ORLANDO--Using certain strategies in dealing with payers can
contribute significantly to building successful relationships and
maximizing revenues from bone marrow transplants and peripheral stem
cell procedures, said Charles J. Bruno, vice president of business
development for the City of Hope Management Services Organization,
which manages oncology care for nearly 1 million lives in Southern California.
Case Rate Payer Method
Mr. Bruno formerly managed key payer relationships for the City of
Hope National Medical Center, which has performed more than 2,000
bone marrow transplants since 1976.
Especially in a highly evolved managed care market like California,
following key guidelines can help ensure sound, profitable
relationships with physicians, institutions, and payers, Mr. Bruno
said at a transplant conference, sponsored by IBC/Infoline.
City of Hope most often uses the case rate payer method (a flat rate
per case treated) for reimbursing transplant services. In a few
cases, Mr. Bruno contracted on a discounted fee-for-service basis.
While capitation (a flat rate per member enrolled) is highly
desirable, he said, few payers have expressed interest in this
approach. "Weve been experimenting with it," he
commented. "Its advantage is in removing barriers regarding the
decision whether or not to transplant."
The first maxim for those responsible for managing transplant
contracts is that they should understand all risk-sharing
relationships, and align institution and physician objectives and
incentives accordingly, Mr. Bruno said.
"In highly competitive markets such as Southern California,"
he said, "theres not much room left for reducing rates,
as pricing has already been cut to the bone."
In other, less intensively managed areas, however, if institutions
and physician groups are interested in sharing risk, he said, "it
should be for services where modest reductions wont break the
bank. Because institutions and physicians must work together on
managed care strategies, all parties must be clear on the objectives
youre trying to achieve."
Second, make contracts as user-friendly as possible, Mr. Bruno
counseled. For example, in contracting separately for
physician/hospital services, apply payment methodology consistently
in terms of case rate structure, outlier protection, and exclusions.
"Also use consistent contract language and try to achieve
seamless communication with health plans and members," he said.
"In other words, plan members should view the institution and
physicians as one and the same."
Third, to the extent possible, it is critical to include physicians
in the payer contracting process. Review service attachments,
coverage criteria, and transplant grids with them, and be sure to
determine physician payment rates and splits on all-inclusive case
rates prior to contracting.
In addition, have key physicians participate in site visits with
payers. "This is a major hurdle, but so important," Mr.
Bruno noted. Payers want a collaborative relationship with medical
staff, so physicians should be encouraged to participate in
developing patient selection criteria, implementing contracts, and
serving on technology assessment committees.
"When payers or the medical director of a health plan can
associate a face with a name of the medical director of your bone
marrow program, it can cut through a lot of discomfort and increase
your chances for success immensely," he said.
Fourth, contract designers and negotiators must be extremely well
educated about details such as variable vs fixed costs for each
transplant phase, including pretransplant evaluation and care, the
transplant procedure itself, post-transplant care, and donor
search/marrow procurement procedures, he cautioned.
"You must know whats acceptable and whats not,
including when experience and knowledge tell you that accepting
business below cost may be worth it, or when to walk away," he said.
Community-based programs are now competing more successfully on a
cost basis than academic programs, he said, so contractors should
also understand the services and costs associated with each phase of
the transplant. "For ease of negotiation, its a good idea
to develop standard boilerplate proposal language for all
transplant procedures," he advised.
Similarly, know the typical exclusions in case rate contracts, such
as standard chemotherapy, cancer care not directly related to
transplants, National Marrow Donor Program (NMDP) charges,
readmissions, postdischarge drugs, and blood and blood-related products.
"Unless youre prepared to accept the risk, only contract
for those services directly provided through your own program,"
he warned. "Some payers may ask the program to provide one
years care, whether its on-site or not. If you arent
able to do that, dont include it in your contract!"
Contract negotiators should also be well-versed in the different
types of stop/loss coverage. Some California payers, Mr. Bruno said,
are now requesting a flat case rate "take it or leave it,"
with no outliers.
"If Ive done a thousand stem cell rescues, I should have
very good cost data plus a smaller degree of variability in cost to
perform the procedure. So with certain payers, we could consider
taking this risk," he said. "But with unrelated allogeneic
transplants, which are much more costly, where NMDP charges are
incurred outside your program, and where significant cost variability
can exist, you have no protection, and the losses can be significant."
Part of the job of any good negotiator should be to educate the
institutions clients, Mr. Bruno said. Be sure that payers
understand that outpatient bone marrow transplant programs work
differently than inpatient programs.
"It is wise to base outpatient program stop/loss on charges
accrued either from the date of evaluation or from the date of actual
transplantation. These charges should be tracked until the patient is
formally released from the program after completion of all necessary
outpatient transplant care," Mr. Bruno said. "In programs
combining inpatient and outpatient services, you must be able to
track patients through both inpatient and outpatient days," he added.
Know the Market
Finally, he emphasized that negotiators must know their market and
their competition in order to deal successfully with payers,
including what types of procedures are available at their own and
other institutions, how their program compares with others, the
unique capabilities and value-added services their institution
offers, and the institutions patient satisfaction rates.
Also, he said, to get the best advantage, be aware of competitive
rates and terms, staff changes at other institutions, and
distribution of referrals by type of procedure.
Mr. Bruno noted that "transplant technology is shifting from the
cutting edge to the leading edge," meaning that community-based
programs will compete with more established centers for the same
patient base. Unfortunately, he added, HEDIS [Health Plan Employer
Data and Information Set] lacks data-specific indicators on
transplant services, so it is hard for payers to compare programs.
"When there are no other indicators, you have to default back to
price," Mr. Bruno acknowledged. Payers can be reluctant to share
data on how programs compare on both costs and services, but this
information is invaluable if you can get it. "Ideally, you and
the payers can educate each other, to the benefit of everyone
involved," he said.