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Payer Strategies

April 2011, Vol 1, No 1
Dawn Holcombe, MBA, FACMPE, ACHE
President, DGH Consulting, South Windsor, CT

Half or more of oncology care is paid by payers other than Medicare or Medicaid. Does your cancer center have a defined strategy for communications, contracting, and program development with these payers?

Defining Payer Strategies

  • Are all my contracts in one place and easily accessible?
  • Do I know the expiration and renegotiation deadlines for each of my payers, and do I have prompts to remind me to meet those deadlines with change requests and new expectations?
  • Do I know what my patient volume is for each payer? • Do I know my denial rates and profiles for each payer?
  • Do I know my patient demographics and net charges, costs, and profit/loss for each payer?
  • Do I know the medical directors, pharmacy directors, physician relations/contracting staff for each significant payer and their contact information?
  • Am I tracking my referral sources for each significant (more than 5% of your net revenue) payer, and noting any changes (which includes market organizational changes and affiliations/mergers)?
  • Am I aware of the oncology management policies (not just medical policy but also oversight, prior authorization, pricing patterns, and depth of utilization management and focus on oncology issues and costs) for each significant payer?
  • Have I talked to the medical or pharmacy director about oncology management policy (not individual patient claim issues) in the past 6 months?
  • Am I aware of the vendors who are calling on payers regarding oncology management solutions, and how those programs would affect my cancer center?

A negative response to any of these questions would indicate that your cancer center is at risk for significant unanticipated adverse events occurring that could affect daily operations. There are a number of ways to reduce that risk—which will position your group for better negotiations and make it easier to be proactive in your payer relationships.


The terms of your payer contract are explicit. They govern the timing and changes generated by either you or the payer. There is a finite period of time and degree of notice that has been negotiated in these terms, and you can be sure that the payers are tracking those terms very closely. If you don’t have ready access to your contracts, and do not watch the deadlines, it is likely that you will miss activity by payers outside of those contract boundaries, or your own chance to present changes before expiration/renewal dates.

Patient Activity Profiling
Payers know to the penny what their costs are for every patient you touch. Payers regularly profile your volume, costs, admission rates, readmission rates, etc. To be an effective negotiator, you also need to understand the issues and trends for the patients you treat for any individual payer, as well as how they are performing as a contracted agent of yours— their payment and service patterns.

Referral and Market Trends

Healthcare affiliations and mergers discussions are moving forward at a rapid rate, whether or not they actually materialize. Primary care physicians are being heavily targeted. More than one oncology practice has suddenly found its referral patterns change overnight as corporate loyalties shift with these affiliation and merger discussions. Payers and hospital disagreements can also affect your patient base. Staying aware of the market trends is a key element of your overall group strategy and directly touches on your contracting and financial situations.

Payer Oncology Management Policies

Every day, external vendors are calling on payers with programs designed to control the costs of oncology care. Some will reach out to cancer centers and physicians in the process, most will not. Payers are not immune to these vendors, because every payer is sensitive to the need for reduction in variation of care, reduction of costs, and proving that the dollars they are paying for care are being spent wisely and efficiently. Every payer has a different focus and set of top issues and concerns. Most are waiting for physicians to be proactive and bring suggestions/ program options to them, but will not wait for long.

Unfortunately, if they are looking at such strategies, many payers and physicians make the mistake of accepting one solution brought to them by one vendor (with its own agenda), and struggle to make that solution fit their market (which often leads to frustration and failure).

True collaboration and joint oncology strategy will entail a journey together, and probably integrate several tools, projects, and vendor solutions along the way. Take the time to listen, learn, and become truly collaborative (not just with payers, but with other cancer centers in the market) on quality issues for the most productive and successful solution in the long run.

Payer strategies are essential and cut to the very lifeblood and existence of a cancer center. The best care cannot be delivered for long without payment, and understanding not only the terms and limitations of payer contracts, but also the key people and directions of the payers themselves is the most effective payer strategy for any cancer center. 

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