For the first time, the total of payments that doctors and teaching hospitals received from pharmaceutical companies and medical device makers was made public. The reported amount, $3.5 billion, reflects the final five months of 2013, and is the most extensive such data collection ever subjected to public scrutiny.
Breakdown on Payments
The payments not only included professional nods such as consulting and speaking fees with research grants, but also travel, meals, and entertainment, according to the Centers for Medicare and Medicaid Services (CMS). Although the names of the recipients of about 40 percent of payments were withheld due to data inconsistency concerns, approximately 546,000 providers and 1,360 teaching hospitals altogether received 4.4 million individual payments from healthcare companies amounting to $23 million per day.
Why Transparency Matters
As part of federal healthcare reform law enacted in 2010, any payment of over $10 must now be disclosed to CMS, including those sent immediately to charity. This aspect of the Affordable Care Act, called the Physician Payments Sunshine provision, received bipartisan support from both Democrat and Republican lawmakers in an effort to increase transparency. Years of research indicate that the majority of physicians (83 percent) receive gifts from drug or medical service companies, and 28 percent of providers receive payments for research or consulting.
Despite requests from physician groups, including the American Medical Association (AMA), the CMS would not delay the release of payment data. Physician groups complained about over errors that had the potential to create an inaccurate representation of the medical industry particularly the impact that such payments have on individual doctors.
Patients’ awareness of potential conflicts of interest that are financially based can cause them to question the reasons behind prescriptions or treatment recommendations. With increased financial transparency, doctors can know whether experts who recommended guidelines were paid for their opinions by parent companies that stand to benefit. Health insurers have voiced concerns that extensive industry payments cause physicians to overprescribe expensive drugs and medical devices out of financial motives.
The tenet of “First do no harm” should trump kickbacks and incentive payments, yet the pharmaceutical and medical device industry boasts deep pockets that may tempt physicians into making care decisions based on the wrong motivations.
Brendan Buck, the spokesman for America’s Health Insurance Plans, describes the payments as the “perfect symbol for the misaligned incentives in our healthcare system.” Unlike other healthcare stakeholders who work to lower costs, drug makers are invested in inflation-based pricing that benefits their profit margin instead.
Research shows no correlation between patient trust and industry payments, as patients may view the request to—for example—consult in return for an all-expenses-paid trip as a compliment to their physician’s expertise rather than a symbol of his or her corruption.
The new emphasis on increased transparency in medical funding serves as a reminder that financial involvement with the medical industry, while it can be beneficial, also needs to be conducted above-board rather than behind locked doors.
Written by Dean Van Dyke, Vice President, Business Process Optimization
Dean Van Dyke is the Vice President of Business Process Optimization for iBridge. He brings more than 18 years of customer relations, business process outsurcing, lean six sigma, program/project management, records management, manufacturing, and vendor management experience to iBridge. Mr. Van Dyke was the former head of Microsoft’s corporate records and information management team, and served honorably for over fourteen years in the U.S. Navy and Army National Guard. He received his Bachelor of Science in Business Administration from the University of South Dakota and his Master’s in Business Administration from Colorado Technical University.