april 2011, no 1, vol 1

Wellness-Based Healthcare: Economic Incentives and Benefit Design

©2011 Engage Healthcare Communications, LLC

Special Edition

ONCOLOGY PRACTICEMANAGEMENT

™

APRIL 2011 VOLUME 1• NUMBER 1

PROCESS IMPROVEMENTS TO ENHANCE PATIENT CARE

Half or more of oncology care ispaid by payers other than Medi -care or Medicaid. Does your can-

cer center have a defined strategy forcommunications, contracting, and pro-gram development with these payers?

Defining Payer Strategies• Are all my contracts in one place and

easily accessible?• Do I know the expiration and renego-

tiation deadlines for each of my payers,and do I have prompts to remind me to

Payer Strategies Forewarned Is ForearmedBy Dawn Holcombe, MBA, FACMPE, ACHE

Given the reimbursement climate,there is growing concern that theeconomics of private medical

oncology practices are no longer sustain-able. As such, many oncologists are eval-uating alignment options with hospitalpartners who, in turn, are seeking tostrengthen their oncology service lines.

Relationship options offer varying de -grees of integration, benefits, and risks.Meeting objectives, responding to strategicneed, improving physician integration, andmitigating financial risks are key consider-ations when seeking and evaluating thevarious alignment models (Figure, page 14).

In addition to negotiating compensa-

tion for clin ical services, phy sicians shouldbe familiar with the following key ele-ments that may be included in the varioustypes of transactions.

1Fair market value (FMV) for assets.Hospitals will buy assets or arrange to

assume leases at rates that are supported bymarket data. A third-party firm is usuallyconsulted to evaluate a group to determineFMV for the purchase of the practice.Physician practices will be asked to pro-vide a host of financial in formation includ-ing tax returns, financial statements, andother documents for the FMV analysis.

Preparing for SuccessfulAlignmentKey Elements from Start to FinishBy Jessica L. Turgon; Malita I. Scott

Continued on page 14

Continued on page 6

HOSPITAL-BASED CANCER CENTERS

Taking the Right Steps TowardCollaboration . . . . . . . . . . . . . . 15PRACTICE MERGERS

The Subjective Factors forSuccess…or Failure . . . . . . . . . . 16INTEGRATION CASE STUDY

Florida Cancer Specialists . . . . 18

I N S I D E

IntroducingOncologyPracticeManagement

Oncology Practice Management seeksto offer process solutions for allmembers of the cancer care

team—medical, surgical, and radiationoncologists, as well as executives, admin-istrators, and cod ers/billers. It is our hopethat the information contained withinthese pages will assist our readers with theskills needed to master the ever-changingbusiness of oncology in or der to continueto provide the high-quality care cancerpatients deserve.

It is my hope that this series will instilla feeling of hope in our readers, as wehighlight the positive changes oncologyprofessionals are making to positionthemselves for success in the current

DawnHolcombe, MBA,FACMPE, ACHE Editor-in-Chief

President, DGH Consulting

Continued on page 3

VELCADE and Millennium are registered trademarks of Millennium Pharmaceuticals, Inc. Other trademarks are property of their respective owners.

Millennium Pharmaceuticals, Inc., Cambridge, MA 02139

Copyright © 2010, Millennium Pharmaceuticals, Inc. All rights reserved. Printed in USA V-10-0196 11/10

O

Printed in USA V-10-0196 11/10

A Letter from the Editor

3April 2011 I www.OncPracticeManagement.com I

Bruce A. Cutter, MDPresident

Cutter HealthCare ConsultingSpokane, Washington

Patrick A. Grusenmeyer, ScD, FACHESenior Vice President, Cancer and

Imaging ServicesChristiana Care Health System

Newark, Delaware

Teri U. Guidi, MBA, FAAMAPresident & CEO

Oncology Management Consulting GroupPipersville, Pennsylvania

Cindy C. Parman, CPC, CPC-H, RCCPrincipal

CSI Coding Strategies IncPowder Springs, Georgia

PUBLISHING STAFF

PublisherNicholas [email protected]

Associate PublisherMaurice [email protected]

Directors, Client ServicesJohn [email protected]

Phil [email protected]

Cristopher [email protected]

Editorial DirectorDalia Buffery

EditorDawn [email protected]

Production ManagerMarie R. S. Borelli

Quality Control DirectorBarbara Marino

Business ManagerBlanche Marchitto

MISSION STATEMENT

Oncology healthcare requires providers tofocus attention on financial concerns andstrategic decisions that affect the bottomline. To continue to provide the high-quality care cancer patients deserve,providers must master the ever-changingbusiness of oncology. Oncology PracticeManagement will offer process solutionsfor members of the cancer care team—medical, surgical, and radiation oncolo-gists, as well as executives, administrators,and coders/billers—to assist them in reim-bursement, staffing, electronic healthrecords, REMS, and compliance withstate and federal regulations.

EDITORIAL BOARD

Editor-in-ChiefDawn Holcombe, MBA, FACMPE, ACHE

President, DGH ConsultingSouth Windsor, Connecticut

VOPM1

oncology healthcare marketplace.Each issue will concentrate on one area

of oncology practice, showing you ways to

manage your business as efficiently as pos-sible. With this inaugural issue, we focuson the collaborations and affiliations that

can move us forward. Collab orationrequires us to work with others for mutualbenefit, be it another practice, a hospital,or your payers. In each situation, you willneed to understand your options andproperly prepare for the negotiations. Asour case study illustrates, successful collab-oration can bring challenges but offersmany rewards.

Future issues will delve into imple-menting technology, such as electronichealth records, and regulatory pro cesses,such as risk evaluation and mitigationstrategies.

Along with the editorial board andstaff, I am excited to bring you OncologyPractice Management. We look forward toyour feedback. l

Oncology PracticeManagement…Continued from the cover

Value-Based Cancer Care®, ISSN 2153-4888 (print); ISSN 2153-4896 (online), is published 7 times a year by Engage Healthcare Communications, LLC, 241 Forsgate Drive, Suite 205A, Monroe Township, NJ 08831.Copyright © 2011 by Engage Healthcare Communications, LLC. All rights reserved. Value-Based Cancer Care® is a registered trademark of Engage Healthcare Communications, LLC. No part of this publication maybe reproduced or transmitted in any form or by any means now or hereafter known, electronic or mechanical, including photocopy, recording, or any informational storage and retrieval system, without written per-mission from the publisher. Printed in the United States of America.

The ideas and opinions expressed in Value-Based Cancer Care® do not necessarily reflect those of the editorial board, the editors, or the publisher. Publication of an advertisement or other product mentioned in Value-Based Cancer Care® should not be construed as an endorsement of the product or the manufacturer’s claims. Readers are encouraged to contact the manufacturers about any features or limitations of products men-tioned. Neither the editors nor the publisher assume any responsibility for any injury and/or damage to persons or property arising out of or related to any use of the material mentioned in this publication.

Postmaster: Correspondence regarding subscriptions or change of address should be directed to CIRCULATION DIRECTOR, Value-Based Cancer Care®, 241 Forsgate Drive, Suite 205A, Monroe Township, NJ08831. Fax: 732-992-1881. Yearly subscription rates: 1 year: $99.00 USD; 2 years: $149.00 USD; 3 years: $199.00 USD.

Collab oration requires us to work with others for mutual benefit, be it another practice, a hospital, or your payers.

4 I ONCOLOGY PRACTICE MANAGEMENT I April 2011 I Special Edition

In This Issue

Want to Implement WhatYou Have Learned?Printable Checklists of Steps

• Collaboration

• Payer Contracting

Want to Read a SecondCase Study?

Cancer Care Northwest: A Lesson for Consolidation and Integration

www.OncPracticeManagement.com

DRUG CODING & PRICING GUIDE

Colorectal Cancer.................................................................................................. 7

HOSPITAL-BASED CANCER CENTERS

Taking the Right Steps Toward Successful Collaboration ....................15

PRACTICE MERGERS

The Subjective Factors for Success…or Failure ............................16

MANAGED CARE CONTRACTING

Negotiate Your Way to Higher Reimbursements ..............17

INTEGRATION CASE STUDY

Florida Cancer Specialists ......................................18

Contact your GSK representative for additional information or visit www.ARZERRA.com.

©2010 The GlaxoSmithKline Group of Companies All rights reserved. Printed in USA. AZA228R0 January 2011

Announcing a NEW J-Code for ARZERRA

ARZERRA will have a permanent HCPCS code effective January 1, 2011

The new J9302 Code replaces miscellaneous HCPCS Codes J9999, J3590, J3490, and C9260 that most providers have used to bill for ARZERRA to date

HCPCS code

J9302

Effective

January 1, 2011

Description

Injection,ofatumumab, 10mg

ARZERRA® HCPCS Code J9302


Payer Strategies

meet those deadlines with changerequests and new expectations?

• Do I know what my patient vol-ume is for each payer?

• Do I know my denial rates andprofiles for each payer?

• Do I know my patient demo-graphics and net charges, costs,and profit/loss for each payer?

• Do I know the medical direc -t ors, pharmacy directors, phy si -cian relations/contracting stafffor each significant payer andtheir contact information?

• Am I tracking my referral sourcesfor each significant (more than5% of your net revenue) payer,and noting any changes (whichincludes market organizationalchanges and affiliations/mergers)?

• Am I aware of the oncology man-agement policies (not just med-ical policy but also oversight,prior authorization, pricing pat-terns, and depth of utilizationmanagement and focus ononcology issues and costs) foreach significant payer?

• Have I talked to the medical orpharmacy director about oncolo-gy management policy (not indi-vidual patient claim issues) inthe past 6 months?

• Am I aware of the vendors whoare calling on payers regardingoncology management solutions,and how those programs wouldaffect my cancer center?

A negative response to any ofthese questions would indicate thatyour cancer center is at risk for significant unanticipated adverseevents occurring that could affectdaily operations. There are a numberof ways to reduce that risk—whichwill position your group for betternegotiations and make it easier to beproactive in your payer relationships.

ContractingThe terms of your payer contract

are explicit. They govern the timingand changes generated by either youor the payer. There is a finite periodof time and degree of notice that hasbeen negotiated in these terms, andyou can be sure that the payers aretracking those terms very closely. Ifyou don’t have ready access to yourcontracts, and do not watch thedeadlines, it is likely that you willmiss activity by payers outside ofthose contract boundaries, or yourown chance to present changesbefore expiration/renewal dates.

Patient Activity ProfilingPayers know to the penny what

their costs are for every patient youtouch. Payers regularly profile yourvolume, costs, admission rates, re-admission rates, etc. To be an effectivenegotiator, you also need to under-stand the issues and trends for thepatients you treat for any individualpayer, as well as how they are perform-ing as a contracted agent of yours—their payment and service patterns.

Referral and Market TrendsHealthcare affiliations and merg-

ers discussions are moving forward ata rapid rate, whether or not theyactually materialize. Primary carephysicians are being heavily target-ed. More than one oncology practicehas suddenly found its referral pat-terns change overnight as corporateloyalties shift with these affiliationand merger discussions. Payers andhospital disagreements can alsoaffect your patient base. Stayingaware of the market trends is a keyelement of your overall group strate-gy and directly touches on your con-tracting and financial situations.

Payer OncologyManagement Policies

Every day, external vendors arecalling on payers with programsdesigned to control the costs of

oncology care. Some will reach outto cancer centers and physicians inthe process, most will not. Payers arenot immune to these vendors, be -cause every payer is sensitive to theneed for reduction in variation ofcare, reduction of costs, and provingthat the dollars they are paying forcare are being spent wisely and effi-ciently. Every payer has a differentfocus and set of top issues and con-cerns. Most are waiting for physi-cians to be proactive and bring sug-gestions/program options to them,but will not wait for long.

Unfortunately, if they are lookingat such strategies, many payers andphysicians make the mistake ofaccepting one solution brought tothem by one vendor (with its ownagenda), and struggle to make thatsolution fit their market (which oftenleads to frustration and failure).

True collaboration and jointoncology strategy will entail a jour-ney together, and probably integrateseveral tools, projects, and vendorsolutions along the way. Take thetime to listen, learn, and becometruly collaborative (not just withpayers, but with other cancer centersin the market) on quality issues forthe most productive and successfulsolution in the long run.

Payer strategies are essential andcut to the very lifeblood and exis-tence of a cancer center. The bestcare cannot be delivered for longwithout payment, and understandingnot only the terms and limitations ofpayer contracts, but also the key peo-ple and directions of the payers them-selves is the most effective payer strat-egy for any cancer center. l

Dawn Holcombe is President of DGHConsulting, which provides consulting andspeaking services to practices, pharma, andpayers in strategy development, MD/payernegotiations and relationships, and oncolo-gy management and pathways.

Forewarned Is Forearmed…Continued from the cover

Drug Coding & Pricing Guide


Medications Used for the Treatment of Colorectal CancerColon cancer forms in the tissues of thecolon (the longest part of the large intes-tine). Most colon cancers are adenocarcino-mas (cancers that begin in cells that makeand release mucus and other fluids). Rectalcancer forms in the tissues of the rectum(the last several inches of the large intestineclosest to the anus). The following sectionswill assist healthcare professionals and pay-ers by providing appropriate coding andbilling information associated with the man-agement of colorectal cancers.

The following sections include:• Associated ICD-9-CM codes used for

the classification of colorectal cancer• Drugs that have been FDA-approved

in the treatment of colorectal cancer• Drugs that are Compendia listed for

off-label use for colorectal cancerbased on clinical studies that suggestbeneficial use in some cases. Pleasenote: if a check mark appears in theFDA column it will NOT appear inthe Compendia off-label use column

• Corresponding HCPCS/CPT® codesand code descriptions

• Most recent ASP plus 6% (Medicareallowable), if applicable

• Current Code Price (AWP-based pricing)

• Possible CPT® Administration Codesfor each medication

Associated ICD-9-CM Codes Used for Colorectal Cancer153 Malignant neoplasm of colon

excludes: benign carcinoid tumor of colon (209.50-209.56)malignant carcinoid tumor of colon (209.10-209.16)

153.0 Hepatic flexure153.1 Transverse colon153.2 Descending colon

Left colon153.3 Sigmoid colon

Sigmoid (flexure)excludes: rectosigmoid function (154.0)

153.4 CecumIleocecal valve

153.5 Appendix153.6 Ascending colon

Right colon153.7 Splenic flexure153.8 Other specified sites of large intestine

Malignant neoplasm of contiguous or overlapping sites of colon whose point of origin cannot be determined

excludes: ileocecal valve (153.4)rectosigmoid junction (154.0)

153.9 Colon, unspecifiedLarge intestine, not otherwise specified

154 Malignant neoplasm of rectum, rectosigmoid junction, and anus

excludes: benign carcinoid tumor of rectum (209.57)malignant carcinoid tumor of rectum (209.17)

154.0 Rectosigmoid junctionColon with rectumRectosigmoid (colon)

154.1 RectumRectal ampulla

154.8 OtherAnorectumCloacogenic zoneMalignant neoplasm of contiguous or overlapping sites of rectum, ectosigmoid junction, and anus whose point of origin cannot be determined

Supplied by: RJ Health Systems



Compendia Current MedicareFDA- listed off-label code price allowableapproved use for (AWP- (ASP + 6%), CPT ®

generic (Brand) HCPCS code: for colorectal colorectal based effective administrationname code description cancer cancera pricing) 4/1/11-6/30/11 codes

bevacizumab J9035: injection, ✓ $70.04 $59.84 96413, 96415(Avastin) bevacizumab, 10 mgcapecitabine J8520: capecitabine, ✓ $8.95 $6.94 N/A(Xeloda) oral, 150 mgcapecitabine J8521: capecitabine, ✓ $29.83 $22.92 N/A(Xeloda) oral, 500 mgcarmustine J9050: injection, ✓ $205.69 $175.88 96413, 96415(BiCNU) carmustine, 100 mgcetuximab J9055: injection, ✓ $58.46 $50.47 96413, 96415(Erbitux) cetuximab, 10 mgcisplatin J9060: injection, cisplatin, ✓ $4.33 $2.07 96409, 96413, (Platinol AQ) powder or solution, 96415

per 10 mgdoxorubicin J9000: injection, ✓ $13.20 $3.50 96409(Adriamycin) doxorubicin hydrochloride,

10 mgfloxuridine J9200: injection, ✓ $121.06 $37.30 96422, 96423,(FUDR) floxuridine, 500 mg 96425fluorouracil J9190: injection, ✓ $3.37 $1.54 96409(Adrucil) fluorouracil, 500 mgirinotecan J9206: injection, ✓ $31.48 $5.00 96413, 96415(Camptosar) irinotecan, 20 mgleucovorin calcium J0640: injection, ✓ $3.60 $1.18 96372, 96374, (Wellcovorin) leucovorin calcium, 96409

per 50 mglevoleucovorin calcium J0641: injection, ✓ $2.12 $1.80 96365, 96366(Fusilev) levoleucovorin calcium,

0.5 mglomustine J8999b: prescription drug, ✓ NDC NDC N/A(CeeNu) oral, chemotherapeutic, level level

not otherwise specified pricing pricinglomustine S0178: lomustine, ✓ $10.59 S0178: not N/A(CeeNu) oral, 10 mg payable by

Medicaremethotrexate J9250: methotrexate ✓ $0.30 $0.19 96372, 96374,sodium sodium, 5 mg 96401, 96409,

96450methotrexate J9260: methotrexate ✓ $2.95 $1.91 96372, 96374,sodium sodium, 50 mg 96401, 96409,

96450mitomycin J9280: mitomycin, ✓ $67.20 $20.76 96409(Mutamycin) 5 mg




Compendia Current MedicareFDA- listed off-label code price allowableapproved use for (AWP- (ASP + 6%), CPT ®

generic (Brand) HCPCS code: for colorectal colorectal based effective administrationname code description cancer cancera pricing) 4/1/11-6/30/11 codes

mitoxantrone J9293: injection, ✓ $106.50 $34.60 96409, 96413(Novantrone) mitoxantrone

hydrochloride, per 5 mgoxaliplatin J9263: injection, ✓ $11.89 $8.52 96413, 96415(Eloxatin) oxaliplatin, 0.5 mgpanitumumab J9303: injection, ✓ $101.85 $87.26 96413, 96415 (Vectibix) panitumumab, 10 mgpemetrexed J9305: injection, ✓ $62.70 $52.35 96409(Alimta) pemetrexed, 10 mgtopotecan J8705: topotecan, ✓ $89.73 $77.13 N/A(Hycamtin) oral, 0.25 mgtopotecan J9351: injection topotecan, ✓ $20.41 $19.67 96413(Hycamtin) 0.1 mgvinCRIStine J9370: vincristine sulfate, ✓ $5.83 $4.00 96409(Vincasar) 1 mg

aCompendia references available upon request.bWhen billing a nonclassified medication using a CMS 1500 claim form you must include both the HCPCS code (ie, J8999 for CeeNu) in Column 24D and the drugname, strength, and National Drug Code (NDC) in Box 19 to ensure appropriate reimbursement.

ReferencesHCPCS Level II Expert, 2011 • Current Procedural Terminology (CPT®), 2011 (CPT® copyright © 2011 American Medical Association. All rights reserved. CPT® is a registered trademark of the American Medical Association) • ICD-9-CM for Professionals Volumes 1 & 2, 2011 • FDA-approved indication (from product’s prescribinginformation) • National Cancer Institute® • www.ReimbursementCodes.com powered by RJ Health Systems International, LLC, Wethersfield, Connecticut • CMS (Centers for Medicare & Medicaid Services), Medicare Allowable 2nd Quarter 2011 (effective dates: 4/1/11-6/30/11).

Prices listed herein are effective as of April 1, 2011.

ASP indicates average sales price; AWP, average wholesale price; CMS, Centers for Medicare & Medicaid Services; CPT, Current Procedural Terminology; FDA, US Food and Drug Administration; HCPCS, Healthcare Common Procedure Coding System; NDC, National Drug Code.

PO BOX 290616, Wethersfield, CT 06109 T: (860) 563-1223 • F: (860) 563-1650 • www.RJHealthSystems.com

This information was supplied by:



Exit Strategies

2Physician compensation. Theappropriate compensation plan

aims to strike a balance among pro-ductivity, service, and quality. Phy -sicians should expect the hospital torely on historical performance dataand on survey data to determine anFMV compensation range. There canbe variability de pending on the attrib-utes of the practice and the marketthe practice serves. Most compensa-tion plans are heavily weightedtoward performance and based on thenumber of work relative value unitsgenerated by a physician as well asperformance on quality incentives.

3Transition to a hospital-basedsetting. Because hospitals may

receive higher reimbursement for thesame infusion and ancillary servicesprovided in a physician office, it islikely that hospital management willwant to either convert the practice tohospital outpatient space or relocateinfusion services to the hospital. Thepotential in upside reimbursementmakes this concept an integral com-

ponent to the discussions surround-ing the deal. Both hospitals andphysicians will benefit from an eval-uation that understands the impactto the service line of transitioningoncology services from office-basedto provider-based. In addition to bet-ter payment structures, hospital pur-chasing constructs may allow theseservices to realize lower costs relatedto drug acquisition. Al though aprovider-based setting can generate a higher combined reimbursementfrom Medicare and certain commer-cial payers, there are several opera-tional changes that should be consid-ered. These considerations include,but are not limited to:• Greater billing complexities and

potential inefficiencies, becauseof integration of billing functionsand services

• Potentially higher out-of-pocketpayments from Medicare patients

• Potentially higher practice costs,related to additional staffing andfacility upgrades.

Because of the considerable impactto revenues and operations, evaluat-ing the significance of a transition toa hospital-based service should beincluded in initial discussions.

4Exit strategy. Although the goalis to establish an affiliation that

is both scalable and sustainable, anydeal should be structured with theability to unwind the arrangement.As such, some oncologists begin witha professional services agreement.

Although physicians may preferoptions other than full employment,they should expect continued finan-cial instability in an independentpractice, which can be mitigatedunder an integrated approach.When and if the prospect of an exitstrategy becomes necessary, the exitstrategy should be well thought outand subject to rules, procedures, anda valuation methodology that hasbeen mutually agreed upon by bothparties. The following are recom-mended guidelines:• Rules—Define the parameters that

allow both parties to relinquishinterest in the alliance

• Procedures—Outline the approachfor parties interested in relinquish-ing their interest

• Valuation—Outline the methodol-ogy to determine the values andsubsequent remuneration of theexiting parties.

ConclusionA deal will be defined not only by

the negotiated payment levels but thestrategic and operational priorities ofboth partners. Oncology practicesshould realize the advantages of vari-ous alignment tactics with hospitalsand seek to develop relationships thatare sustainable and successful. l

Jessica L. Turgon is Senior Managerand Malita I. Scott is Manager, ECGManagement Consultants, which pro-vides business and strategy solutions forhealthcare organizations.

Figure. Level of Integration with Various Alignment Models

Medicaldirectorship

Practicemanagement

serviceorganization

Jointventure

Comanagementarrangement

Physicianenterprise

Professional andmanagement

services agreement

Professional services

agreementFull employment

Looselyintegrated

Tightlyintegrated

Degree of hospital/physician

integration

Preparing for Successful Alignment…Continued from the cover

Malita I. ScottJessica L. Turgon


Hospital-Based Cancer Centers

Creating a successful hospital-based cancer cen ter re quiresmedical and radia tion oncol-

ogists to col la borate with the hos pital.But how to partner to create a finan-cially viable cancer cen ter while stay-ing in line with myriad regulatorylaws that affect such arrangements?

1Hospital employs med ical and ra -diation oncologists. Hospital cre-

ates an on- or off-campus cancercenter that may be provider-basedand employs the oncologists to pro-vide services to the center. Thisoption presents little risk for the hos-pital; however, it may not be themost attractive to the oncologists.

2Hospital-oncologists clinicaljoint venture. Hospital and radi-

ation oncologists partner to create afreestanding cancer center.

Medical oncologists are excludedfrom such a venture because of theStark regulations. The venture couldstill involve medical oncologiststhrough equipment leasing, medicaldirectorships, and/or a managementservices relationship.

Under the federal and state anti-kickback stat utes, ownership may beopen to scrutiny given the ability ofthe hospital and oncologists to gen-erate business for and refer patientsto the cancer center.

3Hospital-oncologists nonclinicaljoint venture. Medical and radi-

ation oncologists form a manage-ment services organization (MSO)to provide management ser vices andlease equipment, space, and nonpro-fessional staff to the hospital’s on- oroff-campus cancer center.

Due to constraints under theStark law, the MSO cannot actually

“perform” the radiation therapy andother cancer-related services. Thehospital must exercise professionalcontrol over the services and per-form other functions to ensure thatit is clear that, although the hospitalmay be contracting with the MSOfor certain functions, it is the hospi-tal itself operating the cancer centerand providing the services.

Payments to the MSO need to bestructured to comply with applicablelaw. The management fee could be apercentage of collections, and lease

fees would likely need to be flat dol-lar amounts that are consistent withfair market value and not be basedon a percentage of revenues or a per-use basis in the case of the leases.

4Hospital-branded cancer center.Hos pital and oncologists remain

separate in providing their respec-tive services, but collaborate on mar-keting and “branding” all of theirservices under the auspices of a can-cer center. This model works partic-ularly well with a hospital with awell-known reputation.

A number of federal and state lawsand regulations may impact any pro-posed arrangement discussed, includ-ing the federal antikickback statuteand state antikickback laws, the Starklaw and state versions of such law,state certificate of need regulations,corporate practice of medicine laws,and state licensure laws and regula-tions. In addition, ownership struc-ture and governance issues will needto be carefully considered.

What You Can Do• Assess current oncology market

in the community. Are therealready large, established groups,or are there a few smaller groups?What makes the most sense interms of the community—a hos-pital-based cancer center or afreestanding clinical or nonclini-cal joint venture entity?

• Analyze proposed structure underapplicable laws and regulations toidentify potential legal hurdles.

• Keep abreast of additional regula-tory changes that may impact thecancer center in the develop-ment phase and thereafter. Beprepared to modify arrangementsas needed. l

Sharron Swann and Sarah Fink areattorneys at Swann & Waddill, a lawfirm in Austin, Texas, that focuses onhealthcare-related legal matters.

Sarah Fink, JDSharron Swann, JD

Medical and radiationoncologists form amanagement servicesorganization to provide managementservices and leaseequipment, space, andnonprofessional staff tothe hospital’s on- or off-campus cancer center.

Hospital-Based Cancer CentersTaking the Right Steps Toward Successful CollaborationBy Sharron Swann, JD; Sarah Fink, JD


Long gone arethe uncom-plicated days

of private oncologypractice operations.Privately practicingphysicians now facemajor decisions aboutthe structure withinwhich they will prac-tice medicine.

Mergers are anopportunity to create

the critical mass needed for the now larger practice to leverage oper-ating costs properly and maintaincompetitive physician compensationlevels for physician owners who donot see hospital employment as aviable option.

Market share is a primary driver forinvestigating practice mergers. Phy -sicians of all specialties need marketshare for a flourishing private practice.Market share provides for access tomore patients, which is the foundationfor growth and financial success.

The ChallengeMergers are challenging because

there is no single template for ensur-ing the process is a success. Many

experts will tell you, “If you’ve seenone merger, then you’ve seen onemerger.” The legal, accounting, tax,and financial aspects of a merger arecomparatively easy to negotiate by theprofessionals engaged to get the dealdone. The challenging aspects of amerger are subjective and rely moreon physician involvement and leader-ship than the technical prowess ofaccountants, lawyers, and consultants.

With the proper physician leader-ship in place, the advantages ofmerging are clear and plenty.

• Control one’s destiny• Capture, retain, or build market

share• Create and maintain leverage on

different levels with payers andhospital systems

• Build or expand service lines ornew ancillary services

• Subspecialize• Address and solve common pri-

vate practice problems: staffingallocation, recruiting, manage-ment, and IT/electronic medicalrecord issues

• Leverage with economies of scale• In administration—ability to

hire the “best of the best” inpractice management, billing

and coding, and IT• In clinical services• In ancillary services• In use of space and in rent costs

• Establish high quality-of-carestandards and best practices

• Create assets: real estate (ownedoffice space), captive insurancecompany as a tax-advantagedsavings- and risk-managementvehicle.

Physician practice mergers canmaintain a private practice modelwhile creating a true professionallyrun business. If done properly, it willgive you all the perceived advan-tages of hospital employment whileretaining your independence andopportunities to make more money—not to mention the ability to stay incontrol of your destiny.

Factors of SuccessA practice merger will only suc-

ceed if it involves physician mem-bers of like mind, common purpose,and aligned vision. It must have oneor more champions for the cause orthe deal will die an early death fromfatigue or lack of direction. Mergerssucceed and fail for a variety of rea-sons, all unrelated to the strength orweakness of professional advisors.These are mostly process-driven andsubjective factors (Table).

If practice merger is the road ofchoice, recognize it is the road lesstraveled. But in the end, if successful-ly done, it can make all the differencein providing the highest level of pro-fessional job satisfaction possible. l

Stephen F. Schulz is a partner atMountjoy Chilton Medley, where heprovides broad-based practice manage-ment consulting services for physicianpractices.

Practice Mergers

Practice MergersThe Subjective Factors for Success…or FailureBy Stephen F. Schulz, CPA, CMPE

Stephen F. Schulz, CPA, CMPE

Table. Subjective Factors of Success or Failure

Factors of Success Factors of FailureCommitment to vision Lack of championCommitment to process Deal fatigueCommitment to time Not investing the time to finish the dealManage expectations Unrealistic goalsManage communication Poor communicationWork around obstacles Allow distractions and obstacles

to dominateGood of the whole in favor Good of a few overshadow the good of of the few the whole


With preparation, you cannegotiate favorable reim-bursement from man aged

care and other contracted payers. Todo so, you will need to develop acontracting strategy be fore eachnegotiation.

1It is a negotiation; leave theadversarial relationship at the

door. Negotiation is defined as a give-and-take process between parties,each with its aims and needs, seekingto discover a common ground andreach an agreement. The negotiationprocess should be fair to all parties.

2Prepare for negotiation. Make alist of contracting issues and in-

clude the items you must have, theitems you would like to have if possi-ble, and the items you are willing togive up. For the contracting experi-ence to be successful, both partiesmust leave satisfied with the final-ized contract.

3Be a partner. Demonstrate to thepayer how your practice can help

it meet its needs with the patientpopulation. Provide information onvalue-added services offered by yourorganization, such as clinical trials,disease management, and palliativecare. Emphasize relationships withother providers in the same networkwho ensure their patients get all nec-essary services in a cost-effectivemanner. In addition, if you have cut-ting-edge technology or a desirablelocation, emphasize those benefits.

4Compile organized data. Quantifythe number of medical necessity

denials or bundling rejections fromthis payer, and what each type ofdenial has cost your practice or facili-

ty. Develop statistics on the numberof repeat patients, results of patientsatisfaction surveys, aggregate pay-ment amounts, and any other statisti-cal information that supports yourcase for increased reimbursement.Remember the golden rule of data:He who has the data, rules.

5Emphasize quality. Analyze andcompile utilizations and out-

comes data to use for leverage duringcontract negotiations (eg, cost perpatient by diagnosis code). Mostmanaged care payers try to reimburseall their network providers at thesame rate schedule, which may be apercentage of the Medicare Phy -sician Fee Schedule or based onAmerica’s Health Insurance Plansdata. If you can present data showingthat your practice or facility is alower cost provider with the same orbetter clinical outcomes than otherproviders of the same medical spe-cialty on its preferred provider panel,the managed care plan may considera rate increase.

6Seek clarity. The negotiationprocess is the time to ensure that

all terms are defined adequately,including the use of bundling soft-ware, preauthorization requirements,refunds, penalties, and other con-tracting issues. Eliminate any amb ig -uous language or confusing clausesduring the negotiation process.

7Little things. Look for apparentlyminor contractual issues that may

cost your practice money over time;for example, a clause that requiresthe practice to pay for copyingrecords when the insurance compa-ny requests a medical record review.

8Maintain balance.Try not to negoti-

ate contracts thatplace all or most ofyour patients with 1or 2 managed careplans. You will needto protect your prac-tice against a majordispute or failure ofone plan costing the practice most ofits revenue.

9Have an “out.” One of the bestcontracting tools is a termination

clause. For example, negotiate a 90-day contract termination option, sothat if the practice starts losing a sig-nificant amount of money on thissegment of the patient population,the contract can be terminated in areasonable time frame.

10Be oncology-specific. Althoughnegotiations should never

focus exclusively on payments, makecertain to review specific issues relat-ed to oncology services, such as thepayer’s formulary, off-label drug userequirements, payments for drugwaste, medical necessity, and theappeals process.

11It is a relationship. After nego -tiations, be the best contract

partner possible. Monitor publica-tions from the managed care plan,communicate with your providerrelations representative, and stayabreast of any changes. l

Cindy Parman is Principal, CSICoding Strategies, Inc, which providesauditing, education, and reference toolsfor outpatient coding and other consult-ing services for specialty coding andcompliance.

Managed Care Contracting

Cindy C. Parman, COC,CPC-H, RCC

Negotiate Your Way to Higher ReimbursementsThe Relationship between Provider and PayerBy Cindy C. Parman, CPC, CPC-H, RCC

I ONCOLOGY PRACTICE MANAGEMENT I April 2011 I Special Edition18

Integration Case Study

In October 2010, GainesvilleHem atology Oncology Associates(GHOA) joined Florida Cancer

Specialists & Research Institute(FCSRI), a larger, privately ownedhematology/on cology regional prac-tice. The merger established FCSRI’spresence in the Gainesville area, and offered expanded benefits to the GHOA physicians already atthat location. This article describesthe processes involved in creatingthis mutually beneficial opportunityfor both practices and the patientsthey serve.

The OptionsWanting to position the practice

for future growth, GHOA researcheda number of potential practice mod-els, including affiliating with the localhospital, joining other oncologygroups, and remaining a small, 5-physician practice. “We came tobelieve that joining a strong groupwith a lot of know-how, specifically inoncology, would be more beneficialfor us and our patients than joining ahospital,” explained Lucio Gordan,MD, a medical oncologist in theGainesville office. Associates at bothpractices had conversed informallyover the years at medical conferencesand oncology society meetings, whichultimately led to FCSRI being identi-fied as the ideal group with which toaffiliate.

Meanwhile, FCSRI was in searchof strategic ways to expand their serv-ices. “We had been looking to growthe group where there were goodopportunities,” said William N.Harwin, MD, a medical oncologist inFt. Myers and president of FCSRI.“Gainesville had a very strong group

and strategy, as well as a strong pres-ence in the market, which fit wellwith our business model.”

The StepsDuring initial meetings, FCSRI

explained the components of its cor-porate business model: operationalstrategies, management structure,and the financial aspects of physicianremuneration, including partnershipand voting rights. Dr Harwin andBrad Prechtl, CEO of FCSRI, alsovisited the practice in Gainesville.According to Dr Harwin, this notonly provided the opportunity “tosee the doctors in operation in theiroffice,” but also furthered develop-ment of the “trustworthy personalrelationship” needed for long-termsuccess.

Physicians in both practices agreedthat trust, along with a transparentprocess, was essential. Together, theydeveloped a template for their agree-ment before involving legal represen-tatives to finalize the deal, noted Dr Gordan.

The ChallengesDuring the merger process, the

groups were faced with several hur-dles. “Working through the emo-tions of transforming from a smallpractice to a large organization andinstilling a level of trust and confi-dence was paramount to the successof the merger,” explained Prechtl.Another challenge was how toreduce the number of staff at theGainesville office. “A selectionprocess was instituted to determinewho would be the best fit in theFCSRI model,” said Dr Gordan.

Merging the 2 electronic health

record (EHR) systems was also nosmall feat, because the 2 systemscould not be seamlessly integrated.This necessitated manual data trans-fer, which took over 3 months tocomplete. After that task was accom-plished, the staff in Gainesville had tobe trained on the new EHR systemand become comfortable using it.

The Payoff“In our overall business model,

there are a lot of benefits from eco n -omies of scale,” said Prechtl. “Theseinclude advantages in pharmaceuticalpurchasing, new business opportuni-ties, a supplementary in-house phar-macy practice, and favorable con-tracts with payers, to name a few.”

However, the benefits derivedfrom the merger extend well beyondbusiness matters. As a combinedpractice group, the physicians inGainesville have improved manyaspects of their patients’ care. Forexample, they now are able to servemore patients because the chemo -therapy unit is in the same location asthe clinic. In addition, the new EHRsystem has enhanced communicationwith referring physicians; and accessto clinical trials will soon expandbecause of FCSRI’s thriving researchprogram and association with theSarah Cannon Research Institute,one of the largest community-basedclinical trial organizations in thenation.

“As a part of the Florida CancerSpecialists network, we have becomequite a lot stronger here in Gaines -ville,” said Dr Gordan in summing up the advantages of the merger, “and I think FCSRI has benefited, as well.” l

Florida Cancer Specialists & Research InstituteMerging in Private PracticeBy Dawn Lagrosa

Medication Access Support.A cancer diagnosis presents many challenges for your patients— and for those who love and care for them. That’s why PatientOne offers reimbursement support and financial assistance for eligible patients who are prescribed Lilly Oncology products. It’s the kind of support that can make access to medication easier—and make a difference in the lives of your patients.

To learn more, visit www.LillyPatientOne.com or call 1-866-4PatOne (1-866-472-8663).

Your goal is to give him a cancer treatment that’s right for him.

When you choose a Lilly Oncology product, our goal is to make sure he has access to it.

Patient Assistance I Insurance Expertise I Claims AppealsMG69852 02/11PRINTED IN USA © 2011, Lilly USA, LLC. ALL RIGHTS RESERVED.

Implementation Checklist: Collaboration

q Assess the oncology market in your community

q Evaluate your current organization

q Envision the future organization

q Research the alignment options and determine which will work with your business goals

q Consider diversification into oral dispensing, durable medical equipment, clinical trials, occupational therapy, laboratory analysis, imaging, or pain management

q Explore business partner options for physicians with similar goals and alignment vision

q Identify a physician champion for the proposed new entity

q Prepare your financial information for review and negotiation

q Define your exit strategy

q Consult an attorney to ensure any new venture is in line with Stark and other regulations

April 2011, Vol 1, No 1For detailed articles on Collaboration, visit


Implementation Checklist: Payer Contracting

q Study the national trends in oncology reimbursement

q Know the terms and deadlines of your payer contracts

q Identify your must-have items, your like-to-have items, and the items you can give up

q Prepare your patient activity profile for each of your payers

q Ready information on your value-added services

q List your relationships with other providers in each payer’s network

q Develop statistics on your cost of medically necessary denials

q Compile utilizations and outcomes data

q Plan to include a termination policy

April 2011, Vol 1, No 1For detailed articles on Payer Contracting, visit


april 2011, no 1, vol 1

Documents

oncology care ispaid

cancer careteammedical

financial statements

andmitigating financial

host of financial

physician integration

physician practices

medi care