Take aim at increased profits with niche diseases

Capitated contracts benefit your agency, patients

Managed care and capitated contracts don’t have to be a lesson in frustration for home infusion agencies. MCOs often want one-stop shopping, something home infusion agencies rarely can provide. However, you don’t have to be left out in the cold. Success at landing such contracts often comes down to how you present your services and with whom. In fact, you may be wise to join forces with other home care providers and target a segment of the home care population that doesn’t even register on the radar screen of regional or national providers.

That’s exactly the course of action being taken by RenalCare of Louisiana (RCL), a New Orleans-based provider service network. Formed by the Nephrology Independent Physician Association of Louisiana (NIPA), RCL consists of eight nephrology practices and 20 nephrologists. RCL will bundle various services required by patients suffering from End Stage Renal Disease (ESRD), such as intra dialytic parenteral nutrition (IDPN) and offer these services to health care plans.

"We are providing a physician-driven integrated network, in which the doctors have developed certain guidelines and a care system," says Carrie McGinnis, RN, MBA, chief executive officer of Healthcare Design Specialists, LLC, which oversees the development, implementation, and ongoing management of RCL. "We’re going to payers and telling them the benefits."

McGinnis notes that the various services required by patients suffering from ESRD, such as nephrology, outpatient dialysis, outpatient laboratory and home infusion IDPN, can be bundled and offered to health care plans under an at-risk payment methodology. This creates an environment in which all providers with RCL share incentives through maximizing clinical outcomes at the lowest cost and identifying and managing problems early to prevent unnecessary use of high-cost clinical services.

McGinnis says RCL is looking for capitated contracts for a carve-out of defined ESRD services. For any given MCO, the number of ESRD patients likely will be rather small. She says some MCOs have 100 ESRD patients, while others may have as few as 25 or 30. That’s because, McGinnis says, Medicare is the primary payer for approximately 90% of ESRD patients across the United States. Because of the remaining small number of afflicted patients within any given health plan, End Stage Renal Disease, as a costly chronic disease, receives little attention from plan administrators.

By adopting the principles of chronic disease management and providing the most appropriate services in the most appropriate care setting to ESRD patients, McGinnis says the patients will receive the best care for their particular situations. In turn, this care will be covered by the MCO. Without such specified care, ESRD patients suffer.

"If nephrologists were allowed to manage the patient’s care as a primary care physician, I think there would be very good quality care," says Mary McNeely, MSRD, the dietitian for Renal Treatment Centers in St. Louis and the chair of the Council for Renal Nutrition for the National Kidney Foundation. "The problems I’ve seen are when an ESRD patient is in an HMO/managed care-type program, the nephrologist can’t order certain tests or procedures unless he goes through the other organization first."

In such situations, because everything must go through the primary care physician first, there can be gaps in care.

"The physician may have ordered a test, but the nephrologist may not ever get the results," says McNeely.

An effective, well-negotiated capitated contract can be a win-win situation, as the MCO pays out less for care of covered patients by allowing more timely and specific care, yet providers such as RCL will be reimbursed more than if they were taking care of patients on a single per-therapy basis.

"If we can bundle [IDPN] as a component of a capitated contract, we can provide nutritional support to ESRD patients suffering from severe malnutrition earlier and less expensively," says McGinnis. "Many patients need IDPN, but many MCOs have such strict requirements on when that is a reimbursable service."

By providing the treatment in a timely, appropriate fashion, patients are likely to be kept healthier than if IDPN is delayed or put off entirely.

"The incentive is that [MCO, patient, and physicians] work together and benefit," notes McGinnis. "The MCO, providers, and patient will benefit as a result of enhanced patient outcomes resulting in less hospitalization."

McGinnis notes that IDPN is a component of the ESRD carve-out that RCL presents to health plans. The key is for care providers and payers to understand which therapies have been historically utilized by this population before a sound capitated proposal can be defined.

"You’ve got to understand what services you provide and what you were reimbursed before you can calculate your cap rate," says McGinnis.

Granted, it is quite unique to negotiate capitated contracts to such a small segment of an MCO’s patient base as ESRD patients. But that is what makes the idea so attractive to MCOs.

"The intensive life-sustaining services required by ESRD patients make it a chronic illness that lends itself well to the concept of chronic disease management," she says. "That’s the message that RCL is presenting to payers."

She adds that focusing on chronic disease management requires a strong commitment from participating providers. The following steps are a must if any such provider network is to succeed in all facets of chronic disease management:

Define your purpose.

The mission of the network and the principles of care management must be clearly defined.

Do your homework.

Research the market thoroughly, and develop and define a bundle of services that participating network providers are willing to go at risk with the payer.

Keep the proper perspective.

"Realize that the purpose of the partnership between the payer, patient, and provider is to provide the most appropriate care in the most appropriate setting to promote patient wellness in an otherwise debilitative illness," says McGinnis. She notes that such capitated contracts warrant a partnership between all entities involved, a sharp contrast to the usual relationship between payers, patients, and providers.

McGinnis helped form a similar network in Arizona. The Renal Integrated Health Service Network was formed in 1995 as a joint venture between Arizona Kidney Disease & Hypertension Center, a nephrology practice, and National Medical Care. Although data is not yet available on its cost-effectiveness, since its inception, the center has signed two capitated carve-out contracts that are still in effect today, one of which includes IDPN.