Meeting the reporting requirements can be complicated for life science companies, but failing to do so can be expensive.
By Bryan Rhody, Partner, Advisory
In March of 2010, Congress passed the Physician Payments Sunshine Act (PPSA) as part of the broader Affordable Care Act. The new law aimed to increase the transparency of any financial transactions between health care providers and pharmaceutical and device manufacturers. The PPSA requires all manufacturers of drugs, medical devices, biological and medical supplies covered by Medicare, Medicaid and the State Children's Health Insurance Program (SCHIP) to collect and track all financial relationships with physicians and teaching hospitals. The information needs to be reported to the Centers for Medicare and Medicaid Services (CMS) through the Open Payments Program. This data is included in a searchable public database.
The purpose of the PPSA is to protect health care consumers. Under the PPSA, pharmaceutical and device makers must file specific annual reports to CMS for any payments or other transfers of value to certain physicians and teaching hospitals. The variety of things that fall under the PPSA is vast. It can include meals for physicians, clinical trials, travel expenses (flights, lodging), consulting, advisory board appointments, reimbursements for continuing medical education (CME) courses, or fees for speaking at conferences. The act even includes a requirement for any ownership stakes a physician or their immediate family members hold in medical companies. The PPSA's first reporting period was in 2013.
While compliance and transparency are critical in such a highly regulated industry that deals essentially with people’s livelihoods, there’s no denying PPSA has significantly burdened companies. In 2020 alone, the Open Payments Program published nearly 6.4 million records. Collecting and tracking this data now falls primarily on the back-office finance and accounting teams at these manufacturers. Adding to this difficulty level, most typical accounting software is not robust enough to handle the extensive policy changes under this evolving legislation.
But there is a solution.
To Track PPSA Charges, You Need Specialized Accounting Software
One of the biggest challenges facing life science companies is gathering all the pieces of data from multiple sources and jurisdictions into one consolidated database. Popular accounting software, such as Excel and QuickBooks, requires valuable time and effort from employees to combine this information manually. And it also increases the chances for errors or data corruption. And yet, the penalties for failing to comply with this legislation can be severe — fines for fraudulent reporting range from $10,000 to $100,000 per expense report line item. Companies must be accurate with this information.
One of the most popular solutions to the challenge of PPSA reporting is NetSuite. This cloud-based software application has a unified database to provide single sources of information that can streamline Open Payments compliance reporting. This takes most of the manual labor off the backs of the accounting and finance teams.
For a company to comply with both federal and state regulations, the expense reports must include numerous data elements for each health care provider. The list includes:
State license number(s)
National Provider Identifier (NPI)
And more. With NetSuite's flexibility, all these additional elements can be captured and organized for efficient reporting and data analysis requirements. The controls built directly into the software help to mitigate compliance risks and meet federal Open Payments, local, state and international transparency reporting requirements. NetSuite's open Application Programming Interface (API) allows companies to integrate directly into the National Provider Identifier (NPI) database, which reduces manual data entry errors.
Companies that utilize NetSuite will enjoy another benefit, the robust reporting system. The software creates dashboards and in-depth analytics to enable a company understand its operations.
Transparency in this sector is essential. It will help detect fraud, protect patients, and assist in reducing overall health care costs.
Get Professional PPSA Software Selection, Implementation, Customization, Training and More From BPM
Being compliant with the PPSA can be a challenge for any life sciences company. The sheer volume of data required for reporting purposes is daunting, and errors can be very costly. Accounting software like NetSuite will streamline the process and bring order to this chaos. And BPM can help. Our professionals will integrate and optimize this powerful application to work seamlessly with, or replace, any company's current accounting systems. To start improving the efficiency of your backroom accounting department, contact Bryan Rhody, Partner and Head of our Technology Solutions Group, today.