The Centers for Medicare & Medicaid Services (CMS) recently added to the trend toward greater health care data transparency by releasing data about the prescription drugs that physicians and other health care providers prescribed in 2013 under the Medicare Part D Prescription Drug Program.  CMS’s press release touted the data as “part of the Obama Administration’s efforts to make our healthcare system more transparent, affordable, and accountable.” Following the Physician Payments Sunshine Act, which makes public the financial arrangements that pharmaceutical and medical device manufacturers have with physicians and teaching hospitals through the “Open Payments” program, and the release of 2012 physician Medicare Part B fee-for-service data, which my colleagues discussed in a previous post, the 2013 Part D data adds to the growing universe of publicly available information about the health care system.

The 2013 Part D Data and Its Limitations

According to CMS’s fact sheet, the 2013 Part D data reflects drug claims submitted by Medicare Advantage Prescription Drug plans and stand-alone prescription drug plans. The data contains information about more than one million health care providers, and over 3,000 drugs, which account for $103 billion in prescription drugs and supplies paid under the Part D program. The data is presented in two ways: by prescriber and by drug. The prescriber-specific data identifies prescribers by name and lists, among other things, National Provider Identifier (NPI); prescriptions by brand name, if applicable, and generic name; specialty; and total drug cost. The drug-specific data includes the brand and generic name, the number of prescriptions, the number of prescribers, the number of claims, and the total drug cost. CMS explained that the total drug cost includes (1) the drug’s ingredient cost, (2) dispensing fees, (3) sales tax, and (4) any applicable administration fees, and it is “based on the amount paid by the Part D plan, Medicare beneficiary, government subsidies, and any other third-party payors. . . .”

Although the volume of the 2013 Part D data is substantial, the data has a number of important limitations. Most notably, total drug costs do not reflect any manufacturer rebates paid to Part D plan sponsors. As a result, the Pharmaceutical Research and Manufacturers of America said in a statement that the Part D data is “misleading” and “an inaccurate representation of actual Medicare Part D spending” because insurers often negotiate rebates as much as 20% to 30% for branded medications.

CMS described a number of additional limitations of the 2013 Part D data:

  • The data may not be representative of a prescriber’s entire prescribing pattern because it only contains information from Medicare beneficiaries with Part D coverage, and clinicians typically treat many other patients who are not covered by Part D.
  • The information does not indicate the quality of care provided by individual clinicians; it only contains cost and utilization information.
  • The data does not include over-the-counter medications or any prescriptions obtained outside the Part D benefit.

Uses for 2013 Part D, Sunshine Act, and Medicare Physician Billing Data

The data published in the Sunshine Act’s yearly reports, the annual release of physician Medicare billing information, and now the newly released Medicare Part D data offers a trove of information. The full panoply of ways these new data sources will be used remains to be seen, but undoubtedly a host of interested parties, including reporters, health care enforcement agencies, qui tam whistleblowers, and many others will utilize the newly available health care data to spot prescribing and cost trends. According to CMS, “[t]his new dataset provides key information to consumers, providers, researchers, and other stakeholders to help drive transformation of the health care delivery system. This data enables a wide range of analyses on the type of prescription drugs prescribed in the Medicare Part D program, and on prescription drug utilization and spending generally.” For example, CMS proposed that it will be possible to “compare drug use and costs for specific providers, brand versus generic drug prescribing rates, and to make geographic comparisons at the state level.”

In its fact sheet, CMS published a glimpse of the ways to analyze the 2013 Part D data by including cost and utilization information by drug, prescriber specialty, and region, such as:

  • Top ten drugs by claim count;
  • Top ten drugs by costs;
  • Prescriber specialties with the highest total drug costs;
  • Generic dispensing rate by specialty; and
  • Dispensing rate by hospital referral region.

Given the wealth of newly available data, physicians, hospitals, and other health care providers, as well as pharmaceutical and medical device manufacturers, may consider analyzing the data themselves to assess risks and identify any outliers. In fact, the Office of Inspector General for the Department of Health and Human Services, in its recent Practical Guidance for Health Care Governing Boards on Compliance Oversight which my colleagues discussed in a recent post, recommended that health care boards utilize publicly available information about the health care industry, including Open Payments data, Medicare payment data, and health care outcomes and quality measures for compliance purposes. As with many other industries, Medicare “big data” is likely here to stay, and health care providers and suppliers should consider ways to use this data to their advantage to assess organizational risk and compliance, among other things.