists
• Podiatrists
• Optometrists
• Chiropractors

Open Payments defined healthcare organizations as teaching hospitals. CMS publishes a list of teaching hospitals at least 90 days before each reporting period.

The expanded definition of covered recipients in the SUPPORT Act includes several types of non-physician providers (NPPs). These new types of providers are:

• Physician assistants
• Nurse practitioners
• Clinical nurse specialists
• Certified registered nurse anesthetists
• Certified nurse-midwives

As the number of licensed physicians declines in the US, the number of NPPs is growing. They have a larger scope of practice and prescribing authority than in the past.

Medical suppliers often interact with NPPs the same way they interact with physicians. For this reason, payments to NPPs are now subject to reporting under the Open Payments program.

Natures of Payment

The original definition of the types of payments that needed reporting was rather broad. It included many types of payments, gifts, and other transfers of value. The list included:

• Consulting fees
• Compensation for services other than consulting
• Compensation for teaching an accredited or unaccredited continuing education program
• Charitable contribution
• Education
• Entertainment
• Facility fee or space rental
• Food and beverage
• Gift
• Grant
• Honoraria
• Ownership or investment interest
• Research
• Royalty or license
• Travel and lodging

The new regulations add three payment categories:

• Acquisition
• Debt forgiveness
• Long-term medical supply or device loan

The categories of teaching an accredited or unaccredited continuing education program are now combined. They were previously two separate categories.

The Open Payments program excludes some natures of payment from reporting. For example, educational materials for the benefit of patients or product samples for patient use aren’t subject to reporting.

What to Report for an Aggregate Spend

The data to report for an aggregate spend identifies the recipient, identifies the product that’s related to the payment, and gives information about the transfer of value. The required data includes:

• Recipient’s name and address
• Recipient’s National Provider Identifier (NPI) and state license
• Date of the transfer of value
• Amount of the transfer of value
• Form and nature of the payment
• Marketed name of the product, including the Device Identifier when applicable

The reporting requirements vary somewhat depending on if the payment was connected with research or not.

Sunshine Act Reporting Process

After an organization collects its payment data for the calendar year, it must submit the data to the Open Payments system. All reports are due by March 31 each year.

Recipients can then review the data and dispute the HCP spend if necessary. The reporting company should resolve any disputes with its recipients. After that, the payments data becomes available to the public.

Complying with the Open Payments Program

Complying with Open Payments regulations can be complicated. Reporting entities have many types of data to track, collect, and report.

Accurately reporting your aggregate spend for each covered recipient is critical. It helps ensure that you’re in compliance with these important regulations. Now that you know more about the new reporting requirements, you can take steps to be sure your aggregate spend calculations are up-to-date.

Check back daily for more timely information that impacts the medical industry.