The Physician Payments Sunshine Act will require pharmaceutical companies to record any physician payments or benefits provided in 2012 and to annually report this information to the Secretary of Health and Human Services beginning March 31, 2013. This new requirement is expected to present formidable challenges, since most companies currently use multiple systems to capture healthcare-professional–related payments and benefits.

For example, physician meals and other small expenses may flow through a company’s expense-reporting system, while big-ticket items—medical meeting expenses, consulting fees, and research grants, for example—are managed through accounts payable or other enterprise systems. Most companies record approximately 80 percent of HCP transactions in the expense system, although these transactions constitute only 20 percent of the total HCP spend.

Companies that make minimal efforts to respond to these requirements are likely to find themselves unable to produce a scalable, auditable, and repeatable process. In addition to causing confusion, this also will lead to errors, audit failures, and potential fines of up to $1,000,000 annually. Here’s what you need to know to avoid that fate.

Understanding HCP Requirements
Before you get started, engage your legal and audit departments so you can determine how the new HCP laws may differ from the company’s current process. There could be company-specific requirements that also should be incorporated into any new spend-tracking process.

Companies must begin recording HCP spend by January 1, 2012, and must provide electronic reports that are easily downloadable and searchable. (Download Table 1 for a list of information that must be included in each report; Table 2 outlines the state-specific laws that also may affect HCP meetings.)

Specific rules about submitting information to the government will be available by October 1, 2011. At that time, the government will also detail how the information will be published.

Time to Start Tracking Spend
The meeting department needs to list when meeting spend occurs, how HCPs participate in meetings, which systems are used, and what information is captured. You should address the requirements from both a process and a systems perspective.
Medical meeting planners need to work with the business, finance, compliance, and legal groups to determine what types of meeting spend will count toward the reporting requirements, and how this spend should be calculated at the attendee level (e.g., cost per person for an event). In addition to tracking spend, planners will also need to ensure the attendee data in the meeting management system matches the HCP data the company is using to link spend across all applications.

Meeting managers will have to track HCP spend before, during, and after a meeting. In some cases, you may need to discuss the meeting’s specific circumstance with legal to ensure they agree on what you need to track. Among the spend activities you can expect to track are meeting facility and catering fees, promotional activities, education, speaker fees, and meals and travel expenses.

Include All Process Phases
The spend-tracking process should incorporate all phases of the meeting, from planning through implementation and follow-up.

During the Planning Process: You will need to set up the event in an automated meeting system or using a manual process that includes venue information and a preliminary attendee list. This way you can link all planning-related spend to this specific meeting.

You should track money spent on behalf of all the HCPs attending (e.g., catered meals) against an event ID that contains both the attendee and product information. You can do this through the meeting system or a meeting card, or it could be captured in accounts payable.

Money spent on a specific HCP attending the meeting, such as travel expenses, should be tracked against the individual attendee and the product the meeting

During the Meeting: After the Sunshine Act reports are published, HCPs will be able to see spend that is associated with them, and they may check to make sure the reported data is accurate (e.g., they might have signed up for a conference but then not attended the event).

You should have an administrative process to track the attendee list and corresponding activities at meetings. This allows you to verify the spend per HCP so it’s easy to track who had a meal, who received promotional materials, who attended two out of the three days, and so on. You can make the verification process easier by having individual attendees indicate which activities they participated in through a sign-off/confirmation process.

After the Meeting: You will need to report any additional T&E spend for costs and invoices, along with its associated HCP and product information. Among the information you’ll need to report:

• T&E spend for individuals, such as airfare. This data should be tied to a product and the individual should be categorized as an HCP.
• T&E spend for the entire scope of the meeting, including any additional meal fees or promotional materials, should be tied to the meeting event.
• Invoices received after the meeting could include individual spend on an HCP, such as speaker fees, or additional charges for the entire meeting, including adjustments on meal costs based on actual head count. For individual HCP invoices, the vendor should be categorized as an HCP and the invoice should be tied to the product. Invoice charges for the entire meeting should be tied to the meeting event.

Process and System Updates
Companies likely will need to modify applications that track spend to ensure that each application links the information back to the HCP. Many companies store the HCP master record and consolidated data in a centralized reporting warehouse that acts as the system of record, and they send this HCP data downstream to applications.

At the most basic level, all companies will follow the HCP reporting process illustrated in this flowchart.

Each attendee must have a unique identification number so you can accurately report the HCP spend. Frequently, companies use the Specialty and National Physician Index Number (NPI #) and/or a company-assigned unique identification number.
You also can add data fields or lists to track attendees, allowing you to link the spend to the appropriate HCP. If you want to go further, you can add the ability to search, add, and modify the attendee lists, and to create “special lists” for frequently invited attendees.

Because having an HCP master record is the key to ensuring a company has accurate, reportable data, many companies purchase a listing of HCP data from a vendor and merge it with their existing data to create a more accurate and complete list. A sample list of the major providers includes Cegedim Dendrite, HMS, and IMS. Many of these suppliers not only provide HCP data but also compliance reporting and HCP data validation services.

Should the employee not be able to find an attendee in the company-managed list, you also must have a process to handle ad hoc additions of attendee information to prevent duplicates, ensure accuracy, and assign a central unique ID.

Consolidating Meeting Data with
Financial and T&E Data

Once you have a way to track all applications, spend types, and data elements, as well as a process for managing attendee lists, you need to figure out how the meeting data will tie to reported spend and attendees. For example, where will the final list of meeting attendee information reside (e.g., no-shows, people who did not partake in a meal, etc.) and how will meeting spend be applied/calculated for each attendee (e.g., meal cost per person based on number of attendees planned vs. actual attendees) and for each product?

You need to track confirmed and modified meeting attendee details, either in the meeting-planning system or in the downstream consolidated data warehouse. The meeting group will need to work with the project team to communicate the gaps between the current state and the required future state of reporting, based on overall company HCP reporting strategy.

Change Management Is Key
It is key to manage expectations across departments. All departments need to understand the reporting resource requirements and manual reconciliation efforts involved. Although you will have to balance the solution with the effort and implementation time involved, the more time you dedicate to creating a holistic and scalable solution, the easier it will be for your company to meet the U.S. and global requirements as new laws are enacted. Another key challenge will be to manage HCPs’ concerns. Since companies will publish the amount spent in a public database, HCPs will likely have questions about the calculations, especially for larger events or meetings.

Many companies have tried to be as open and transparent as possible about the meeting costs, and have allowed HCPs to “opt out” of certain expenses. For example, if an HCP only attends one day of a three-day conference, the spend attributed to that HCP should be attributed accordingly. The process outlined here can manage these situations. Although this is an extra administrative burden for both the company and the HCP, it may help assuage HCP’s concerns about inaccurate reporting.

The meetings department should work with legal and compliance to understand the company’s position so meeting managers can be prepared to answer questions from HCPs before, during, and after meetings and events. Meeting planners should understand the new processes being put in place, and be educated on the questions they’re most likely to be asked.

Tina Fan is principal and Joanna Sears is engagement manager with Acquis Consulting Group, a boutique management consulting firm that focuses on the alignment of business and operational strategy. Acquis has been partnering with companies in the life sciences industry for the past 12 years and is focused on helping organizations strengthen their compliance programs. The authors can be reached at and

You May Also Want to Read:

Get Ready Now for the Sunshine Act

Pharma Meetings to Face More Scrutiny

How to Get a Handle on HCP Spend

Regulating Medical Meetings: What Planners Need to Know