Addressing Process and Data Requirements Across the Spend Reporting Continuum

Transcription

1 Addressing Process and Data Requirements Across the Spend Reporting Continuum

2 Addressing Process and Data Requirements Across the Spend Reporting Continuum By Mark Linver and Suj Patel, Huron Life Sciences Over the last two years, most pharmaceutical and medical device companies have concentrated on implementing aggregate spend reporting systems to satisfy state and federal spend-reporting requirements to meet the January 1, 2012 data collection milestone of the Sunshine Act. During this time, many companies gave priority to implementing the spend reporting applications while any major data integration issues identified or process issues that could not be addressed were postponed until the spend reporting system was installed. Some of the unaddressed issues include: The Time and Expense (T&E) system is not fully integrated with the Healthcare Professionals and Organizations (HCP/O) master list The Nature-and-Purpose list is not efficiently integrated with the T&E and Enterprise Resource Planning (ERP) systems The Engagements/Needs Assessment and Contract Management systems are not integrated with HCP/O master list The Needs Assessment, Engagements and Contract Management business processes and supporting technology are not sufficiently aligned to manage engagements and contracts Loaner and sample distribution data is not integrated into the reporting system Not only do these possible issues create implementation challenges, they can also expose the company to risk for non-compliance. This white paper discusses the elements that comprise the Spend Reporting Continuum, common gaps that expose manufacturers to compliance risk, and a system topology that is emerging to address data- and system-integration needs. Addressing Business Process Efficiencies In the course of implementing an aggregate spend reporting system, companies have become aware that upstream business processes directly affect collecting transaction level data. As illustrated in the next diagram, the following upstream business processes, comprising the Spend Reporting Continuum, provide data necessary to create the state and federal spend reports: Creating and maintaining arrangements and contracts Managing events and payments Capturing HCP travel expenses Capturing and managing FTE expenses Aggregating spend data and producing required reports Not all data generated by these business processes has a direct input to spend reports. However the approach for managing the processes, and providing oversight and governance, is important to the business because the method for interacting with HCP/Os must be compliant with state and federal regulations. Policies must be developed that provide control points, while at the same time solutions need to incorporate regulatory controls within the business process. For the Engagements/Needs Assessment process, the work steps for creating/maintaining arrangements and contracts generates fewer inputs for spend reporting than other business processes such as expenses or events. However, the procedures for determining needs, assigning and engaging HCPs, and managing resulting contracts requires governance and compliance interaction to mitigate risk. For example, companies have been required to implement procedures and systems that provide controls for managing arrangements and contracting processes with HCPs/Os (and subject to review and approval by government monitors) as a result of deferred prosecution and corporate integrity agreements. Issues that are commonly encountered include: huronconsultinggroup.com

3 Spend Reporting Continuum SPEND REPORTING COMPLIANCE SYSTEM - PROCESS VIEW E ngagements (N eeds Assessment) Determine HC P / Consultant Qualificati on Determine Business Needs C ompliance R eview and H C P Q ualificationsl (C Q R C ) Create appropriate engagements and assign Qualifed H C P s Qualified H C P Database R eview Engagements (S N R C ) Approve Create Contract and M anage Contracts M anage Payments Spend Reporting Expenses T ravel E vents Determine Event Requirement Submit Request for H C P Travel Initiate Expense Report Consolidate and Validate Spend Data Plan Event and Submit for Internal Approval Enter Spend Information Consolidate and Aggregate Spend Data by H C P/O Review by SNR C Approve E xecute E vent Book Travel H C P A ssociated Expense Apply State, Federal and International Reporting Rules Prepare Publish Draft Reports Capture/Consilate H C P T ravel Expenses Approve Expense Report Receive Feedback from H C P s and Finalize Reports Capture/ Consolidate H C P Expenses Capture/ Consolidate H C P Spend for the Event Yes Publish and Submit Reports Associating qualified HCPs to engagements Associating appropriate nature and purpose Managing the business review for needs and arrangements with sufficient interaction by the compliance department Tracking deliverables and expenses by engagements Managing contracts to ensure that payments are made for executed services only A common control point that manufacturers need to address within the events management process is ensuring that the events and their budgets have been reviewed and approved at the appropriate level (business sponsor) and by the compliance organization. Issues associated with managing the event process and integrating events data include: Work flows within the arrangements process are sometimes not designed to ensure that the appropriate approvals/reviews are attained Collecting data at events is usually manual and often incomplete Identifying HCPs is often difficult Associating nature and purpose is not easily accomplished in management or ERP systems after the event is held For many companies, managing and arranging travel for HCPs is usually provided by commercial travel agencies. When implementing spend reporting solutions, travel agencies should work closely with the company to better manage the process, implement controls and make changes to their in-house systems to capture HCP ID information (National Provider Identifier number, license, etc.), as well as the nature and purpose when the travel reservation is made. It is increasingly common for travel agency data to be extracted from the agency data systems and directly integrated into the spend reporting system or data repository. 3

4 The process for managing expenses associated with HCP/O spend is usually accomplished by expanding the capabilities of the existing expense management systems (Concur, SAP T&E, etc.) and implementing controls to ensure that the appropriate data is captured at the detail level for each expense report. Issues that are usually encountered that require system/process/procedure changes include: Associating appropriate HCPs with each specific transaction within the expense system Adding HCP records to the expense management system without disrupting the expense reimbursement business process. Considerations when implementing a policy include: Should personnel be limited to submitting expense reports only for HCPs that are currently listed in the expense reporting system with the appropriate NPI numbers? Should personnel be allowed to submit expenses when HCPs are not listed in the expense reporting system requiring association after the expense report is paid? Modifying the expense system to associate nature, purpose and products to specific transactions. Integrating Systems to Support the Spend Reporting Continuum As drug and device companies address business and compliance requirements across the continuum, interoperability and integration between systems is becoming more important. Companies ideally would prefer a one-stop-shop answer for applications to support spend reporting as well as the other business processes. However, off-the-shelf vendor applications are not widely available to support all of the business processes on the continuum. The main concern of vendors and manufacturers during 2010 and 2011 was to provide integrated (hosted) solutions that associate master HCP/O data with transactions for the spend reporting system. As functional requirements for business processes have been identified, partially resulting from spend reporting system implementation efforts, a system topology and architecture is emerging. The following diagram illustrates a high level system topology for the Spend Reporting Continuum. Many companies have implemented systems that manage expense reimbursement, spend reporting, travel, and, to a degree, HCP/O master data. However, these systems, like other legacy systems, were implemented to satisfy specific requirements. The goal of integrating seamlessly within the compliance continuum was given only minimal thought. For example, HCP/O management systems that were implemented as part of a spend reporting application usually provide golden HCP/O records to all the processes that support the upstream business processes (arrangements, travel, expense, events, etc.). Most master data solutions contain third-party information as reference data to establish master HCP/O files. However, the third-party reference data may not, for a number of reasons, always be up-to-date or complete. For example, HCPs may have been added to the local databases that may not be resident in the third-party data sources. For that reason, many companies are managing HCP data from a HCP master data hub. It is stored locally, on site with the company, and refreshed regularly with vendor data and locally-generated HCP data. To support the arrangements and contract management business process, most manufacturers are either building internal custom systems or contracting with companies that build and manage customized applications. Very few vendors offer off-the-shelf arrangements management systems or buy-side (buying services from HCP/Os) contracting systems. Software companies offer sellside (selling products to customers such as wholesalers, distributors, etc.) applications that are well established and frequently used by pharmaceutical and medical device companies. However, the buy-side business processes cannot be supported easily by the existing functionality of the sell-side applications. To provide a seamless operation across the Spend Reporting Compliance Continuum, businesses should consider: Defining detailed buy-side assessment and arrangements requirements that will ensure that all interfaces (HCP, contracts, etc.) and data integration requirements are identified Developing interfaces that provide integration between approved arrangements, contract creation (authoring), contract management, fair market value, HCP qualifications, and payments (in accordance with the contract terms) 4

5 Spend Reporting Continuum SPEND REPORTING COMPLIANCE SYSTEM - SYSTEM VIEW Source Systems Spend Reporting System E ngagements (N eeds Assessment) Arrangements Management Application R eview and H C P Q ualificationsl (C Q R C ) R eview and C reate appropriate engagements and assign Q ualifed H C P s N eeds and B udget (S N R C ) C ontract Management System C reate and M anage C ontracts M anage P ayments to H C P /O s S pend R eporting S ystem C onsolidate and A ggregate S pend D ata by H C P /O E xpenses Travel & E vents Master D ata H C P /O M aster D ata P lan E vents E nter and R eview E xpense E vents Management System S N R C E vents E xpense Report System and P ay E xpense M anage E vents and P ayment E nter and R eview D istributor and 1099 E xpenses P lan and B ook T ravel for H C P s V endor P ortal T ravel Agency and P ay/r ecord E xpenses C apture/ C onsolidate H C P T ravel E xpenses E R P A pply S tate, F ederal and International R eporting R ules P repare P ublish D raft R eceive F eedback from H C P s and F inalize R eprts P ublish and S ubmit Incorporating work flow into the needs assessment process in a manner that supports the business users while simultaneously incorporating the compliance approval work steps without impeding the business process Identifying golden record HCP requirements across business units to satisfy business/corporate needs Determining HCP affiliations for group practices, clinics, and other non-practicing entities Identifying early in the implementation process how disparate data from multiple systems will be accessed and managed across the continuum Incorporating processes that manage data quality across all source systems and interfaces Summary and Conclusion Throughout 2011, many companies gave priority to implementing spend reporting applications in order to meet the January 1, 2012 data collection milestone. The main concern during these implementations has been to extract data from source systems and work around any gaps that might be encountered in the Spend Reporting Continuum. The following are priority areas where challenges have been encountered and companies should continue to focus: Identifying outstanding gaps/requirements in managing source level transactions Addressing process gaps to increase efficiency across the continuum expanding externally from generating state and federal spend reports 5

6 Determining the level of automation desired to manage upstream processes and systems across the continuum. For example: Creating and maintaining arrangements and contracts to maintain compliance with internal processes as well as state/federal requirements Managing events and payments to HCP/Os Integrating the process for creating and maintaining HCP/O golden records across all business units Developing a short- and long-term approach or road map to address requirements and identified gaps. Although the federal requirement deadline to collect data has been delayed, the milestone to submit spend reports (under the Sunshine Act) has not. Requirements to manage spend with HCP/Os remains the same. Even though not all data generated by continuum business processes has a direct input to spend reports, it is important to provide oversight and governance for each process since the method for interacting with HCP/Os must be compliant with state and federal regulations. About the authors Mark Linver is a Managing Director with Huron Life Sciences. He has more than 20 years of experience designing and implementing solutions to the business needs of pharmaceutical, medical device, and biotechnology companies. He is particularly experienced in employing information technology strategy, customer relationship management, business intelligence, knowledge management, artificial intelligence, and data management solutions in industries regulated by the Food and Drug Administration. Suj Patel is a Director with Huron Life Sciences. He has more than 15 years of progressive business and technical experience in the life sciences, healthcare, and financial services industries. He assists pharmaceutical and medical device clients in developing solutions that address issues with compliance management and aggregate spend, commercial contracting, and government pricing. YOUR MISSION OUR SOLUTIONS Huron Consulting Group helps clients in diverse industries improve performance, comply with complex regulations, reduce costs, recover from distress, leverage technology, and stimulate growth. The Company teams with its clients to deliver sustainable and measurable results. Huron provides services to a wide variety of both financially sound and distressed organizations, including healthcare organizations, Fortune 500 companies, leading academic institutions, medium-sized businesses, and the law firms that represent these various organizations. Learn more at Huron Consulting Group Inc. All Rights Reserved. Huron is a management consulting firm and not a CPA firm, and does not provide attest services, audits, or other engagements in accordance with standards established by the AICPA or auditing standards promulgated by the Public Company Accounting Oversight Board ( PCAOB ).