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Urology Practice Management Special Issue - May 2013 Vol 2, No 1 - Practice Administration
Matthew Wendling, MPH

Overall, the practice of medicine has been evolving in recent years, and the specialty of urology has been no exception. These changes are being driven by a combination of clinical and economic factors, including therapeutic innovation, improved surgical techniques, and perhaps most prominently, a policy environment in which purchasers of healthcare are increasingly focused on accountability, quality, and value. These changes are having a profound effect on urology practice management from a business as well as a clinical perspective.
Early screening, identification, and treatment of patients with prostate cancer have had a considerable effect on the clinical course of the disease. Patients are diagnosed earlier and are living longer with prostate cancer than ever before.

As a result, prostate cancer is increasingly viewed as a chronic disease. This has important ramifications for purchasers of healthcare. As patients live longer, they receive treatment for a longer period of time, which increases the cost of care. Of course, many lower-risk prostate cancer patients may be managed by active surveillance, and minimization of overtreatment in lower-risk patient populations may mitigate the increasing cost of treating advanced prostate cancer patients to some degree.

In the past, payers have been somewhat hesitant to institute utilization management controls in oncology. However, in recent years, the utilization management paradigm in oncology has begun to align more closely with management approaches for other chronic illnesses such as diabetes, COPD, and heart failure, to name a few. Utilization management approaches currently being used by payers in oncology include prior authorization (PA), quantity limits, clinical treatment pathways, differential tiering, and in an increasing number of categories, step edits. Furthermore, specialty pharmacy is playing a more important role in distribution and management, particularly with the newer oral agents. The ensuing discussion will focus on the practice management challenges faced by today’s urology community as well as some of the solutions that are being implemented by progressive practices.

Navigating Prior Authorization

The urology practices represented on the Steering Committee noted that an increasing number of prostate cancer agents are subject to payers’ PA requirements. Fulfilling PA requirements may be resource intensive and make it necessary that assigned staff receive proper orientation and training. In support of PA requirements, practices may be required to submit laboratory data, medication history, and other supporting information. Furthermore, the typical urology practice sees patients with coverage provided by a range of commercial and Medicare insurance plans. The specific PA requirements may be different for each of these payers. In addition to PAs for oncology drugs, many payers require precertification to establish medical necessity for radiation and surgical procedures.

The urology practices represented on the panel vary in the way they navigate payer requirements. For practices with one central location, it may be logical to assign PA/precertification responsibilities to a single individual. However, this approach may not be optimal for practices with a number of different offices. These practices may be better served by assigning PA responsibilities to an individual at each satellite office.

Panelists noted that PA requirements vary by therapy as well as payer. This may also impact the decision to centralize PA responsibilities to a single individual or small number of dedicated staff. In general, more complex therapies may be subject to more complicated PA requirements. For example, the PA for immunotherapy may require urology offices to provide more information than other PAs, including ECOG status, family history, and CT scans prior to approval. It may be logical to assign more complex PAs to a single individual, while allowing satellite office staff to process more straightforward PAs on higher-volume medications.


Figure 1

Working with Specialty Pharmacies

Specialty pharmacy provides comprehensive and coordinated patient management plans for chronic illnesses and complex medical conditions. In specialty pharmacy, distribution focuses on drugs that are high cost and administratively and clinically intensive. Specialty pharmacies are involved in a continuum of activities beginning with intake management through drug fulfillment (Figure 1). Underlying all of these activities is drug therapy management, a critical function that can help urology practices manage certain patient populations.
Traditionally, specialty pharmacy distribution has focused primarily on self-administered oral or injectable medications. However, because of market forces and the decreasing attractiveness of the “buy and bill” drug purchasing model, many specialty pharmacies now have an increased role in dispensing and managing office-administered drugs as well.

There is no standard definition for a specialty pharmaceutical. However, the Centers for Medicare & Medicaid Services set a minimum cost for medications included in specialty tiers, specifically, prescriptions costing more than $600 per month.1 Many other stakeholders have adopt­ed this way of characterizing specialty drugs. Notably, there is no standard designation for specialty pharmaceuticals—they are not labeled as such by the US Food and Drug Administration (FDA) or any other regulatory body.

Specialty pharmacies are owned and operated by a number of stakeholders in the healthcare market. The major pharmacy benefit managers own the largest specialty pharmacies. Some health plans also operate their own specialty pharmacies. In addition, there are a number of independent specialty pharmacies. Some oncology practices dispense specialty pharmaceuticals, even oral oncolytics, which makes them a de facto specialty pharmacy. Traditional specialty pharmacies provide back-end support services through group purchasing organization relationships with some of these large dispensing practices.

In recent years, cost trends have been minimal for traditional drugs, whereas specialty drug costs have been increasing by 15% to 25% per year. Most experts expect the trend to continue for at least the next 5 years, as shown in Figure 2. Due in large part to these cost trends, payers contract with specialty pharmacies to help manage the utilization and costs associated with specialty medications.

Drug pipelines are a major factor in driving specialty drug cost trends. Nearly 60% of the new FDA approvals in 2012 were specialty drugs, and this trend is expected to accelerate in the coming years.2

A substantial proportion of the pipeline drugs are oral therapies, signifying a major shift from injectable and infusion therapies, which have traditionally constituted the bulk of the specialty market. It should be noted that the majority of these new molecular entities are oncolytic agents, and several will impact urology practices.
An increasing number of specialty drugs are being covered by payers’ pharmacy benefit, which is typically the domain of oral drugs. Looking specifically at prostate cancer, more and more patients are being diagnosed at a younger age. These younger patients typically enroll in commercial, rather than Medicare Part D, coverage. This is an impor­tant distinction, because Part D benefit designs often require more patient cost-sharing than commercial coverage. In addition, PA and other utilization management requirements may be different for these 2 types of coverage.

There are 3 distribution models used for specialty drugs. The first of these is exclusive distribution, which takes place when a manufacturer chooses to work with 1 pharmacy as a sole dispensary. This type of distribution is usually limited to drugs with a very small patient population, for example, cabozantinib and vandetanib for medullary thyroid cancer.

More commonly, manufacturers limit the distribution of their pro­d­ucts to a handful of pharmacies or limited distribution panels. The vast majority of these limited distribution panels must meet specific requirements that are developed by manufacturers. In a limited distribution arrangement, manufacturers typically contract with 5 to 15 specialty pharmacies to dispense a product. Many manufacturers choose limited distribution because it gives them excellent control over their product, particularly when partnering with specialty pharmacies that offer comprehensive drug therapy management programs. In other cases, the manufacturer may use specialty pharmacies to collect data in support of their risk evaluation and mitigation strategy (REMS) program, which may be mandated by the FDA when the product is approved.3-5


Figure 2

Drug therapy management is a valuable service provided by most specialty pharmacies. When adopting new oral therapies into their treatment armamentarium, some urologists on the panel expressed concern about patient adherence to these therapies, citing across-the-board suboptimal adherence rates for self-administered drugs in all therapeutic categories.

Practices, as well as payers and pharmacies, employ a number of techniques in an effort to improve adherence, including telephonic outreach. For the products they dispense, with access to real-time patient data, specialty pharmacies are perhaps best positioned to conduct telephonic outreach to patients. These calls are typically made either proactively or when it has been determined that a patient has not refilled their prescription within a predetermined window of time. If a new prescription is required, specialty pharmacies may also notify the prescriber.

Many payers have instituted split-fill programs, where a 15-day supply of a newly prescribed medication is dispensed and patients are monitored closely to ensure that they are tolerating the drug. In split-fill programs, the specialty pharmacy is often contractually responsible for conducting the telephonic outreach. These types of outreach programs, done in conjunction with patient education, have been effective in promoting compliance with prescribed therapy, thereby impacting both the quality-of-care and cost-containment efforts, because noncompliance is costly.

Specialty pharmacies engage in other activities to support drug therapy management. They collect data from patients on potential side effects, and are able to monitor situations that may require dose adjustment. Specialty pharmacies can also assist urology offices in navigating payer utilization management requirements. As payers begin to manage drugs to treat patients with prostate and other urologic cancers more aggressively through PAs, quantity limits, and differential tiering, specialty pharmacy providers can help urology practices alleviate the stress around some of these barriers.

With these changes in the marketplace, it becomes even more impor­tant for specialty pharmacies to dem­onstrate value to their customers.

Group Practice Integration

Urology practices are being forced to adapt to today’s rapidly changing business environment. Declining reimbursement and increasing expenses have forced practices to improve business efficiencies in order to thrive. The Accountable Care Act and other healthcare legislation are also driving a shift away from traditional fee-for-service–based payment models and we are entering an era where risk-based payment may become the rule rather than the exception. As a result, practices are encountering an increased regulatory burden and increased pressure to standardize care.

In response to financial pressure, many urology practices have accepted acquisition offers from hospitals and health systems in their areas. Although urologists may realize some benefits from these arrangements in terms of guaranteed income and reduced risk exposure, as hospital employees they may also experience a loss of fiscal autonomy and clinical independence. Hospitals, like most other businesses, seek to contain their vendor expenses, and struggling urology practices may not be in the most ideal negotiating situation. Furthermore, the historical payment advantage to hospitals is under attack, as the Medicare Payment Advisory Commission (MedPAC) continues to discuss equalization of office-based and hospital outpatient department payment rates.
Group practice integration is another option for today’s urology practices. Consolidation helps to build the economies of scale required for urology practices to have the negotiating and purchasing leverage required in today’s highly competitive healthcare environment. It also makes it easier for practices to obtain capital-intensive resources such as pathology laboratories, diagnostic imaging, and radiation oncology equipment and specialty staff, if they choose to do so.

Integration puts practices in a better position to assume risk. Medicare enables providers to form accountable care organizations, participate in shared savings programs, and create novel reimbursement models such as bundled payments.6 In addition, integration may also allow a practice to contract directly with third-party payers, particularly if the practice can demonstrate that it offers an integrated suite of services for a patient.
Integrated urology practices can meet today’s regulatory challenges by developing the infrastructure to support clinical standardization and enforcing policies that member physicians have collectively agreed on. Clearly defined utilization review, quality management, and compliance processes are needed to generate the data requested and are sometimes required by purchasers of healthcare.

Perhaps the greatest challenge for integrating group practices is to overcome the competitive internal practice environment that often exists and develop a unified culture of shared clinical risk from the beginning. Once consensus is reached regarding policies and processes to support clinical standardization efforts, it is critical for the practice to empower leadership to enforce those policies.

An integrated, well-managed, shared-risk group practice model allows physicians to retain their professional and economic independence. In today’s shifting healthcare treatment paradigm, it may afford urologists the best opportunity to provide optimal patient care, make independent clinical decisions, and exercise some degree of control over their financial circumstances.

Author Disclosure Statement
Mr Welz has nothing to disclose. Dr Kaddis has nothing to disclose. Dr Kapoor is on the Medical Advisory Board for Strand Diagnostics’ know error sytem.

References
1. National Opinion Research Center (NORC) and Georgetown University for the Medicare Payment Advisory Commission (MedPAC). Drugs on Specialty Tiers in Part D. NORC and Georgetown University. http://www.medpac.gov/documents/feb09_drugson specialtytiers_contractor_rs.pdf. Published February 2009. Accessed March 20, 2013.
2. Tharaldson A; Express Scripts Lab. 2012: Landmark Year for Drug Approvals. http://lab.express-scripts.com/prescription-drug-trends/2012-landmark-year-for-drug-approvals/. Published March 28, 2013. Accessed April 15, 2013.
3. Pharmaceutical Studies Group. Understanding Specialty Pharmacy Management and Cost Control. Pharmaceutical Strategies Group, LP; June 2010.
4. Sharon B. 2010 Health Care Trend Survey: Summer. Aon Consulting; 2010.
5. EMD Serono. EMD Serono Specialty Digest, 7th Edition: Managed Care Strategies for Specialty Pharmaceuticals. EMD Serono, Inc; 2011.
6. Innovation Models. Centers for Medicare & Medicaid Services (CMS) Web site. http://innovation.cms.gov/initiatives/index.html. Accessed April 23, 2013.

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Last modified: May 7, 2013
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