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Author's profile photo Tridip Chakraborthy

Addressing HCP Spend Sunshine Act requirements with SAP CLM Contracts

The Sunshine Act is looking at tightening some of the spend aspects considerably in the Life Sciences industry. Companies are beginning to absorb what the law brings with it and its exact requirements and downstream implications and subsequent reporting aspects. IT being the system that would help bind these aspects for a smooth follow-on reporting is an area where the thought process must be crafted in-line to what the law expects. It’s a given that, companies need to modify enterprise systems to ensure information is accurately captured and recorded.

What is the Law?

The Physician Payments Sunshine Act will require 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 (HHS) beginning March 31, 2013. This new requirement is expected to present formidable challenges since most companies currently use multiple systems to capture HCP payments and benefits.

Define HCP (Health Care Practitioner / Physician)

Sunshine Act defines physicians (HCP), by reference to 42 USC 1861(r), as someone legally authorized to practice medicine.  In other words, a licensed MD, DO, Doctor of Dental Medicine/Surgery, Podiatric Medicine, Optometry or a licensed Chiropractor.  It does not require that a physician be actively “practicing” medicine, only that he/she is licensed.  For our purposes, if an individual represents himself/herself with certain credentials (e.g., MD, DO), then we will consider that individual to be a licensed physician subject to CIA/Sunshine reporting. 

For example, spend categories that relate to a physicians expenses ex. meals and other small expenses flow through a company’s expense reporting system while big ticket items (e.g., research grants, consulting fees) are managed through accounts payable or other enterprise systems. In most companies, approximately 80% of HCP transactions are recorded in the expense system, although these transactions comprise only 20% of the total HCP spend. Not surprisingly.

SAP MDM had come up with a great concept of visualizing this data into a separate repository and treat it as a unique HCP master data record, there are various ways to classify the important categories that will impregnate these HCP spends into them for upstream reporting requirements.

However, we have done some simple tweaks to the header page of the Master Agreement and the Sub-Agreement to house the information of capturing some important Meta-data fields that will flow back to the ECC backend as an Outline agreement and the spend could be reported through Business Objects Spend Performance Management.

What are the Important pieces of Meta Data that needs to be captured in SAP CLM

  1. Physician name
  2. HCP Specialty
  3. HCP License No
  4. HCP affiliation
  5. HCP Business address
  6. HCP National      provider ID
  7. Payment value
  8. Payment Mode (e.g.,      cash, Check, Direct Deposit)
  9. Payment date
  10. Payment type      category (Spend Category)
  11. The name of the      related drug / device / supply
  12. Currency


Try and map these to standard fields in CLM or create custom extensions and collections as desired and ensure that the fields that need to be mandatory have “instructions embed in the hover text that will help the contract creation personnel aware of the importance of field population”

What are some of the Spend Categories that need to be defined as HCP Material Groups or Product Categories in SAP Sourcing / CLM / SAP SRM to help allocate the spend to?

Tip: Don’t try and create custom categories for HCP spend tracking, instead, try and map the spends that need to be reported into the standard Product Categories that exist today.

These days most of the companies follow the process of No PO or Contract -> then No Pay to the Vendor, we are somewhat assured that any payment that would be made to a HCP would not be expensed against an invoice, but will definitely be settled via a Purchase Order process (that is wishful thinking for some people who are still not trending P2P (Procure to Pay)

Typical SAP Product Categories that would map into HCP Spend?

  1. Gift
  2. Food
  3. Grants management
  4. Referring Drug      Consulting fees
  5. Co-location
  6. Entertainment
  7. Travel
  8. Honoraria
  9. Research funding
  10. Education
  11. Profit distribution
  12. Charity contribution
  13. Consulting fees
  14. Royalties
  15. License fee
  16. Speaking fees
  17. Dividends
  18. Stock or stock      options

Some Illustrative Screen-shots of how these would look in SAP CLM

Placing them using re-distribution or Override UI to mask some and show some on the Header or the screen of your choice, most visible to your end-users that are expected to input HCP related data into the SAP CLM Contracts.

Possible follow-on actions that actually would help report the HCP Spend

1)      If you are running SAP CLM in stand-alone mode without ECC or SRM, then develop a custom report inside SAP CLM to pass the meta-data into a downstream reporting system or build a custom report using the Query feature and publish the report to the authorities and have it in auditable condition at any given time

2)      If you have Spend Performance management downstream, then the SAP CLM Contract can be pushed as an outline agreement and all the follow-on downstream procurement data can be reported with the Business Objects SPM Cube

3)      If you have SAP MDM in the landscape, then build the custom repository for HCP Master Data and syndicate that to the necessary back-ends and then slice and dice and use the data downstream and upstream to address compliance requirements


The ideal is to ensure that you somehow comply with what the Sunshine act legislates

Do share your feedback, if you did some similar interesting piece using SAP to address the requirements of the Sunshine Act.

Flash News from the #SAPAnalytics and #SAP Procurement shop

Fortnight back, we just tweeted about the release of the SAP BusinessObjects Data Enrichment and Classification product going GA, the features and processes supported are mentioned below, follow the twitter handle @SAP_Procurement @tridipchakra to hear more on the #SAP #SupplierInfoNet release in the near future:

Features and productinclusions for the SAP BusinessObjects Data Enrichment and Classification product : 

·                  Data collection – Ensure a complete and accurate aggregation of spend from multiple, disparate systems including SAP and non-SAP sources.

·                  Enrichment – Improve leverage and decision making by normalizing the supply base and supplements it with additional information from trusted sources.

·                  Classification – Ensure a consistent and complete understanding of purchasing activity by organizing spend transactions by what was purchased within a goods and services hierarchy.

·                  Revision – Achieve greater accuracy and continuous improvement by incorporating subject matter expertise into the process.

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