My payor contract doesn’t include Specialty…why?

A large healthcare system in Northern California recently asked the Specialty Sage,”Do I have to renegotiate my commercial payor contract now that we are opening a specialty pharmacy?” The short answer is yes and it is not easy.

Hospital-owned, integrated and managed specialty pharmacy is one of the most effective ways hospitals have to improve patient care post-discharge. “Pharmacy Today”, an official publication of the American Pharmacist Association, says that “[adherence strategies]are the linchpin of specialty pharmacy and the driving force behind improving patient care and satisfaction.” What better place to get care then the hospital, right? Then why do commercial payors exclude or “carve out” specialty?

If patients get better care, then it is reasonable to believe that readmission to the hospital system would go down. If readmission to the hospital goes down then it is reasonable to believe that adherence to prescribed specialty drugs may be a factor. This means there’s a more effective use of the drug regimen and avoidance of other factors that may complicate patient care resulting in a lower cost of care with better patient outcomes. Why would a payor negotiate specialty separately?

Now that I have asked twice, here is a great RA patient blog post that makes this issue come to life. Basically, this patient’s insurer forces her to fill at a particular specialty pharmacy. The care she receives isn’t meeting her needs and she is left without any choices. Why would the payor do this?

Let’s ask the question differently – if payors believe that care through the hospital produces better outcomes then why would they be difficult about including specialty pharmacy in their contracts? This is an issue touched on in a previous Specialty Sage post here.

Let’s use another analogy – let’s say that you are buying a new construction home.  Your new home was built by a reputable builder that believes in quality and craftsmanship. The builder happens to also have a realtor associated with them and a lawyer that can draw up the papers.  Although convenient and not illegal, it does beg the question as to why everyone is employed or associated with the builder. Of course the builder wants to sell as many houses as they can and retain as  much of the revenue for themselves.  This is called vertical integration.  It happens in most industries and it has already happened in healthcare.

You, the healthcare system, want to give better, more cost effective care and retain revenues. The smart folks at the payors want to retain revenues as well. This now makes you, the healthcare system and the payor competitors. So, what is the best way to get access to those patients?

The short answer is to look at the entire contract. The long answer is make sure that you have an expert on your side.

Contact me at with your solutions and feedback – all my posts come from you the readers!








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