Presentation for Philadelphia MDRP Conference
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This document discusses ensuring data integrity from an IT perspective for government drug pricing. It outlines the key elements the OIG expects to see in compliance programs, including accurate reporting of prices and discounts. It also identifies potential risk areas around pricing data integrity and describes how a compliance-centered pricing system can help ensure accurate, reproducible calculations and security. Such a system should integrate all sales data, handle complex calculations, and allow flexibility while maintaining integrity.
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Presentation for Philadelphia MDRP Conference
- 1. Data Integrity : Ensuring Compliance from an IT Perspective All programs and calculations which are detailed within this presentation Have been directly derived from OIG guidelines Christopher C. Biddle
- 2. Overview Today’s talk will focus on: • OIG Compliance Guidance for manufacturers • Potential risk areas identified by OIG • How to reduce risks by using a “compliance-centered” government pricing system
- 3. Government: Medicare / Consumer, Medicaid, FSS, VA, PHS & Professional, etc. Risk State Programs Reduction Contract Pricing Administration Strategies Profitability IT Systems Chargebacks Rebates EDI (Electronic Data Interchange)
- 4. OIG Compliance Guidance: Basic Elements of a Compliance Program Begins with a formal commitment to compliance by board of directors/governing body: Allocation of adequate resources Timetable for implementation of compliance measures Appointment of compliance officer
- 5. OIG Compliance Guidance: Basic Elements of a Compliance Program At a minimum, compliance program should include: Written policies & procedures Compliance officer/committee Regular education & training Effective lines of communication between compliance officer & all employees Regular compliance monitoring Enforcement of clear & specific disciplinary guidelines Clear guidelines for investigating & responding to alleged offenses
- 6. OIG Compliance Guidance: Potential Risk Areas OIG identifies 3 major potential risk areas for manufacturers: Integrity of data used by state & federal governments to establish payment Kickbacks & other illegal remuneration Drug samples
- 7. OIG Compliance Guidance: Integrity of Data OIG states that manufacturers’ reported prices should accurately take into account: price reductions & cash discounts free goods contingent on a purchase agreement rebates, up-front payments & coupons goods in kind free or reduced-price services grants other price-concessions or similar benefits offered to some or all purchasers
- 8. OIG Compliance Guidance: Integrity of Data OIG makes 4 additional suggestions regarding integrity of data: Any discounts or similar benefits offered on the purchase of multiple products should be fairly apportioned among them Assumptions underlying reported prices should be “reasoned, consistent, and appropriately documented” All records relevant to reported prices and efforts to comply with federal programs should be retained Particular attention should be paid to AMP and BP calculations
- 9. OIG Compliance Guidance: Integrity of Data • OIG Guidance devotes only 2 pages to integrity of data – bulk of Guidance focuses on kickbacks and samples • Bottom line = manufacturer is responsible for ensuring the integrity of data they send to the government • Integrity of data is largely a technical issue – need a system that can accurately pull in and filter massive amounts of data, perform complicated computations & ensure that they can be accurately replicated for the life of the particular government program!
- 10. Ensuring Data Integrity: Potential Liability Government can impose serious penalties if data it receives is not complete and accurate: Termination of MDRP/FSS Agreement(s) by CMS or DVA Civil money penalties, such as large fines under the MDRP Penalties under the False Claims Act for knowingly failing to generate or report information accurately (e.g. TAP) Penalties resulting from an OIG audit (interest, fines, DoJ referral, CIA)
- 11. Ensuring Data Integrity: Building a Compliance-Centered System An effective government pricing system must: Withstand audit scrutiny – reproducible calculations Be transparent – lack of transparency is behind most investigations Integrate commercial and government sides of business – do not operate in a vacuum Handle use by multiple corporate entities separately & distinctly, if applicable Manage assembly of data elements & produce corresponding transmission files & other forms required by VA and/or CMS
- 12. Ensuring Data Integrity: Transparency Question . . . . What is transparency? How would you implement TRANPARENCY in your environment?
- 13. Ensuring Data Integrity: Reproducible & Auditable Calculations Pricing system must reliably recalculate pricing to the penny at any later date: Reference same data and policies used during any pricing run Demonstrate that prices submitted to VA and/or CMS were calculated by the system of record
- 14. Ensuring Data Integrity: Reproducible & Auditable Calculations Pricing system must re-generate all supporting sales data for any pricing run: • Data may be used to externally validate system- generated price during an audit • System must store all transactional data plus historical & current COT alignments • System must be able to handle changes in COT: capture & record COT each customer acting under for each transaction (e.g. if customer changes way does business) change COT for all affected transactions (e.g. if customer was incorrectly classed)
- 15. Ensuring Data Integrity: Source Data Reconciliation Pricing system must reconcile local data with all relevant source systems before pricing process begins: Control totals for each transactional data feed should agree with totals from pricing system All domain/master tables should be compared & confirmed to be identical Pricing system must be able to “see” all sales data at transactional level Pricing system must be able to interface data from multiple sources (direct & indirect sales, rebates, etc.)
- 16. Ensuring Data Integrity: Automatic Data Monitoring & Processing Pricing system must support business events & irregularities in contracts that affect pricing calculations: Identify significant business events, e.g. product introduction/expiration, new trade classes/codes Accurately allocate payment in unique situations affecting AMP & BP, such as product bundling Allow for product blending, in which sales occur across multiple NDC codes Adjust calculated prices to reflect differing potencies of the same product, if necessary
- 17. Ensuring Data Integrity: GAP Pricing Pricing system must accurately report prices for periods in which no transactional data is identified: Data either does not exist or sales aggregate to a negative value (preponderance of returns or negative adjustments) Prior period’s price is carried forward as reported price for “no data” periods (can extend through an indefinite number of periods) Must update all “carried-forward” prices if prior pricing period is recalculated
- 18. Ensuring Data Integrity: User Flexibility Pricing system must allow users the flexibility to identify questionable calculations & incorporate information that affects pricing process: Users must be able to - identify all individual transactions for each calculation quickly & accurately compare calculated values to other price points, e.g. AMP & BP re-run calculations on command to incorporate new data (for current & prior periods) manually enter new data & edit existing data overwrite system-calculated prices with externally- calculated prices, if necessary
- 19. Ensuring Data Integrity: Security Overview Pricing system must integrate several key security measures to ensure data integrity: Lock down & archive all calculations plus supporting data, once completed Do not allow access to the data base through any other internal tool besides the government pricing system Change control – do not give one person authority to make changes within system; always require approval from another point of control Build in varying security levels for users within the application itself
- 20. Ensuring Data Integrity: System Security Pricing system must support configurable security roles and levels: User level security - controlled access to various functionalities: • authorizations for manual entries & overrides • limited access to certain fields, windows or data Interdivisional level security • no interdivisional access to data, calculations, methodologies or results unless authorized by business users Audit level security • calculations locked down once completed • histories of changes recorded
- 21. Ensuring Data Integrity: Reporting, Analysis & Forecasting Data analysis & reporting capabilities assist users when pricing questions arise: • Ad hoc query tools allow business users to research pricing anomalies & decrease reliance on IT staff • Preformatted reports aid in identifying & addressing problems with pricing submissions Operational reporting (sales totals, pricing components, transactional details, product comparisons) Exception reporting or Alerts Trending & Forecasting
- 22. Ensuring Data Integrity: Summary of Data Handling Capabilities An effective & compliance-centered government pricing system must: Reconcile local data with all relevant source systems before the pricing process begins Accurately report prices for periods in which no transactional data is identified (GAP pricing) Reliably recalculate pricing to the penny at any later date Re-generate all supporting sales data for any pricing run
- 23. Ensuring Data Integrity: Summary of Systems Requirements An effective & compliance-centered government pricing system must: Support business events & irregularities in contracts that affect pricing calculations Allow users flexibility to identify questionable calculations & incorporate information that affects the pricing process Incorporate data analysis & reporting capabilities to assist users when pricing questions arise, including transmission or required files & forms to VA or CMS Support configurable security roles and levels
- 24. Ensuring Data Integrity: IdealGP TM Ideal Systems has developed a government pricing solution (IdealGPTM) that: Incorporates all of the requirements for an effective & compliance-centered pricing system discussed in today’s presentation Ensures compliance Optimizes government pricing to significantly improve financial performance
- 25. Meeting the Needs of Today’s Pharmaceutical Manufacturers: IdealGP TM Ideal System’s 4th generation (4G) government pricing solution fully addresses the needs of the pharmaceutical industry by incorporating: Full compliance Price Optimization Forecasting Capabilities Flexible Policy Administration Full Reporting & Analysis Functionality
Editor's Notes
- OIG = Office of Inspector General – has enforcement power over government pricing programs (not CMS) OIG Guidance document available at: http://oig.hhs.gov/fraud/complianceguidance.html#1 OIG also met with 3 additional groups of industry stakeholders when developing guidance: health plan & health plan association reps, reps of PBMs and reps of American Medical Association (AMA) and its member organizations
- See OIG Guidance document, pp. 6-7.
- See OIG Guidance document, pp. 7-9, 50-51. Written policies: OIG wants policies to “verbalize the company’s commitment to compliance,” for example by including adherence to the company compliance program as a part of employee evaluations. OIG also suggests addressing specific areas of fraud and abuse including the reporting of pricing and rebate information to the government and sales and marketing practices. Compliance officer: OIG details that the compliance officer should have the authority to report directly to the board of directors and/or president or CEO. Lines of communication: OIG suggests company’s develop a hotline or other reporting system for complaints or questions, and that clear procedures are in place to protect the anonymity of complainants and to protect whistleblowers from retaliation. Investigative guidelines: OIG suggests these should include procedures for “prompt and proper” responses to detected offenses.
- See OIG Guidance document, p. 6. Note that OIG on page 10 states that while these 3 areas do not address all potential risk areas for manufacturers, they are the areas that are “currently of concern to the enforcement community.” Kickbacks: OIG makes the point that in health care, many common business and marketing practices may implicate the federal anti-kickback statute Regarding government pricing, one of the four questions the courts have identified as “potentially aggravating considerations” to use in identifying arrangements “at the greatest risk of prosecution” focuses on the Medicaid BP issue: “Does the arrangement or practice have the potential to be a disguised discount to circumvent the Medicaid Rebate Program Best Price calculation?” (OIG Guidance document, pp. 14-15) Samples: OIG points out that recent enforcement efforts regarding samples have focused on physicians who sold samples to patients or billed them to federal health care programs on the behalf of patients.
- See OIG Guidance document, p. 12 OIG also indicates that
- See OIG Guidance document, p. 12.
- Note: entire OIG Guidance document is 56 pages (52 pages + endnotes)
- How do we avoid these types of penalties? . . . We need a pricing system that ensures compliance.
- For example: system must be able to exactly reproduce price calculations on command at any later date – access same data assumptions must be clearly documented – such as how the manufacturer defines “retail class of trade” (not defined anywhere by CMS), current policies, etc. – clear audit trail commercial side should know who tracking customer is and be “flagged” if they are about to affect that price, or set a new BP (regarding the Medicaid Drug Rebate Program) These issues addressed in greater detail in following slides . . . But before I get into that, I want to ask a QUESTION . . . What is transparency??
- One can define transparency as . . . Being able to drill down and reproduce results at any time. Back-up, lower level, atomic data is kept in an audit trail.
- IdealGP requirements document, p. 5-31
- IdealGP requirements document, p. 5-31
- IdealGP requirements document, p. 5-31
- IdealGP requirements document, p. 5-32 Note: for “Business Events” – user should be able to configure what types of events the system should identify
- IdealGP requirements document, pp. 5-33 – 5-34
- See IdealGP requirements document, pp. 5-32, 5-34 Note – last 2 points about manual entry and price overwrite obviously must incorporate appropriate security measures - discussed in later slides
- Varying security levels – some users can calculate but not override, etc.
- IdealGP requirements document, p. 5-35
- See IdealGP requirements document, pp. 5-35 – 5-36 Preformatted reports: Operational reports – increase efficiency of business operations Exception reporting or Alerts - flags potential problems, e.g null code values, zero/negative NFAMP, BP > AMP Trending - used to better understand pricing across quarters, compare one price to others over congruent time periods Forecasting – can improve financial performance by quantifying impact on regulated markets pricing & revenue
- Support business events & irregularities: product introduction/expiration, product bundling or blending, new trade classes/codes Allow users flexibility: provide transaction level data & value comparisons, support calculation re-runs & overwrites, allow manual data entry & editing
- Price optimization – in actual implementation experience at multiple members of Big Pharma, price optimization has been shown to result in a 1-4% increase in federal revenues. When applied to federal sales volumes (typically $100 million among large pharmaceuticals) this means roughly $1-$4 million in bottom line increases. (See IdealGP Product Analysis & Business Plan, p. 10) Same % benefit in reduction in Medicaid liability - when applied to typical Medicaid sales volumes of large companies, translates into $3 - $12 million in reductions in Medicaid liability. Total benefits of $4 - $16 million, repeated annually.