FOR UROLOGISTS, PRACTICE MANAGERS, FINANCIAL COUNSELORS, AND REIMBURSEMENT SPECIALISTS™
VOLUME 3 • NUMBER 3
Bone Mineral Density Should Be Checked in All Hypogonadal Men
Urologists Partner with Medical Professional Liability Carriers to Navigate Increasing Operational Demands
By Rosemary Frei, MSc
recent retrospective study of 114 patients with hypogonadism has led to the conclusion that men with this condition should be screened with dual-energy x-ray absorptiometry (DEXA) for low bone mineral density (BMD). Almost half of the men who participated in this study with testosterone levels below 300 ng/dL were found in the retrospective chart review to have either osteopenia or osteoporosis.1 Presented at the American Society of Andrology’s 2014 Annual Meeting, the study examined BMD scans on patients with clinical hypogonadism. Participants presented with clinical symptoms as well as biochemical deficiencies. Hypogonadism among the older adult male populaContinued on page 4
By Jonathan McKenzie, Head of Captive Management, Alterna, LLC, Seattle, WA
ncreased operational costs coupled with decreased sources of revenue have created unprecedented fiscal pressures on the physician community;
practices of all types have renewed their focus on reducing costs and increasing efficiencies to stay ahead in the marketContinued on page 5
Bundled Payment Options Explored for BPH Patients By Ellen Martin
ractice managers gathered recently at the 11th Annual American Urological Association’s Practice Management Conference in Orlando to hear the presentation, “Concep tualizing a Bundled Payment for BPH Patients.” During the presentation, experts discussed the benefits of a bundled payment reimbursement model, as
well as details of how to arrive at a bundled payment value for an episode of benign prostatic hyperplasia (BPH). “One capability that everybody running a physician practice of any sort needs to know [is] how to do better cost accounting and more relevant cost accounting with regards to bundled Continued on page 6
T EN EM ut G P A to ...14 N A hereNow M :W y
©2014 Engage Healthcare Communications, LLC
H g e LT estin Mon EA v ur W In Yo
FOR UROLOGISTS, PRACTICE MANAGERS, FINANCIAL COUNSELORS, AND REIMBURSEMENT SPECIALISTS™
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FEATURES Bone Mineral Density Should Be Checked in All Hypogonadal Men….........................................................................................1 By Rosemary Frei, MSc
Urologists Partner with Medical Professional Liability Carriers to Navigate Increasing Operational Demands…...............................................1 By Jonathan McKenzie
Bundled Payment Options Explored for BPH Patients.........................................1 By Ellen Martin
Do’s and Don’ts in Physician-Hospital Alignment, Part 1.................................8 By Max Reiboldt, CPA
MGMA Survey Reveals Drawbacks to Participation in ACA Insurance Exchange Program Networks….....................................................10 By Rosemary Frei, MSc
Fair Labor Standards Act: Exemptions Review...............................................12 By Robert D. Orzechowski, MBA, SPHR
Investing: Where to Put Your Money Now......................................................14 By W. Ben Utley, CFP®, and Lawrence B. Keller, CFP®, CLU®, ChFC®, RHU®, LUTCF
EDITORIAL ADVISORY BOARD Neil Baum, MD Practicing Urologist New Orleans, LA Cheris Craig, MBA, CMPE Chief Administrative Officer Urology of Greater Atlanta, LLC Atlanta, GA Michael deWitt Clayton, MD, FACS Urology Associates of San Luis Obispo, CA Rick Janss, MBA, CMPE Practice Administrator Clinical Urology Associates Gadsden, AL
John McMann, MS Administrator Advanced Urology Specialists, LLC Oxford, FL
James A. Sylora, MD Urologist AUS–Midwest Urology Evergreen Park, IL
Jonathan Oppenheimer, MD, FCAP Medical Director, Chief Pathologist Oppenheimer Urologic Reference Laboratory Nashville, TN
Sean M. Weiss, CCP-P, CCA-P, ACS-EM, CPC, CPC-P Vice President & Chief Compliance Officer DecisionHealth/ Professional Services Gaithersburg, MD
Jonathan Rubenstein, MD Director of Coding and Compliance Chesapeake Urology Baltimore, MD
MISSION STATEMENT Urology healthcare requires providers to focus attention on financial concerns and strategic decisions that affect the bottom line. To continue to provide the high-quality care urology patients deserve, providers must master the ever-changing business of urology. Urology Practice Management offers process solutions for members of the urology care team—medical, surgical, and radiation urologists, as well as executives, administrators, and coders/billers—to assist them in reimbursement, staffing, electronic health records, REMS, and compliance with state and federal regulations.
Urology Practice Management™, ISSN (requested), is published 6 times a year by Engage Healthcare Communications, LLC, 1249 South River Road, Cranbury, NJ 08512. Copyright © 2014 by Engage Healthcare Communications, LLC. All rights reserved. Urology Practice Management™ is a trademark of Engage Healthcare Communications, LLC. No part of this publication may be 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 permission from the publisher. Printed in the United States of America. The ideas and opinions expressed in Urology Practice Management™ do not necessarily reflect those of the editorial board, the editors, or the publisher. Publication of an advertisement or other product mentioned in Urology Practice Management™ 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 mentioned. 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, Urology Practice Management™, 1249 South River Road, Cranbury, NJ 08512. Fax: 732-992-1881. Yearly subscription rates: 1 year: $99.00 USD; 2 years: $149.00 USD; 3 years: $199.00 USD.
Bone Mineral Density Should…Continued from the cover
tion is expected to increase in coming years; the mean ± standard deviation age of the cohort in this study was 48.3 ± 13.7 years.1,2 “Even though the Endocrine Society’s 2010 guidelines state that hypogonadal men should get DEXA scans only when they have severe testosterone deficiency – that is, below 150 ng/dL – we found you still have just as much of a chance of having hypogonadism below 300 ng/dL, and no levels below this are predictive of having worse BMD,” Igor Sorokin, MD, third-year urology resident at the Albany Medical College and lead author of a poster presentation on the results, told Urology Practice Management. “The study confirms that any male coming to your clinic with hypogonadism should get a baseline DEXA regardless of previous treatment.”3 Hypogonadism is associated with a number of comorbidities; symptoms include reduced libido/erectile dysfunction, reduced muscle mass and strength, increased adiposity, and depressed mood and fatigue. It has also long been recognized as a risk factor for osteoporosis and
osteopenia. However, there has been very little investigation of the strength of this association and of what factors are the strongest predictors of low BMD.1,2 Andrew McCullough, MD, surgery professor, Division of Urology, Albany Medical College, led the team who reviewed the records of 114 consecutive patients who were being treated for hypogonadism
Hypogonadism has long been recognized as a risk factor for osteoporosis and osteopenia. However, there has been very little investigation of the strength of this association and of what factors are the strongest predictors of low BMD.
to have osteopenia and 9 (7.9%) had osteoporosis. Their mean testosterone level at diagnosis was 183 ng/dL. The researchers found lower total and mean testosterone were not significantly associated with lower BMD, nor were longer duration of hypogonadism or higher serum estradiol levels.1 Former or current smoking was associated with a higher prevalence of osteopenia and osteoporosis: 57% of people with osteopenia were former or current smokers, whereas 43% were never-smokers, and the respective numbers for subjects with osteoporosis were 78% and 22%. The team did not find a correlation between total testosterone levels and t-scores of the spine, hip, or femoral neck. They did find higher total testosterone levels in men who had previously received testosterone treatment than in those who had not received such treatment, but previous testosterone treatment was not associated with higher BMD.1 l
References between February 2011 and September 2013 at the Men’s Health Center. Hypogonadism is defined as the presence of both symptoms and serum testosterone levels of <300 ng/ dL. The subjects had all undergone BMD assessment.1 Forty-four (38.6%) of the men had been found on DEXA screening
1. Sorokin I, et al. Prevalence of bone density deficiencies in men presenting for hypogonadism treatment: do we need to worry? American Society of Andrology’s 39th Annual Meeting, April 4-8, 2014, Atlanta. Poster #69. 2. Dandona P, Rosenberg MT. A practical guide to male hypogonadism in the primary care setting. Int J Clin Pract. 2010;64(6):682-696. 3. The Endocrine Society’s Clinical Guidelines. Testosterone therapy in adult men with androgen deficiency syndromes: an Endocrine Society clinical practice guideline. 2010. http://www.endocrine.org/~/ media/endosociety/Files/Publications/Clinical%20 Practice%20Guidelines/FINAL-Androgens-in-MenStandalone.pdf. Accessed May 6, 2014.
Urology Practice Management is now available online at: www.UroPracticeManagement.com
UROLOGY PRACTICE MANAGEMENT
Urologists Partner with Medical…Continued from the cover place. These pressures have accelerated the trend for medical practices to consolidate. With the growing trend of urology group consolidations, practices now face the substantial hurdle of successful integration of physicians, processes, and procedures. Historically, practices have put most of their focus on revenue generation and little on changing physicians’ practice patterns to comply with a group standard; however, the need to manage physician behavior is critical to the success of the integrated care model. With the implementation of the Affordable Care Act , the emphasis is squarely focused on patient outcomes and satisfaction, which require more group resources on quality measures and standardizing urologic care. Medical professional liability (MPL) insurance has always been a major component of practice costs; this remains true despite softening market rates over the last several years. Given the associated expenditure, it could be argued that a practice’s most significant business partner is its MPL carrier. In the past, these entities could only provide insurance capacity and lacked the resources to provide any meaningful risk management support. Most national MPL carriers utilize a reactive risk management approach for their insureds, tying premium rating methodologies directly to claims activity. More progressive practices, however, have partnered with proactive MPL providers to create a new paradigm in which both parties have a mutual goal to reduce medical liability risk and improve patient safety, along with providing value-added resources to assist in quality metrics. With the consistent application of proper risk management procedures, practices and MPL providers are achiev-
ing their mutual goal of lowering the cost of MPL premiums even when tested in real-world environments, balancing patient satisfaction with increasing patient visits. Supported by trends in the traditional marketplace and growth in the alternative insurance market, we have found that the optimal MPL partner for a physician practice has been to integrate a captive insurance facility (often referred to as a “captive” or “risk retention group”) into a practice’s insurance program. Captives are considered part of the alternative insurance market and have become increasingly viable for practices of all sizes over the past decade. The basic concept is simple: a practice interested in controlling claims and instituting effective, tailored risk management practices will form its own or purchase insurance from a captive insurance facility and share in the profit or loss of that facility. From this baseline there are myriad insurance possibilities, including access to reinsurance markets. From an operational perspective, the captive also becomes a segregated business unit, assuming the year-to-year variability of risk and claims management costs. Not only will this provide the practice with consistent, level MPL premium charges, but it also incentivizes providers to participate in the practice’s quality management processes. Since the practice shares in the insurance facility’s loss or gain, physicians have a financial stake not just for their own behavior, but for the behavior of their partners as well. Practices enjoy the dual benefit of reducing operational costs while simultaneously creating a mechanism to leverage physician behavior. Effective risk and claims management programs are the hallmarks of any profitable insurance facility, and
they also form the cornerstone by which practices can use such facilities to modify physician behavior. This is why the relationship between the insured and insurer are of the utmost importance and require a proactive business approach. As such, the decision to join or form a captive insurance facility should be considered the same as any new business opportunity. Initially a practice should consider its appetite for loss. As a matter of practicing medicine, there is an inherent potential of incurring a claim; a practice needs to determine what dollar amount, if any, it is willing to assume from a significant loss or losses. This assessment is similar to evaluating the benefits of entering into a high-deductible or excess-ofloss coverage program. Next, a practice should consider its risk profile. As with the traditional insurance market, a captive insurance facility will need to develop premiums based on metrics, including loss history, geographic area, specialty, and continuing education policies. In evaluating a practice’s individual risk profile against the marketplace, it will be able to develop a benefit matrix from the utilization of a captive insurance facility. Finally, an evaluation of the opportunity costs of utilizing the alternative market should be conducted. A captive insurance facility is considered a long-term approach to lowering the cost of malpractice insurance. Unlike an annual policy renewal, the ultimate savings from a captive is realized over multiple years in the form of reduced premiums, reductions in overall claim counts through targeted risk management activities, and distributions of accumulated earnings. Unlike the traditional marketplace, a captive isn’t structured to slash premiums to gain market share, rather its focus is on the long-term benefit of its Continued on page 6
AUA Practice Management Conference
Bundled Payment Options Explored…Continued from the cover payments and other types of novel reimbursements,” said Ellis ‘Mac’ Knight, MD, senior vice president and chief medical officer of the Coker Group. “We’re starting to see them [bundled payments] come along through the Medicare bundled payment pilot.... We’re seeing more commercial insurers come along with bundled payment, particularly around surgical procedures.” Dr Knight said the main advantages of the bundled payment approach are improved quality of care, by promoting care coordination, best-practice care procedures, and data-driven performance im provement at the bedside level. He said that bundled payments also lower the costs of care, for example, by reducing waste and inefficiency in the system. “Bundled payment hopefully can
“One capability that everybody running a physician practice of any sort needs to know [is] how to do better cost accounting and more relevant cost accounting with regards to bundled payments and other types of novel reimbursements.” —Ellis ‘Mac’ Knight, MD
reestablish—especially I would say in the hospital setting, but perhaps even at the practice level—a more firm relationship between cost and pricing. In the hospital, as you all know, there is no relationship
between those 2 things. The price charged is really a fictitious number that really doesn’t have a basis in reality, especially a basis in true cost reality,” noted Dr Knight. “So bunContinued on page 7
Figure. Captive insurance facility model.
Urologists Partner with Medical…Continued from page 5
members through consistent, focused operations (Figure). The needs and requirements of a practice will dictate the most viable solution. A properly structured and managed captive insurance facility has a number of advantages over the traditional marketplace by being able to offer coverage specific to an individual practice and risk environment, additional coverage limits and/or capacity, providing direct access to onshore and offshore reinsurance markets, flexible funding and underwriting criteria, and control over claims mitigation and resolution. When coupled with the ability to leverage changes in physician behavior, conversion to a captive insurance facility can convert MPL premiums from an operating expense to an investment that bears out-
standing long-term economic and quality returns. l Mr McKenzie concentrates on the formation and management of alternative insurance vehicles and leads the
UROLOGY PRACTICE MANAGEMENT
Figure Captive insurance facility model. Reduced Premiums
Overall Claim Reduc$ons
Cap$ve Insurance Facility
Targeted Risk Management Ac$vi$es
Return on Investment
captive management practice of Alterna, LLC, in Seattle, WA. He can be reached at jmckenzie@alternaman agers.com, or visit www.alternamanag ers.com for more information.
AUA Practice Management Conference
Bundled Payment Options Explored…Continued from page 6 dled payments and knowing the true costs that go into that, and using that to set price, will alleviate that [problem]. That, coupled with the increased consumer demand for price transparency, I think will be a big step forward in helping reform the system.” Dr Knight also said he believes the approach of the single bundled payment is preferable to fee-for-service with shared savings. This is because in the single bundled payment “the clinical process of care, the clinical procedure, is designed by the people that know best how to do that – ie, the clinicians, particularly physicians,” said Dr Knight. With fee-for-service with shared savings, he noted, “The shared savings are not a true cost reduction. Those are savings of the insurers, of the payers themselves, lowering their spend and really not freeing up any of the waste and inefficiency in the system.” He said, however, that practices must ramp up in many areas to be successful with bundled payments, with the most important realm being “clinical integration.” “It’s a relentless focus on the …equation …[of] the quality over the cost.” Having the appropriate technology infrastructure, care management infrastructure, and business/administration infrastructure are also important, according to Dr Knight. Cass Schaedig of HealthTronics IT Solutions furthered the discussion by describing the company’s analysis of calculating total payment perw BPH episode. The data are from HealthTronic’s InfoDive urology database, using information from 204 urology-provider groups between January 2012 and March 2014. The HealthTronics team defined a BPH episode as starting with an International Classification of Diseases, Ninth Revision, Clinical Modification diagnosis code of
600.01—for a diagnosis of BPH with urinary obstruction and other lower urinary tract symptoms—and ending 90 days later, covering all services rendered throughout this period. They excluded patients who also received a code of 185 (prostate malignancy) or 790.93 (elevated prostate-specific antigen) in those first 90 days.
algorithm-guided pathways. “You’re going to recognize that there’s a lot of variability in your practice, more than likely,” explained Dr Dowling. “So in your practice when you do the analysis you’re going to be faced with the fact that not every physician does things the same way. [And] again it’s an opportunity to converge a bundled concept with the concept of clinical integration [to achieve maximal efficiencies].” Next comes the accounting. First the practice manager must work with the clinicians to determine what comprises a BPH episode. After you define the episode, you gather the number of episodes, number of services, total number of RVUs, and cost per RVU or collections per RVU. Then you input the desired profit margin, allowing you to calculate the desired collections per episode and RVUs per episode. When RVUs are not available, the practice manager can analyze data from his/her practice to determine the number of BPH episodes over a set period and then the number of services per episode and the cost of those services, including salaries, drugs, supplies, and general overhead. The manager can then calculate the total cost per episode, input the desired profit margin, and arrive at the desired collections per episode. “I think that for those of you who have just started to think about bundled payments and haven’t done [these steps], this is a potential starting place to do a claims analysis in your practice. Using either [of these] 2 methods or your own method, start to figure out what it costs at a service level to take care of a patient,” concluded Dr Dowling. “And then thinking about this, go through the exercise before you start negotiating with a payer or an intermediary for a bundle.” l
“When you do the analysis you’re going to be faced with the fact that not every physician does things the same way.” —Robert Dowling, MD
The total average payment per episode was $691.19. This included 18.86 total relative value units (RVUs) and 7.52 work RVUs. Surgery and evaluation/management comprised 84% of the total payment per episode. Ms Schaedig indicated that the analysis also uncovered potential inefficiencies in the system, such as the fact that cystoscopy was included in 22.1% of BPH episodes but comprised only 8.94% of the payment total. Yet, however revealing such results may be from a health-systems perspective, it is still up to practice managers to determine what they consider to be an appropriate definition of an episode, and to roll up their sleeves and calculate revenue per episode and cost per episode, explained Robert Dowling, MD, who is consulting medical director for HealthTronics IT Solutions. He said a key step in this process is figuring out how to move from current practice to
Physician-Hospital Alignment Series
Do’s and Don’ts in Physician-Hospital Alignment, Part 1 By Max Reiboldt, CPA, President/CEO, Coker Group, Alpharetta, GA
he alignment of physicians with hospitals and health systems is increasingly challenging in today’s healthcare climate. In the past, many physicians viewed hospitals as potential partners with endless channels of money by which they could augment their previous private practice incomes. Notwithstanding the compliance concerns with this approach, the economic realities are that hospitals do not have excess funds to pay physicians—at least not at the levels that many physicians expect. Moreover, the regulatory requirements of paying at fair market value and commercially reasonable rates prevail in every instance. Despite these challenges, interest in alignments continues to expand. And the necessity of maintaining a strong and diverse medical staff versus the threat of losing critical team members and the subsequent closure of a business line often results in hospitals/health systems making de cisions and promises they may not otherwise make. Accordingly, let’s briefly examine some of the key areas of consideration that must occur to prevent hospitals and physicians from falling into arrangements that are unlikely to succeed.
Pretransactional Due Diligence Before formulating the transaction, both the hospital and the physician group must be reasonably certain that they are comfortable with partnering. Often, this results from an initial review of the landscape (stage 1). Hospitals will engage consulting firms to complete a landscape review, which involves nonthreatening in
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teractions between the physicians and hospital leadership in exploratory discussions. It is at this stage that specific issues are identified; even more importantly, an exact model is designed. That model could range from limited to moderate to fuller forms of alignment.
The alignment of physicians with hospitals and health systems is increasingly challenging in today’s healthcare climate.
The initial review of the landscape should encompass some basic financial analysis to consider the historical performance of the practice. The analysis should also begin to explore what the practice will look like posttransaction through a financial pro forma, which will have a great deal to do with the model that has been selected. If multiple models are under consideration, each should have its own financial pro forma. Once the basic analysis is completed and the decision is made to move forward into transactional development (stage 2), a more detailed financial analysis should be prepared; this could be prepared by an independent party. That independent party should also be knowledgeable in fair market value testing for commercially reasonable rates of compensation for physicians
employed by nonprofit hospitals or integrated delivery systems. The financial analysis will ultimately lead to a completed pro forma. The pro forma analysis will address many things, not the least of which will be the hospital or delivery system’s return on investment. The fullfledged pro forma analysis will lead to the development of a term sheet that memorializes (not legally binding) the key financial terms of the transaction. Assuming the processes continue to go well, an independent appraisal will also be needed in order to determine the fair market value of the assets and other related items of value that are included in the transaction. Depending upon the structure of the transaction, the areas of consideration could range from the entire practice entity to certain components of the practice, such as physician and staff workforce remaining in place. The independent appraisal should be specific in response to the actual structure of the proposed transaction. For example, if the transaction is a joint equity model, the appraisal would only be for a minority interest (assuming that the hospital is only buying a minority interest) of the practice. If it is a professional services agreement, there will likely be very little upfront value exchange, with the exception of the ancillary assets, which are often purchased by the hospital. Finally, as a part of the pretrans actional due diligence, the hospital/ health system should complete an operational assessment of the practice or other healthcare entity. This would only be needed if they are
Physician-Hospital Alignment Series
acquiring all or most of the practice or the related ancillary service, such as an ambulatory surgery center. Typically, a hospital/health system will be equipped with its own internal resources to review all areas of operations, or they will engage an independent expert to complete that operational assessment; the operational assessment often will include a procedural coding audit. The pretransitional due diligence process involves many facets to allow the hospital and health system to gain full undersactional of what they are getting into. From there, the parties can move toward a well-designed and legally compliant alignment transaction.
Structural Design Another key facet toward the successful development of a physician/ hospital alignment relationship is the actual design of the model. As briefly discussed, there are myriad models; each has its pros and cons, from both the hospital and physician perspectives. It is the job of the experts (often independent consultants and attorneys) who are assisting the practice and the hospital to point out the pros and cons of each model and, ultimately, to build consensus as to the best model for the particular transaction. Flexibility in model development is a key overarching point of view in achieving a positive result. Although employment is often the preferred model and is the outcome of the majority of transactions, this arrangement should not be forced on the physicians. Key economic and noneconomic terms and conditions should be considered. Ultimately, these will be formalized in the definitive agreements; prior to that, a term sheet or letter of intent (LOI) or memo of understanding should detail these terms and conditions. Often, we separate these into 3 major classifications: • Economic
• Governance/leadership • Unwind provisions With the term sheet and LOI draft in place, these major areas of review have been considered and are a significant part of the overall foundation that is being formed. (It should be noted that several of the items discussed under pretransactional due diligence would be completed simultaneously with the matters we are discussing at this point under structural design.)
performance results cannot be considered in order to determine the physicians’ compensation within the alignment model. However, the hospital should certainly consider the impact of having these assets and being able to realize this revenue going forward. It should also be noted that often this revenue (under HOPD rates) is much better than that paid to private practices. In short, the overall return on investment (“downstream revenue”) is better for the hospital. Although this should be considered in the overall impact analysis, it cannot be a part of the actual direct transaction for legal and compliance purposes. Finally, within the structural design and assuming all of these prior analyses have been thoroughly reviewed, and both parties are still interested in proceeding (note that at any point during this process either party can drop out or change the transaction structure), the definitive agreement drafting should be completed. This should include utilization of legal counsel and the consultant’s support to formulate the actual legal documents that will be executed at closing. Such legal documents will vary, but usually will include an asset purchase agreement, or, if the entity (or a part of the entity) is being purchased, a stock purchase agreement. Other agreements could be tied to management services, operating agreements, employment agreements, professional services contracts, etc. Again, these are all a part of the definitive agreement process that must be ultimately decided upon and responded to, based upon the actual model structure. Part 1 of this 3-part series has focused on pretransactional due diligence and structural design processes as they pertain to physician–hospital alignments. Part 2 of this series will address governance and compensation plans; the final installment will discuss ongoing relationships and planning for a potential “divorce.” l
It is the job of the experts who are assisting the practice and the hospital to point out the pros and cons of each model and, ultimately, to build consensus.
Next, an additional financial analysis should be considered. While analysis under pretransactional due diligence is absolutely essential, another financial analysis—the “impact analysis”—should be completed by the hospital. This is done by the hospital as an internal document that incorporates the overall contributions that the transaction will entail—meaning that there are some portions of the transaction that will likely not appropriately (or legally) be considered within the pro forma process. For example, if the hospital acquires the ancillary services from the practice as a part of the alignment transaction and they choose to convert these to hospital outpatient department (HOPD) billing structure for Medicare and Medicaid, and they move these out of the actual integrated entity, those
The ACA Exchanges
MGMA Survey Reveals Drawbacks to Participation in ACA Insurance Exchange Program Networks By Rosemary Frei, MSc
he challenges involved with the start of implementation of the Affordable Care Act (ACA)’s insurance exchange program are evident in the responses to an April 2014 survey by the Medical Group Management Association (MGMA).1 There were 728 respondents to the survey, representing more than 40,000 physicians. A majority (59.4%) of respondents viewed ACA insurance exchanges as being unfavorable to their practices, and most said that payment rates are no higher than those offered from traditional commercial products or traditional Medicare. Furthermore, 87.6% reported difficulty identifying whether patients had ACA exchange coverage. Most respondents also said that it is more difficult than with traditional insurance products to accomplish tasks such as verifying patient eligibility and obtaining information about patients’ provider networks to facilitate referrals. “Some of these things I think are growing pains,” said Allison Brennan, MPP, senior advocacy advisor, MGMA, Washington, DC. “This is the first year. It is a transition for practices and patients and the insurance industry. So, some of these are going to get better over time.” Ms Brennan and colleagues included the survey in an e-newsletter that they e-mailed to all 22,500 members of the MGMA. Although the response rate was only 3.2%, respondents hailed from all but 4 states and were from 42 specialties. Their practices included multispecialty practices with pri-
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mary and specialty care (19.3%), orthopedic surgery practices (10%), family practices (8.3%), and obstetrics/gynecology practices (6.6%). Approximately three-quarters (75.1%) were independent medical practices, and the mean practice size was 55.7 full-time– equivalent physicians.
Allison Brennan, MPP
These are roughly similar proportions to those from the more than 1000 physician practices that responded to a September 2013 survey by MGMA.2 The earlier survey was intended to determine how practice administrators viewed the impending start of patient purchase of ACA insurance exchange products. The April 2014 survey results indicate that 15.1% of respondents regard the ACA insurance exchanges as very unfavorable to their practices, and 44.3% view them as unfavorable. Approximately three-quarters (76.5%) of respondents said that
their practices are participating with new health insurance products under the ACA. The main reasons cited for participation are remaining competitive in the local market, replacing current charity care when uninsured patients obtain coverage, and providing care to underserved patient populations. The top reason cited for nonparticipation was the financial liability represented by the 90-day grace period for ACA exchange enrollees. Among respondents whose practices are participating, 84.8% offer coverage through 5 or fewer products. Only 19.9% of respondents, however, said that their practices had been excluded from a network in which they would like to have been included. “I think it’s a 2-way street with the insurer asking the practice if they want to be in the network. Practices also have to evaluate whether the network opportunity is a good one for the practice in terms of reimbursement and also administrative burdens,” noted Ms Brennan. Just 25.8% of respondents said that their practice’s patient numbers had increased under the ACA, and approximately one-tenth (10.8%) said that their patient numbers had fallen. Furthermore, approximately one-third of respondents reported that payment rates under the ACA exchanges were somewhat lower than or equal to average payment rates from all of their traditional commercial contracts, at 32% and 36.6%, respectively. Just under half (41.8%) said that rates were equal to those from traditional commer-
The ACA Exchanges
cial products offered by the same payers. The situation was somewhat better compared with traditional Medicare and Medicaid, with 30.1% and 46.4% of practices, respectively, reporting higher reimbursement with the new exchanges than with these government programs. When Ms Brennan and colleagues probed the practical aspects of the implementation, they found an abundance of pain for practices and patients. Approximately onethird (31.5%) of respondents said that it has been very or extremely difficult to distinguish between patients with ACA insurance coverage versus traditional commercial health insurance not related to ACA exchanges, whereas 56.1% found it slightly or moderately difficult. Only 12.4% said it was not at all difficult. Furthermore, 63.2% have found it more difficult to verify patient eligibility for coverage, 62.3% said it was more difficult to obtain cost-sharing information, and 58.6% have found obtaining information about the plan’s provider network to facilitate referrals to be more difficult than with traditional commercial coverage. “We are going to have to hire
additional staff just to manage the insurance verification process,” wrote one respondent in the comments section of the survey.
patients have high deductibles with the new products compared with traditional commercial coverage. “We are consistently denied ‘out of network’ approvals for the very sick who truly need to continue their care with providers who have worked with the patient for years,” wrote a respondent; another indicated that “payer directories [of providers in the practices’ networks] are woefully inaccurate and impossible to rely on.” Ms Brennan said that she and her colleagues have heard these complaints from a number of providers, and that they represent significant problems for patients and physicians. However, she said that these difficulties, like most of the others associated with the early days of exchange network use, are being worked on and should improve over time. l
“Some of these things I think are growing pains. This is the first year. It is a transition for practices and patients and the insurance industry. So, some of these are going to get better over time.” —Allison Brennan, MPP
1. Medical Group Management Association. MGMA ACA exchange implementation survey report. May 2014. www.mgma.com/government-affairs/issues-over view/aca/aca-exchange-implementation-report/acasurveyreport_online_2?ext=.pdf. Accessed June 5, 2014. 2. Medical Group Management Association Legislative and Executive Advocacy Response Network (LEARN). ACA insurance exchange implementation, Sept. 2013. www.mgma.com/Libraries/ Assets/Government%20Affairs/Advocacy/LEARN/ ACA-Exchange-Implementation-LEARN.pdf. Accessed June 5, 2014.
Fully 40.9% of those who completed the survey said that their practices had been unable to treat some patients, because their practices were not included in those patients’ insurance exchange networks. In addition, 94.8% of respondents said that it was likely that
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Fair Labor Standards Act: Exemptions Review By Robert D. Orzechowski, MBA, SPHR, Chief Operating Officer, Lancaster Cancer Center
ecent media cov erage of the debate surrounding an increased federal minimum wage as well as increased “salary basis” test to determine exempt status has drawn employers’ attention. Although some claim that these actions are posturings on the part of politicians seeking to further their own party’s agenda and will have little impact on the majority of American workers, the news does provide an opportunity to clarify a few critical points for medical practice employers. The federal minimum wage and salary basis test are provisions within the Fair Labor Standards Act (FLSA),1,2 enacted in 1938, which is often referred to as the “Wage and Hour” law. Imagine the labor and employment landscape that must have existed in 1938, including oppressive working rules and conditions, and no worker protections for overtime, minimum wages, child labor, recordkeeping, and numerous other aspects of the employment relationship. The FLSA was also, in effect, an attempt at a national job classification program. Since its passage, certain jobs and entire industries have been excluded from coverage.2,3 There are regular court decisions on issues of working hours, class action suits regarding the “exempt” status of certain employees, and W-2 versus Form 1099 workers. Exempt status is based largely on income and job description; the classification impacts whether an employee is governed by rules regarding minimum wage and overtime pay.4 It is possible that employers may misclassify employees out of ignorance
UROLOGY PRACTICE MANAGEMENT
or inattention to job details. It is also possible that employers misclassify employees as independent contractors. The results of these misclassifications can be disastrous. Sanctions for violations (intentional or otherwise) can be severe,5 compliance is often uncertain, and most states (or municipalities) even have their own similar—but not always exact—replicas of the FLSA. If you are covered by any of these related statutes or ordinances and the FLSA, you must follow whichever requirements are more advantageous to your employees. The purpose of this article is to review a primary point of concern for medical practice management: the employee’s exempt versus nonexempt status. We will assume for the purpose of this article that your employing medical practice is covered by FLSA, and that your workers are, in fact, W-2 employees. The next step, then, is to determine each employee’s status as exempt from FLSA or if they are nonexempt. The FLSA specifically exempts certain workers and industries from its minimum wage provisions, overtime requirements, or both. The employee exemptions have some specific, and not-so-specific, standards (duties tests). Therefore, accurate, current job descriptions are critical to compliance. The main categories of exemptions are executive, administrative, professional, and outside sales. Readers may recall recent court decisions regarding pharmaceutical representatives and their exemption as “outside sales” employees. Other exemptions include computer, highly compensated, and first re sponder employees. In addition, if employees are determined to be exempt by virtue of their work (not
their job title), they must ordinarily be paid a salary. There is also a salary level test, which is currently $455 weekly. Other rules apply to exempt employees regarding docking pay for no work, discipline, or garnishment.2-4 Each duties test must be satisfied within its own category. The employer cannot choose duties from multiple exempt categories. Furthermore, the job’s primary duties are paramount for the exempt determination. Ideally, the job design will require any primary duties to account for more than 50% of the total work time. There is no percentage requirement in the FLSA, but employers are cautioned that having lower percentages of any exempt duties increase the legal risk if challenged. The actual FLSA language is too lengthy to include here, but can be found on the US Department of Labor’s Wage and Hour Division website6; most medical practice employees would have the following exemptions if their duties warranted such an exemption (Table)4: • Executive. This includes “hire/ fire” authority, management of all or part of the entity, and directing the work of others • Administrative. This includes office or nonmanual work directly related to the management or business operations of the employer. It must include the exercise of discretion and independent judgment • Professional. This is divided into 2 sections: learned professional (LP) and creative professional (CP). The LP is described as doing work that is intellectual in nature, requiring the consistent exercise of discretion and requiring advanced knowledge.
The CP is described as doing work that requires invention, originality, or talent in a recognized field of artistic endeavor. The detailed rules and examples used to qualify for these exemptions appear to be specific.4 Unfortunately, the reality of our work processes, job designs, and shifting responsibilities are often less specific than the written examples. Employers should familiarize themselves with the criteria for each exemption before making a determination about and documenting their decision for FLSA coverage. Here are a few related issues that may arise in the course of implementing compliance programs for the FLSA4,6,7: • Employees may not waive their rights to the requirements of the law • Only actual time worked (including certain “donning and doffing” time) must be considered when calculating overtime. Vacation, holiday, and sick time, for example, are not included in the total hours in a given workweek • Each workweek’s hours are calculated separately in most cases. • Nonexempt employees must be paid premium pay for hours worked in excess of 40 in a workweek (not for hours exceeding 8 in a workday). Note that there are exceptions to this 40-hour rule • Employers are generally free, within limits, to establish their own definitions for a workweek and a pay period. A workweek is any consecutive 7-day (168hour) period. A pay period is usually 2 consecutive workweeks for nonexempt employees (some employers pay exempt employees monthly)
Most medical practice employees could fall under the following exemptions.4
Executive. Hire/fire authority, some management responsibilities Administrative. Office or nonmanual work, related to management, includes exercise of discretion Professional. LP: work is intellectual, requires discretion and advanced knowledge CP: work requires invention, originality, or talent in an artistic field LP indicates learned professional; CP, creative professional.
• Compensatory time is generally not allowed for nonexempt employees in the private sector • Nonexempt employees may be paid a salary, but doing so exposes the employer to some complicated calculations should overtime pay be required. It is prudent to pay nonexempt employees on an hourly basis and to devise adequate controls on overtime • Exempt employees may be paid for time worked above a certain number of hours, but doing so should be a business decision and developed only after a thorough analysis • Employers are not required to have exempt employees track their working time through manual or electronic means. There may be business reasons (and employee relations reasons) for such a decision. Recent proposals from members of Congress could include an increase to the current salary basis amount of $455 weekly. Should the duties test remain as written, but the salary test increase substantially, it is possible that many employees of medical practices may have their exempt status revised and, if then found to be nonexempt, would be eligible for overtime pay going forward. The FLSA is a critical piece of
labor law and must always be taken seriously. The dynamics of the workplace and evolving nature of this law through presidential executive order, court cases, and congressional amendment demand our constant vigilance for compliance. No single article on the FLSA can possibly cover all aspects of it, and nothing can replace legal counsel for your human resources policy and practices review. Future articles will focus on other aspects of this important legislation. l
1. United States Department of Labor, Wage and Hour Division. Compliance Assistance – Wages and the Fair Labor Standards Act (FLSA). http://www. dol.gov/whd/flsa/. Accessed April 29, 2014. 2. United States Department of Labor, Wage and Hour Division. Fact Sheet #17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA). http://www. dol.gov/whd/regs/compliance/fairpay/fs17g_salary.pdf. Accessed April 29, 2014. 3. United States Department of Labor, Wage and Hour Division. Coverage Under the FLSA. http://www.flsa. com/coverage.html. Accessed April 29, 2014. 4. United States Department of Labor, Wage and Hour Division. Fact Sheet #17A: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the Fair Labor Standards Act (FLSA). http://www.dol.gov/whd/regs/ compliance/fairpay/fs17a_overview.pdf. Accessed April 29, 2014. 5. United States Department of Labor, Wage and Hour Division. Poster: Employee Rights Under the Fair Labor Standards Act. http://www.dol.gov/whd/ regs/compliance/posters/minwage.pdf. Accessed April 29, 2014. 6. United States Department of Labor, Wage and Hour Division. Home Page. http://www.dol.gov/whd/. Accessed April 29, 2014. 7. United States Department of Labor, Wage and Hour Division. Overtime Pay. http://www.dol.gov/ whd/overtime_pay.htm. Accessed April 29, 2014.
Investing: Where to Put Your Money Now By W. Ben Utley, CFP®, and Lawrence B. Keller, CFP®, CLU®, ChFC®, RHU®, LUTCF
W. Ben Utley
Lawrence B. Keller
ou make more money than you spend. It’s the right problem to have, but it’s a problem nonetheless. In fact, every new dollar of savings seems to call for a new investment strategy, but you don’t know where to begin. When you ignore the problem, cash piles up in your checking account—first $40,000, then 6 figures. Then you get nervous. If it was hard to invest a smaller sum, it seems impossible to invest more than $100,000. Then one day, you stumble upon the headline that brought you here, hoping to find the answer. And if this were any ordinary article, you might be well on your way to making the same mistake that most of your colleagues have made at least once in their careers: they pile their money into a hot investment touted at the time. First, they buy it. Then, they watch it drop like a rock. And, months later, when the promised results fail to materialize, they sell everything and feel foolish. It gets worse as the cash continues to pile up and your question goes unanswered: “Where do I put my money now?” The best investment strategies have nothing new about them and they work. Here are 3 investment strategies you can use over and over again, decade after decade, to make your savings last.
UROLOGY PRACTICE MANAGEMENT
Stop Trading Stocks and Start Owning Markets We are sure that you have heard stories in the doctor’s lounge about how your colleagues doubled or tripled their money with their latest stock picks or how they nabbed a tax-free bond paying 5 full percentage points above average. Sounds like they are making a killing, right? Not exactly. The chances are good that they have gotten killed on plenty of trades, but physician cul-
We’ve seen plenty of doctors who stock picked their way to a small fortune, but most started out with a much larger one. Instead of taking on substantial risk by betting on one stock, keep risk in check by owning a portfolio of them—the easy way.
ture won’t allow them to tell you about their blunders. We’ve seen plenty of doctors who stock-picked their way to a small fortune, but most started out with a much larger one. Instead of taking on substantial risk by betting on one stock, keep risk in check by owning a portfolio of them—the easy way. Single stocks can go bankrupt and single bonds can go into default, wiping you out completely. Index funds, which represent ownership in
hundreds if not thousands of companies, make it easy to gain instant diversification, diluting the uncompensated or “bad” risk while retaining the “good” risk that leads to rewards over the long haul. Index funds are cheap. With operating expense ratios as low as 0.05%, you can buy an index fund and gain exposure to bonds or stocks around the world. That insignificant carrying cost also buys you the freedom to stop acting like a stockbroker and allows you to get back to serving as a healthcare provider. Savvy physicians prefer mutual funds for their tax efficiency. Since they follow a buy-and-hold approach to investing, index funds are more likely to realize tax-favored capital gains and tax-qualified dividends than more highly taxed short-term gains. This keeps your tax bill in check.
Stop Timing the Markets and Start Owning Them (All) If you have heard about index investing, you probably know about the S&P 500, a basket of stocks that represents the 500 biggest companies in the United States. The index was made famous in the 1980s and 1990s as it ran up to the dotcom bubble, then vilified in the ensuing “lost decade” when the 10-year return on that index was close to zero. What index hecklers fail to realize, even to this day, is that there’s more than one index. In fact, you can gain exposure to practically all the stocks and bonds on the planet by owning as few as 4 mutual funds. Had investors done this during the past 10 years, they would have avoided some of the technology crash, found the lost decade, and enjoyed very decent returns after all. Unfortunately, the average inves-
tor seldom receives average returns. According to a recent study by mutual fund data company Morningstar, “the typical investor gained only 4.8 percent annualized over the ten years ended December 2013 versus 7.3 percent for the typical fund.” That’s a yawning 2.5% gap. Why did investors miss out on fully one third of the market returns? It’s simple. They did the same thing with their funds that your colleagues did with their stocks: they traded in and out of the market. To garner the returns advertised over the past decade, or even the last 3 decades, you would have to own them through thick and thin, no matter how dramatic or dire the news.
Invest Like a Nobel Prize Winner The main argument against an index-only strategy is that it generates merely average returns in the best-case scenario. This logic appeals to doctors who have never once settled for things that are merely average (and that’s pretty much all the physicians we’ve met). Thanks to the research of Nobel laureate Eugene Fama, we now know it’s possible to reliably beat the averages over the long run—but it’s not free. Mr Fama, a financial luminary who founded the first small cap index mutual fund, discovered that the smaller a company is, the more likely it is to outperform a larger one. This is known as the “small cap effect,” and it is robust, having been observed in US market history as well as the
return series of developed foreign stock markets and even emerging markets. Mr Fama and colleague, Kenneth French, both researchers who hail from the renowned University of Chicago Booth School of Business, also found that the stocks of cheap companies, known as “value stocks,” tend to outperform their more expensive “growth stock” peers in what is known as the “value effect.” This effect is also robust in markets domestic and foreign, and is available to investors using index funds.
though Mr Fama won the Nobel Prize in economics just last year, his research on the small cap and value effects has been public knowledge since the 1980s.
Summary These perfectly decent strategies are so mundane—so incredibly boring—that you and your colleagues may never have heard of them. After all, words like “diversified,” “tax-efficient,” and “cost-effective” make lousy headlines. The good news is that you can start using a solid investment strategy and keep using it year after year, decade after decade, secure in the knowledge that you have found a permanent answer to a nagging question. Remember, the answer to good investing is more than where you put your money now. It’s where you keep it over the long haul. l
Remember, the answer to good investing is more than where you put your money now. It’s where you keep it over the long haul.
W. Ben Utley, CFP®, is the lead advisor with Physician Family Financial Advisors, a fee-only financial planning firm helping doctors throughout the United States to save for college and invest for retirement. Contact him at 541-463-0899 or visit www.physician family.com. Lawrence B. Keller, CFP®, CLU®, ChFC®, RHU®, LUTCF, is the founder of Physician Financial Services, a New York–based firm specializing in income protection and wealth accumulation strategies for physicians. He can be reached at 800-481-6447 or by e-mail to Lkeller@physician financialservices.com with comments or questions.
While a small cap value tilt may add up to 4 percentage points more than the average untilted portfolio over long periods of time, it brings more volatility, too. When equity markets decline, those index funds filled with cheap little stocks take it hard, and you may wish you had never owned them. The only way to reliably garner the higher expected returns from small cap value stocks is to remain fully invested and stay the course, even when times are tough. This, too, is old news. Even
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ZYTIGA® (abiraterone acetate) Tablets Brief Summary of Prescribing Information. INDICATIONS AND USAGE ZYTIGA is a CYP17 inhibitor indicated in combination with prednisone for the treatment of patients with metastatic castration-resistant prostate cancer. CONTRAINDICATIONS Pregnancy: ZYTIGA can cause fetal harm when administered to a pregnant woman. ZYTIGA is not indicated for use in women. ZYTIGA is contraindicated in women who are or may become pregnant. If this drug is used during pregnancy, or if the patient becomes pregnant while taking this drug, apprise the patient of the potential hazard to the fetus and the potential risk for pregnancy loss [see Use in Speciﬁc Populations]. WARNINGS AND PRECAUTIONS Hypertension, Hypokalemia and Fluid Retention Due to Mineralocorticoid Excess: ZYTIGA may cause hypertension, hypokalemia, and ﬂuid retention as a consequence of increased mineralocorticoid levels resulting from CYP17 inhibition [see Clinical Pharmacology (12.1) in full Prescribing Information]. In the two randomized clinical trials, grade 3 to 4 hypertension occurred in 2% of patients, grade 3 to 4 hypokalemia in 4% of patients, and grade 3 to 4 edema in 1% of patients treated with ZYTIGA [see Adverse Reactions]. Co-administration of a corticosteroid suppresses adrenocorticotropic hormone (ACTH) drive, resulting in a reduction in the incidence and severity of these adverse reactions. Use caution when treating patients whose underlying medical conditions might be compromised by increases in blood pressure, hypokalemia or ﬂuid retention, e.g., those with heart failure, recent myocardial infarction or ventricular arrhythmia. Use ZYTIGA with caution in patients with a history of cardiovascular disease. The safety of ZYTIGA in patients with left ventricular ejection fraction <50% or New York Heart Association (NYHA) Class III or IV heart failure (in Study 1) or NYHA Class II to IV heart failure (in Study 2) was not established because these patients were excluded from these randomized clinical trials [see Clinical Studies (14) in full Prescribing Information]. Monitor patients for hypertension, hypokalemia, and ﬂuid retention at least once a month. Control hypertension and correct hypokalemia before and during treatment with ZYTIGA. Adrenocortical Insufﬁciency: Adrenal insufﬁciency occurred in the two randomized clinical studies in 0.5% of patients taking ZYTIGA and in 0.2% of patients taking placebo. Adrenocortical insufﬁciency was reported in patients receiving ZYTIGA in combination with prednisone, following interruption of daily steroids and/or with concurrent infection or stress. Use caution and monitor for symptoms and signs of adrenocortical insufﬁciency, particularly if patients are withdrawn from prednisone, have prednisone dose reductions, or experience unusual stress. Symptoms and signs of adrenocortical insufﬁciency may be masked by adverse reactions associated with mineralocorticoid excess seen in patients treated with ZYTIGA. If clinically indicated, perform appropriate tests to conﬁrm the diagnosis of adrenocortical insufﬁciency. Increased dosage of corticosteroids may be indicated before, during and after stressful situations [see Warnings and Precautions]. Hepatotoxicity: In the two randomized clinical trials, grade 3 or 4 ALT or AST increases (at least 5X ULN) were reported in 4% of patients who received ZYTIGA, typically during the ﬁrst 3 months after starting treatment. Patients whose baseline ALT or AST were elevated were more likely to experience liver test elevation than those beginning with normal values. Treatment discontinuation due to liver enzyme increases occurred in 1% of patients taking ZYTIGA. No deaths clearly related to ZYTIGA were reported due to hepatotoxicity events. Measure serum transaminases (ALT and AST) and bilirubin levels prior to starting treatment with ZYTIGA, every two weeks for the ﬁrst three months of treatment and monthly thereafter. In patients with baseline moderate hepatic impairment receiving a reduced ZYTIGA dose of 250 mg, measure ALT, AST, and bilirubin prior to the start of treatment, every week for the ﬁrst month, every two weeks for the following two months of treatment and monthly thereafter. Promptly measure serum total bilirubin, AST, and ALT if clinical symptoms or signs suggestive of hepatotoxicity develop. Elevations of AST, ALT, or bilirubin from the patient’s baseline should prompt more frequent monitoring. If at any time AST or ALT rise above ﬁve times the ULN, or the bilirubin rises above three times the ULN, interrupt ZYTIGA treatment and closely monitor liver function. Re-treatment with ZYTIGA at a reduced dose level may take place only after return of liver function tests to the patient’s baseline or to AST and ALT less than or equal to 2.5X ULN and total bilirubin less than or equal to 1.5X ULN [see Dosage and Administration (2.2) in full Prescribing Information]. The safety of ZYTIGA re-treatment of patients who develop AST or ALT greater than or equal to 20X ULN and/or bilirubin greater than or equal to 10X ULN is unknown. Increased ZYTIGA Exposures with Food: ZYTIGA must be taken on an empty stomach. No food should be consumed for at least two hours before the dose of ZYTIGA is taken and for at least one hour after the dose of ZYTIGA is taken. Abiraterone Cmax and AUC0-∞ (exposure) were increased up to 17and 10-fold higher, respectively, when a single dose of abiraterone acetate was administered with a meal compared to a fasted state. The safety of these increased exposures when multiple doses of abiraterone acetate are taken with food has not been assessed [see Dosage and Administration (2.1) and Clinical Pharmacology (12.3) in full Prescribing Information].
ZYTIGA® (abiraterone acetate) Tablets ADVERSE REACTIONS The following are discussed in more detail in other sections of the labeling: • Hypertension, Hypokalemia, and Fluid Retention due to Mineralocorticoid Excess [see Warnings and Precautions]. • Adrenocortical Insufﬁciency [see Warnings and Precautions]. • Hepatotoxicity [see Warnings and Precautions]. • Increased ZYTIGA Exposures with Food [see Warnings and Precautions]. Clinical Trial Experience: Because clinical trials are conducted under widely varying conditions, adverse reaction rates observed in the clinical trials of a drug cannot be directly compared to rates in the clinical trials of another drug and may not reﬂect the rates observed in clinical practice. Two randomized placebo-controlled, multicenter clinical trials enrolled patients who had metastatic castration-resistant prostate cancer who were using a gonadotropin-releasing hormone (GnRH) agonist or were previously treated with orchiectomy. In both Study 1 and Study 2 ZYTIGA was administered at a dose of 1,000 mg daily in combination with prednisone 5 mg twice daily in the active treatment arms. Placebo plus prednisone 5 mg twice daily was given to control patients. The most common adverse drug reactions (≥10%) reported in the two randomized clinical trials that occurred more commonly (>2%) in the abiraterone acetate arm were fatigue, joint swelling or discomfort, edema, hot ﬂush, diarrhea, vomiting, cough, hypertension, dyspnea, urinary tract infection and contusion. The most common laboratory abnormalities (>20%) reported in the two randomized clinical trials that occurred more commonly (≥2%) in the abiraterone acetate arm were anemia, elevated alkaline phosphatase, hypertriglyceridemia, lymphopenia, hypercholesterolemia, hyperglycemia, elevated AST, hypophosphatemia, elevated ALT and hypokalemia. Study 1: Metastatic CRPC Following Chemotherapy: Study 1 enrolled 1195 patients with metastatic CRPC who had received prior docetaxel chemotherapy. Patients were not eligible if AST and/or ALT ≥2.5X ULN in the absence of liver metastases. Patients with liver metastases were excluded if AST and/or ALT >5X ULN. Table 1 shows adverse reactions on the ZYTIGA arm in Study 1 that occurred with a ≥2% absolute increase in frequency compared to placebo or were events of special interest. The median duration of treatment with ZYTIGA was 8 months. Table 1: Adverse Reactions due to ZYTIGA in Study 1 ZYTIGA with Placebo with Prednisone (N=791) Prednisone (N=394) System/Organ Class All Grades1 Grade 3-4 All Grades Grade 3-4 Adverse reaction % % % % Musculoskeletal and connective tissue disorders Joint swelling/ 29.5 discomfort2 4.2 23.4 4.1 3 Muscle discomfort 26.2 3.0 23.1 2.3 General disorders Edema4 26.7 1.9 18.3 0.8 Vascular disorders Hot ﬂush 19.0 0.3 16.8 0.3 Hypertension 8.5 1.3 6.9 0.3 Gastrointestinal disorders Diarrhea 17.6 0.6 13.5 1.3 Dyspepsia 6.1 0 3.3 0 Infections and infestations Urinary tract infection 11.5 2.1 7.1 0.5 Upper respiratory tract infection 5.4 0 2.5 0 Respiratory, thoracic and mediastinal disorders Cough 10.6 0 7.6 0 Renal and urinary disorders Urinary frequency 7.2 0.3 5.1 0.3 Nocturia 6.2 0 4.1 0 Injury, poisoning and procedural complications Fractures5 5.9 1.4 2.3 0 Cardiac disorders Arrhythmia6 7.2 1.1 4.6 1.0 Chest pain or chest discomfort7 3.8 0.5 2.8 0 Cardiac failure8 2.3 1.9 1.0 0.3
ZYTIGA® (abiraterone acetate) Tablets
ZYTIGA® (abiraterone acetate) Tablets
1 Adverse events graded according to CTCAE version 3.0 2 Includes terms Arthritis, Arthralgia, Joint swelling, and Joint stiffness 3 Includes terms Muscle spasms, Musculoskeletal pain, Myalgia,
Table 3: Adverse Reactions in ≥5% of Patients on the ZYTIGA Arm in Study 2 (continued) ZYTIGA with Placebo with Prednisone (N=542) Prednisone (N=540) System/Organ Class All Grades1 Grade 3-4 All Grades Grade 3-4 Adverse reaction % % % % Renal and urinary disorders Hematuria 10.3 1.3 5.6 0.6 Skin and subcutaneous tissue disorders Rash 8.1 0.0 3.7 0.0 1 Adverse events graded according to CTCAE version 3.0 2 Includes terms Edema peripheral, Pitting edema, and Generalized edema 3 Includes terms Arthritis, Arthralgia, Joint swelling, and Joint stiffness Table 4 shows laboratory abnormalities that occurred in greater than 15% of patients, and more frequently (>5%) in the ZYTIGA arm compared to placebo in Study 2. Grade 3-4 lymphopenia (9%), hyperglycemia (7%) and high alanine aminotransferase (6%) occurred at a greater than 5% rate in the ZYTIGA arm.
Musculoskeletal discomfort, and Musculoskeletal stiffness terms Edema, Edema peripheral, Pitting edema, and Generalized edema 5 Includes all fractures with the exception of pathological fracture 6 Includes terms Arrhythmia, Tachycardia, Atrial ﬁbrillation, Supraventricular tachycardia, Atrial tachycardia, Ventricular tachycardia, Atrial ﬂutter, Bradycardia, Atrioventricular block complete, Conduction disorder, and Bradyarrhythmia 7 Includes terms Angina pectoris, Chest pain, and Angina unstable. Myocardial infarction or ischemia occurred more commonly in the placebo arm than in the ZYTIGA arm (1.3% vs. 1.1% respectively). 8 Includes terms Cardiac failure, Cardiac failure congestive, Left ventricular dysfunction, Cardiogenic shock, Cardiomegaly, Cardiomyopathy, and Ejection fraction decreased 4 Includes
Table 2 shows laboratory abnormalities of interest from Study 1. Grade 3-4 low serum phosphorus (7%) and low potassium (5%) occurred at a greater than or equal to 5% rate in the ZYTIGA arm. Table 2: Laboratory Abnormalities of Interest in Study 1 Abiraterone (N=791) Placebo (N=394) Laboratory All Grades Grade 3-4 All Grades Grade 3-4 Abnormality (%) (%) (%) (%) Hypertriglyceridemia 62.5 0.4 53.0 0 High AST 30.6 2.1 36.3 1.5 Hypokalemia 28.3 5.3 19.8 1.0 Hypophosphatemia 23.8 7.2 15.7 5.8 High ALT 11.1 1.4 10.4 0.8 High Total Bilirubin 6.6 0.1 4.6 0 Study 2: Metastatic CRPC Prior to Chemotherapy: Study 2 enrolled 1088 patients with metastatic CRPC who had not received prior cytotoxic chemotherapy. Patients were ineligible if AST and/or ALT ≥2.5X ULN and patients were excluded if they had liver metastases. Table 3 shows adverse reactions on the ZYTIGA arm in Study 2 that occurred with a ≥2% absolute increase in frequency compared to placebo. The median duration of treatment with ZYTIGA was 13.8 months. Table 3: Adverse Reactions in ≥5% of Patients on the ZYTIGA Arm in Study 2 ZYTIGA with Placebo with Prednisone (N=542) Prednisone (N=540) System/Organ Class All Grades1 Grade 3-4 All Grades Grade 3-4 Adverse reaction % % % % General disorders Fatigue 39.1 2.2 34.3 1.7 Edema2 25.1 0.4 20.7 1.1 Pyrexia 8.7 0.6 5.9 0.2 Musculoskeletal and connective tissue disorders Joint swelling/ discomfort3 30.3 2.0 25.2 2.0 Groin pain 6.6 0.4 4.1 0.7 Gastrointestinal disorders Constipation 23.1 0.4 19.1 0.6 Diarrhea 21.6 0.9 17.8 0.9 Dyspepsia 11.1 0.0 5.0 0.2 Vascular disorders Hot ﬂush 22.3 0.2 18.1 0.0 Hypertension 21.6 3.9 13.1 3.0 Respiratory, thoracic and mediastinal disorders Cough 17.3 0.0 13.5 0.2 Dyspnea 11.8 2.4 9.6 0.9 Psychiatric disorders Insomnia 13.5 0.2 11.3 0.0 Injury, poisoning and procedural complications Contusion 13.3 0.0 9.1 0.0 Falls 5.9 0.0 3.3 0.0 Infections and infestations Upper respiratory tract infection 12.7 0.0 8.0 0.0 Nasopharyngitis 10.7 0.0 8.1 0.0
Table 4: Laboratory Abnormalities in >15% of Patients in the ZYTIGA Arm of Study 2 Abiraterone (N = 542) Placebo (N = 540) Laboratory Grade 1-4 Grade 3-4 Grade 1-4 Grade 3-4 Abnormality % % % % Hematology Lymphopenia 38.2 8.7 31.7 7.4 Chemistry Hyperglycemia1 56.6 6.5 50.9 5.2 High ALT 41.9 6.1 29.1 0.7 High AST 37.3 3.1 28.7 1.1 Hypernatremia 32.8 0.4 25.0 0.2 Hypokalemia 17.2 2.8 10.2 1.7 1Based on non-fasting blood draws Cardiovascular Adverse Reactions: In the combined data for studies 1 and 2, cardiac failure occurred more commonly in patients treated with ZYTIGA compared to patients on the placebo arm (2.1% versus 0.7%). Grade 3-4 cardiac failure occurred in 1.6% of patients taking ZYTIGA and led to 5 treatment discontinuations and 2 deaths. Grade 3-4 cardiac failure occurred in 0.2% of patients taking placebo. There were no treatment discontinuations and one death due to cardiac failure in the placebo group. In Study 1 and 2, the majority of arrhythmias were grade 1 or 2. There was one death associated with arrhythmia and one patient with sudden death in the ZYTIGA arms and no deaths in the placebo arms. There were 7 (0.5%) deaths due to cardiorespiratory arrest in the ZYTIGA arms and 3 (0.3%) deaths in the placebo arms. Myocardial ischemia or myocardial infarction led to death in 3 patients in the placebo arms and 2 deaths in the ZYTIGA arms. DRUG INTERACTIONS Drugs that Inhibit or Induce CYP3A4 Enzymes: Based on in vitro data, ZYTIGA is a substrate of CYP3A4. In a dedicated drug interaction trial, co-administration of rifampin, a strong CYP3A4 inducer, decreased exposure of abiraterone by 55%. Avoid concomitant strong CYP3A4 inducers during ZYTIGA treatment. If a strong CYP3A4 inducer must be co-administered, increase the ZYTIGA dosing frequency [see Dosage and Administration (2.3) and Clinical Pharmacology (12.3) in full Prescribing Information]. In a dedicated drug interaction trial, co-administration of ketoconazole, a strong inhibitor of CYP3A4, had no clinically meaningful effect on the pharmacokinetics of abiraterone [see Clinical Pharmacology (12.3) in full Prescribing Information]. Effects of Abiraterone on Drug Metabolizing Enzymes: ZYTIGA is an inhibitor of the hepatic drug-metabolizing enzyme CYP2D6. In a CYP2D6 drug-drug interaction trial, the Cmax and AUC of dextromethorphan (CYP2D6 substrate) were increased 2.8- and 2.9-fold, respectively, when dextromethorphan was given with abiraterone acetate 1,000 mg daily and prednisone 5 mg twice daily. Avoid co-administration of abiraterone acetate with substrates of CYP2D6 with a narrow therapeutic index (e.g., thioridazine). If alternative treatments cannot be used, exercise caution and consider a dose reduction of the concomitant CYP2D6 substrate drug [see Clinical Pharmacology (12.3) in full Prescribing Information].
ZYTIGA® (abiraterone acetate) Tablets
ZYTIGA® (abiraterone acetate) Tablets
In vitro, ZYTIGA inhibits CYP2C8. There are no clinical data on the use of ZYTIGA with drugs that are substrates of CYP2C8. However, patients should be monitored closely for signs of toxicity related to the CYP2C8 substrate if used concomitantly with abiraterone acetate.
OVERDOSAGE Human experience of overdose with ZYTIGA is limited. There is no specific antidote. In the event of an overdose, stop ZYTIGA, undertake general supportive measures, including monitoring for arrhythmias and cardiac failure and assess liver function. Storage and Handling: Store at 20°C to 25°C (68°F to 77°F); excursions permitted in the range from 15°C to 30°C (59°F to 86°F) [see USP controlled room temperature]. Based on its mechanism of action, ZYTIGA may harm a developing fetus. Therefore, women who are pregnant or women who may be pregnant should not handle ZYTIGA without protection, e.g., gloves [see Use in Specific Populations].
USE IN SPECIFIC POPULATIONS Pregnancy: Pregnancy Category X [see Contraindications].: ZYTIGA can cause fetal harm when administered to a pregnant woman based on its mechanism of action and findings in animals. While there are no adequate and well-controlled studies with ZYTIGA in pregnant women and ZYTIGA is not indicated for use in women, it is important to know that maternal use of a CYP17 inhibitor could affect development of the fetus. Abiraterone acetate caused developmental toxicity in pregnant rats at exposures that were lower than in patients receiving the recommended dose. ZYTIGA is contraindicated in women who are or may become pregnant while receiving the drug. If this drug is used during pregnancy, or if the patient becomes pregnant while taking this drug, apprise the patient of the potential hazard to the fetus and the potential risk for pregnancy loss. Advise females of reproductive potential to avoid becoming pregnant during treatment with ZYTIGA. In an embryo-fetal developmental toxicity study in rats, abiraterone acetate caused developmental toxicity when administered at oral doses of 10, 30 or 100 mg/kg/day throughout the period of organogenesis (gestational days 6-17). Findings included embryo-fetal lethality (increased post implantation loss and resorptions and decreased number of live fetuses), fetal developmental delay (skeletal effects) and urogenital effects (bilateral ureter dilation) at doses ≥10 mg/kg/day, decreased fetal ano-genital distance at ≥30 mg/kg/day, and decreased fetal body weight at 100 mg/kg/day. Doses ≥10 mg/kg/day caused maternal toxicity. The doses tested in rats resulted in systemic exposures (AUC) approximately 0.03, 0.1 and 0.3 times, respectively, the AUC in patients. Nursing Mothers: ZYTIGA is not indicated for use in women. It is not known if abiraterone acetate is excreted in human milk. Because many drugs are excreted in human milk, and because of the potential for serious adverse reactions in nursing infants from ZYTIGA, a decision should be made to either discontinue nursing, or discontinue the drug taking into account the importance of the drug to the mother. Pediatric Use: Safety and effectiveness of ZYTIGA in pediatric patients have not been established. Geriatric Use: Of the total number of patients receiving ZYTIGA in phase 3 trials, 73% of patients were 65 years and over and 30% were 75 years and over. No overall differences in safety or effectiveness were observed between these elderly patients and younger patients. Other reported clinical experience has not identified differences in responses between the elderly and younger patients, but greater sensitivity of some older individuals cannot be ruled out. Patients with Hepatic Impairment: The pharmacokinetics of abiraterone were examined in subjects with baseline mild (n=8) or moderate (n=8) hepatic impairment (Child-Pugh Class A and B, respectively) and in 8 healthy control subjects with normal hepatic function. The systemic exposure (AUC) of abiraterone after a single oral 1,000 mg dose of ZYTIGA increased by approximately 1.1-fold and 3.6-fold in subjects with mild and moderate baseline hepatic impairment, respectively compared to subjects with normal hepatic function. No dosage adjustment is necessary for patients with baseline mild hepatic impairment. In patients with baseline moderate hepatic impairment (ChildPugh Class B), reduce the recommended dose of ZYTIGA to 250 mg once daily. If elevations in ALT or AST >5X ULN or total bilirubin >3X ULN occur in patients with baseline moderate hepatic impairment, discontinue ZYTIGA treatment [see Dosage and Administration (2.1) and Clinical Pharmacology (12.3) in full Prescribing Information]. The safety of ZYTIGA in patients with baseline severe hepatic impairment has not been studied. These patients should not receive ZYTIGA. For patients who develop hepatotoxicity during treatment, interruption of treatment and dosage adjustment may be required [see Dosage and Administration (2.2) in full Prescribing Information, Warnings and Precautions, and Clinical Pharmacology (12.3)] in full Prescribing Information. Patients with Renal Impairment: In a dedicated renal impairment trial, the mean PK parameters were comparable between healthy subjects with normal renal function (N=8) and those with end stage renal disease (ESRD) on hemodialysis (N=8) after a single oral 1,000 mg dose of ZYTIGA. No dosage adjustment is necessary for patients with renal impairment [see Dosage and Administration (2.1) and Clinical Pharmacology (12.3) in full Prescribing Information].
PATIENT COUNSELING INFORMATION See FDA-approved patient labeling (Patient Information) • Patients should be informed that ZYTIGA and prednisone are used together and that they should not interrupt or stop either of these medications without consulting their physician. • Patients receiving GnRH agonists should be informed that they need to maintain this treatment during the course of treatment with ZYTIGA and prednisone. • Patients should be informed that ZYTIGA must not be taken with food and that no food should be consumed for at least two hours before the dose of ZYTIGA is taken and for at least one hour after the dose of ZYTIGA is taken. They should be informed that the tablets should be swallowed whole with water without crushing or chewing. Patients should be informed that taking ZYTIGA with food causes increased exposure and this may result in adverse reactions. • Patients should be informed that ZYTIGA is taken once daily and prednisone is taken twice daily according to their physician’s instructions. • Patients should be informed that in the event of a missed daily dose of ZYTIGA or prednisone, they should take their normal dose the following day. If more than one daily dose is skipped, patients should be told to inform their physician. • Patients should be apprised of the common side effects associated with ZYTIGA, including peripheral edema, hypokalemia, hypertension, elevated liver function tests, and urinary tract infection. Direct the patient to a complete list of adverse drug reactions in PATIENT INFORMATION. • Patients should be advised that their liver function will be monitored using blood tests. • Patients should be informed that ZYTIGA may harm a developing fetus; thus, women who are pregnant or women who may be pregnant should not handle ZYTIGA without protection, e.g., gloves. Patients should also be informed that it is not known whether abiraterone or its metabolites are present in semen and they should use a condom if having sex with a pregnant woman. The patient should use a condom and another effective method of birth control if he is having sex with a woman of child-bearing potential. These measures are required during and for one week after treatment with ZYTIGA. Manufactured by: Patheon Inc. Mississauga, Canada Manufactured for: Janssen Biotech, Inc. Horsham, PA 19044 © Janssen Biotech, Inc. 2012 Revised: September 2013 003185-130920
INDICATION and IMPORTANT SAFETY INFORMATION about ZYTIGA® (abiraterone acetate) INDICATION ZYTIGA® (abiraterone acetate) in combination with prednisone is indicated for the treatment of patients with metastatic castration-resistant prostate cancer (mCRPC). IMPORTANT SAFETY INFORMATION
Contraindications ZYTIGA® (abiraterone acetate) is not indicated for use in women. ZYTIGA® can cause fetal harm (Pregnancy Category X) when administered to a pregnant woman and is contraindicated in women who are or may become pregnant. Hypertension, Hypokalemia and Fluid Retention Due to Mineralocorticoid Excess Use with caution in patients with a history of cardiovascular disease or with medical conditions that might be compromised by increases in blood pressure, hypokalemia, or fluid retention. ZYTIGA® may cause hypertension, hypokalemia, and fluid retention as a consequence of increased mineralocorticoid levels resulting from CYP17 inhibition. Safety has not been established in patients with LVEF <50% or New York Heart Association (NYHA) Class III or IV heart failure (in Study 1) or NYHA Class II to IV heart failure (in Study 2) because these patients were excluded from these randomized clinical trials. Control hypertension and correct hypokalemia before and during treatment. Monitor blood pressure, serum potassium, and symptoms of fluid retention at least monthly. Adrenocortical Insufficiency (AI) AI was reported in patients receiving ZYTIGA® in combination with prednisone, after an interruption of daily steroids and/or with concurrent infection or stress. Use caution and monitor for symptoms and signs of AI if prednisone is stopped or withdrawn, if prednisone dose is reduced, or if the patient experiences unusual stress. Symptoms and signs of AI may be masked by adverse reactions associated with mineralocorticoid excess seen in patients treated with ZYTIGA®. Perform appropriate tests, if indicated, to confirm AI. Increased dosages of corticosteroids may be used before, during, and after stressful situations. Hepatotoxicity Monitor liver function and modify, withhold, or discontinue ZYTIGA® dosing as recommended (see Prescribing Information for more information). Measure serum transaminases [alanine aminotransferase (ALT) and aspartate aminotransferase (AST)] and bilirubin levels prior to starting treatment with ZYTIGA®, every two weeks for the first three months of treatment, and monthly thereafter. Promptly measure serum total bilirubin, AST, and ALT if clinical symptoms or signs suggestive of hepatotoxicity develop. Elevations of AST, ALT, or bilirubin from the patient’s baseline should prompt more frequent monitoring. If at any time AST or ALT rise above five times the upper limit of normal (ULN) or the bilirubin rises above three times the ULN, interrupt ZYTIGA® treatment and closely monitor liver function. Increased ZYTIGA® Exposures with Food ZYTIGA® must be taken on an empty stomach. No food should be eaten for at least two hours before the dose of ZYTIGA® is taken and for at least one hour after the dose of ZYTIGA® is taken. Abiraterone Cmax and AUC0-∞ (exposure) were increased up to 17- and 10- fold higher, respectively, when a single dose of abiraterone acetate was administered with a meal compared to a fasted state. Adverse Reactions The most common adverse reactions (≥10%) are fatigue, joint swelling or discomfort, edema, hot flush, diarrhea, vomiting, cough, hypertension, dyspnea, urinary tract infection and contusion. The most common laboratory abnormalities (>20%) are anemia, elevated alkaline phosphatase, hypertriglyceridemia, lymphopenia, hypercholesterolemia, hyperglycemia, elevated AST, hypophosphatemia, elevated ALT and hypokalemia. Drug Interactions Based on in vitro data, ZYTIGA® is a substrate of CYP3A4. In a drug interaction trial, co-administration of rifampin, a strong CYP3A4 inducer, decreased exposure of abiraterone by 55%. Avoid concomitant strong CYP3A4 inducers during ZYTIGA® treatment. If a strong CYP3A4 inducer must be co-administered, increase the ZYTIGA® dosing frequency only during the co-administration period [see Dosage and Administration (2.3)]. In a dedicated drug interaction trial, co-administration of ketoconazole, a strong inhibitor of CYP3A4, had no clinically meaningful effect on the pharmacokinetics of abiraterone. ZYTIGA® is an inhibitor of the hepatic drug-metabolizing enzyme CYP2D6. Avoid co-administration with CYP2D6 substrates with a narrow therapeutic index. If alternative treatments cannot be used, exercise caution and consider a dose reduction of the CYP2D6 substrate drug. In vitro, ZYTIGA® inhibits CYP2C8. There are no clinical data on the use of ZYTIGA® with drugs that are substrates of CYP2C8. Patients should be monitored closely for signs of toxicity related to the CYP2C8 substrate if used concomitantly with abiraterone acetate. Use in Specific Populations Do not use ZYTIGA® in patients with baseline severe hepatic impairment (Child-Pugh Class C). Please see Brief Summary of Prescribing Information on adjacent pages. © Janssen Biotech, Inc. 2013
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