Kaiser Responds to Association’s Concerns

Oakland, Calif.

Negotiations on the provisions of a controversial contract between Coloplast and Northern California’s breast care retailers have come to an end, according to Kaiser Permanente, the health insurer that orchestrated the contract. Now the retailers must decide, before March 1, 2003, whether to sign the contract or lose the privilege of serving Kaiser beneficiaries. While some retailers, including members of the newly formed American Association of Breast Care Specialists, still are not satisfied with the contract’s terms, Kaiser insists the contract is fair, comprehensive and good for both retailers and beneficiaries.

Under the terms of the contract, Coloplast serves as the middle man between retailers and Kaiser, consolidating billing, ensuring the retailers meet quality standards and processing payments using the HCFA 1500 form.

Built on the foundations of a contract that has existed in Southern California for five years, this “new and improved” contract features a wider product selection and a choice of payment methods, says Patricia Tanquary, director of national continuing care contracting for Kaiser. “We have increased the choice from one manufacturer’s products to seven major manufacturers’ products,” she said, explaining that the reimbursement list now represents 95 percent of all mastectomy products currently offered in the United States. The contract also allows retailers to choose whether to receive typical reimbursement payments or to receive a Coloplast credit.

While it improves on the contract that Kaiser first presented to Northern California retailers, the new contract does not go far enough to protect the retailers’ proprietary information and their autonomy as business owners, according to Patricia McMahon, vice president of AABCS. “We should not have to turn over our confidential client information to Coloplast, a company that is both a manufacturer and a competitor,” she said. “This contract is really eroding our profit margin. You need to be able to control your own profit margin in order to stay in business.”

But Tanquary sees these arguments as “unfortunate misunderstandings.” Not only does the contract include language that prohibits Coloplast from competing with direct sales in the U.S., but it also ensures the protection of sensitive information. “Kaiser has set the rates,” she said. “There is no sharing of any confidential pricing information.”

Tanquary insists that Kaiser must protect its beneficiaries from potential abuses. “Medicare has not developed HCPC codes that match all of the different [breast care] items,” she explained. “Our members are not always protected from a retailer who may purchase a low-end product from a manufacturer and sell it to a patient at the high Medicare allowable rate.”

Southern California retailers have reported satisfaction with the setup, Tanquary continued.

One such retailer is James Kempthorne, president of Riverside, Calif.-based American Home Health Care. “Part of me is a little dumbfounded by this resistance from small independents [in Northern California],” he said. “This is a good contract. The program is successful, with a favorable track record.” In fact, Kempthorne wishes that reimbursements for other DME products were as fair as he believes Kaiser’s are for breast care products.

While not as glowing in her endorsement of the new arrangement as is Kempthorne, Linda Reib, owner of Enhance by Linda Reib, in Sacramento, Calif., said she always has intended to sign the contract. “I’ve had an excellent relationship with Kaiser, and my goal is to keep that relationship,” she said.

Nonetheless, Reib admits that the contract’s opponents have made significant headway in addressing less-desirable provisions. “I see the association as a positive, because they have been able to affect some changes with this contract,” she said. “AABCS brought issues to the table, and Kaiser was smart enough to recognize they could keep good vendors.”

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