Contracting Challenges from a New Front

Since the last publication of Oncology Practice Management, I have transitioned to a new position with Florida Cancer Specialists. Like every practice across the country, we are facing new and different contracting challenges.

It is interesting to watch the transitions of contracting. At the same time that we continue to focus on evaluation and management codes and drug codes, payers are merging and expanding their own markets, and contract changes occur as a result, even with no action on our part. A payer contract is no longer a document signed once and put on the shelf for 1 to 3 years.

From the practice perspective, our own changes and addition of new services also lead to amendments, additions to provider rosters, and even new geographic locations for existing providers—all of which reopen the process and can take anywhere from 60 to 90 days to execute. In the meantime, practices pend their claims and cross their fingers that the negotiations and effective dates will be mutually acceptable.

However, payers do their budgets based upon original contracts, and to their dismay, changes affect their projections as well as the budgets of their customers and self-administered employers. The rapid changes we now live with in the medical oncology delivery system are often not of our choosing, and yet they cause more administrative overhead and delays in our payment stream while we work through new negotiations with a myriad of payers.

It is an interesting but reluctant dance between payers and providers, driven by market pressures as varied as drug shortages, deployment of 340B hospital strategies, hospital expansion, and expanded physician employment. However, there is a new front bringing challenges to specialty practices—primary care physicians.

Primary care physicians are being actively courted by hospitals for both employment and affiliation under new accountable care organization (ACO) development. While oncology as a specialty is not usually a primary or even a secondary focus for these new ACOs, we are dramatically affected when those market changes impact our referral patterns.

In the past month, I have heard from groups about the following challenges:

  1. One acquired primary care practice was told that referrals now needed to go to the new organization’s internal oncology group instead of the private oncology group they traditionally used.
  2. One oncology group’s key referring physicians suddenly found their own book of business drying up because of the shifts and new affiliations among the major hospital networks in the group’s local market.
  3. Primary care physicians are being placed at financial risk for specialty care—and they are driving referrals based upon the costs of treatment in the specialty office.

ACOs and large, clinically integrated network development are adding a significant new twist to contracting challenges. Even having a contract with a payer may not be an absolute guarantee of volume if the market forces are causing referral and market shifts along different alignments that may otherwise have been neutral in regard to payer relationships.

How do we deal with these new challenges? Keep your eyes and ears wide open and your radar on for new market affiliations and alignment shifts. Visit with your primary care physicians and listen for any indications of trends and potential changes. Analyze your local healthcare market, both upstream and downstream; consider the possible scenarios and changes that could adversely or positively affect your own business; and create contingency plans as well as backup plans for what you believe are the most likely 2 or 3 looming changes.

Above all, do not stop watching, listening, networking, and reacting—by the time some of these potential market shifts occur, it may already be too late to catch up.

The remainder of 2013 will be a time for careful watchfulness, not complacency.

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