innovative approaches to outsourcing operations€¦ · outsourced fully outsourced total pricing...

Innovative Approaches to Outsourcing Operations

© 2019 Model N, Inc. Proprietary and Confidential | 1

OPTIMIZING YOUR CONTRACT OPERATIONS BY EXAMINING VARIOUS APPROACHES OF LEVERAGING ON PREMISE, RMAAS AND CUMBERLAND

MANAGED SERVICES POWERED BY MODEL N


Christine OstrowskiPURDUE PHARMA LP

Dave CannellCUMBERLAND CONSULTING GROUP

AGENDA

OPTIMIZING YOUR CONTRACT

OPERATIONS BY EXAMINING

VARIOUS APPROACHES OF

LEVERAGING ON PREMISE,

RMAAS AND CUMBERLAND

MANAGED SERVICES

POWERED BY MODEL N

Manufacturer Landscape and BPO

BPO Model 1

STAFF AUGMENTATION

BPO Model 2

COMPREHENSIVE OUTSOURCING

BPO Model 3

A HYBRID APPROACH

Purdue Case Study

1

2

3

4

5


Manufacturer Landscape


TYPICAL PROCESS FLOW

© 2019 Model N, Inc. Proprietary and Confidential |

5

Maste

r D

ata GP Calculations

Medicaid

Managed Care

Chargebacks

Part D & Tricare

Co

ntr

act

Manag

em

ent

Data Mart

ERP for

Payments

EDI

VAN

Websites

Wholesaler

GPO

PBM/MCO

RX

States

Medicaid, Tricare, Part D

VA, OPA, CMS

Approvals/

Workflow

Users

Customers

Paper

Claims

Electronic

Claims

Wholesaler

GPO

PBM/MCO

RX

States


VA, OPA, CMS

Reconciliation

Customers

Outsourced Functions

Q: Does your organization

partially outsource or fully

outsource any of the contracting

functions listed?


Pre-Signature Functions:

• Pricing Strategy (List prices)• Contract Strategy (Rebate ranges / guidelines)• Product Pricing and Implementation

• Pre-Contract ‘deal / no-deal’ Analysis• Contract Development and Language Negotiations

Contract Administration:• Data Validation on the Commercial Side

• Contract Compliance (e.g. formulary placement, market share)• Commercial Rebate Processing

• Chargeback Processing• Coverage Gap / Donut Hole Payment Processing• Post-Contract Analysis & Reporting

Government Pricing & Compliance:

• Data Validation on the Government Side• Medicaid Dispute Resolution• Medicaid Rebate Processing

• Other Government Rebate Processing• Government Price Calculations & Reporting

• Auditing of Internal Contracting Processes


64%Responding Manufacturers

Outsource at Least One

Function

16 of the 25 respondents

reported outsourcing at least

one of the functions

Few companies outsource

Pre-Signature functions

while many companies

outsource post-signature

functions.(n=16)


Partially

Outsourced

Fully

OutsourcedTotal

Pricing Strategy (List prices) 1 0 1

Contract Strategy (Rebate ranges / guidelines) 1 0 1

Product Pricing and implementation 0 0 0

Pre-Contract ‘deal / no-deal’ Analysis 0 0 0

Contract Development and Language Negotiations 1 0 1

Data Validation on the Commercial Side 6 7 13

Contract compliance 2 1 3

Commercial Rebate Processing 5 4 9

Chargeback Processing 3 6 9

Coverage Gap / Donut Hole Payment Processing 2 7 9

Post-Contract Analysis & Reporting 1 0 1

Data Validation on the Government Side 3 6 9

Government Rebate Processing 0 4 4

Government Price Calculations & Reporting 2 4 6

Medicaid Dispute Resolution 1 5 6

Medicaid Rebate Processing 1 7 8

Auditing of Internal Contracting Processes 5 1 6Go

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Pri

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Performing these functions internally require staffing, processes, and systems in many functional areas

Resourcing

GPO or contract membership/class of trade management

Contract/product system set up/administration

Contract compliance validations

EDI transmissions (chargeback receipt, contract notification to distributors, reconciliation of

submission)

Chargeback processing and credit management

Contract/product system set

up/administration

Contract compliance validations

(formulary or market basket data,

data validations, etc.)

Analytics

Rebate processing, payment

approval, payment processing


PHS, monthly AMP, quarterly

AMP, ASP, quarterly NonFAMP,

annual NonFAMP, BP, FCP

calculations

PHS membership maintenance

and repayment processes

Government contract

administration

Policy and procedure updates

CHARGEBACKS REBATES GOVT PRICING

BPO Model 1 - Staff Augmentation


TRIGGERS

• Resource gaps: temporary (FMLA or other leaves) or permanent (turnover)

• Additional projects or priority shift (system upgrade etc.)

• Increase in processing volumes/contracted business

• Cyclical volumes

BENEFITS

• Less FT headcount/management required

• Quick fix/use as required

• Scalability (up or down), flexibility

• Cost effective

• Reduced learning curve (personnel generally experienced in function)

CONSIDERATIONS

• Which areas are prime candidates for staff augmentation?

• Quality of staff augmentation/knowledge of temporary staff

• Consistency/longevity

• Ability to manage remote/vendor staff – may require different managerial skill set

BPO Model 2 – Comprehensive Outsourcing


Maste

r D

ata GP Calculations

Medicaid

Managed Care

Chargebacks

Part D & Tricare

Co

ntr

act

Manag

em

ent

Software and Cloud Standard

Reporting

Analytics

Payment

Portal

OCR

EDI

VAN

Script

Validate

MFT

Wholesaler

GPO

PBM/MCO

RX

States


VA, OPA, CMS

Workflow

Clients



TRIGGERS

• Significant Resource Constraints

• Corporate direction/downsizing/IT Costs

• Streamline operations/Headcount reduction

• Increase/decrease in business

• Reduce barriers on entry to new Market/New product launch

BENEFITS

• Less FT headcount/management required or Redeployment of existing resources

• Transactional Processing managed / Value Add analysis possible

• Scalability/Flexibility

• IT infrastructure costs

CONSIDERATIONS

• Which areas should be maintained as an in house function

• Data Migration (Historical Data), Interfaces and Reporting

• Which system (Future considerations)

• Existing staff re-assignment/Management of new process

Considerations


To what extent will the service provider take over customer facing functions?

Who issues the payment?

Will the Service provider take part in negotiations?

Beyond payment packages, what is the reporting/analysis strategy?

Profitability analysis, market definitions, pricing/rebate levels?

Medicaid: CLD/Rx, 340B, Formulary,

Process, Approvals, Payments

Mgd Care/Part D/Tricare/Gap:

Rx/340B/Formulary, Process,

Approvals, Payments, Price Protection

Institutional Contracting:

Customer/Membership/Pricing

Management, Transactional Validation

and payments (Wholesaler credits,

Admin Fees, other rebates), EDI and

wholesaler communication

Govt Pricing: Data Sources,

Calculation Methodology


Medicaid - All possible data for adjustments back to the beginning of OBRA 90

Managed Care - Up to contract limits/reporting requirements

Chargebacks – up to contract limits for resubmissions/reporting requirements

GP – Up to restatement limits per statutory rules

Balance effort to convert history with benefits

BUSINESS TRANSACTIONAL DATA

14

BPO Model 3 – A Hybrid Approach

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Leveraging the most beneficial

components of existing BPO models and

direct application access with a Model N

cloud migration can result in a hybrid

processing approach that sometimes provides the most valuable solution

Hybrid Model CONSIDERATIONS

Technology and Sharing a system

System Support

Coordination/Communication

Interfaces (Integrating with on premise

systems and potentially the Cloud)

Reporting/analytics

Staff Augmentation for areas which

need additional resourcing

Cloud Hosting Potential

Transactional Functions Outsourced

Retain Certain Functions In-House

Shared System Functions


CASE STUDYPurdue

Christine Ostrowski


CASE STUDYPurdue

2015

Chargeback processing and membership management –

Comprehensive Outsourced Model

Why?

• Transactional function

• Well understood, common practices; clear SOPs

• Realigned headcount within

contract operations and market access


Contract Operations

Outsourcing History

CASE STUDYPurdue

2016

Staff Augmentation Model Medicaid and

Managed Care Rebate Processing

Why Medicaid?

• Realigned Medicaid headcount to GP and

pricing headcount

• Cyclical work, well understood common

practices; but new function for my team

Why Managed Care?

• Ongoing staff aug: Increased workload due to

contract changes, but not enough for an FTE

• Additional temporary staff aug: Due to rebate

analyst vacancy


Purdue Contract Operations Landscape pre-2018

GP Calculations

Medicaid

Managed Care

Part D & Tricare

ERP for Sales &

Payments

States

Flex On Premise

ON PREMISE SYSTEMSOUTSOURCED

Chargebacks

processing/Membership

management

DW

Reporting

STAFF AUG.

Medicaid claims analyst

(staff aug.)

Managed Care Claims Analyst

(staff aug.)

Data Feeds (Reporting/GP)

IN HOUSEGP Calculation/Reporting

Workflow

Medicaid Processing

Managed Care Processing

Part D/Tricare

Other

Internal Systems

Payments/Credits

Using on-premise system

Using vendor’s system

2018: Contract Operations Transformation


OBJECTIVE

• Evolve to a flexible, scalable, nimble outsourced model within seven months

DECISION ON PROJECT SCOPE

• Outsource transactional processing functions

• Maintain sufficient internal personnel to oversee new processes

• Retain government pricing calculations in-house

PROJECT CHALLENGES

• 7 months from RFP to implementation

• Data migration risk and cost

• Integrating solution with GP system

2018: Contract Operations Transformation


TO MEET TIMEFRAME AND DATA CONCERNS:

• Expanded project to include moving Model N Flex system to the cloud

• Allowed transition of entire Medicaid and managed care historical data, simpler migration

• Retains future flexibility on rebate processing functions

• Retain GP function in-house via Flex in the cloud; remained integrated

• Continue as is with chargeback vendor; added admin fee processing to their scope

Purdue Contract Operations Landscape 2019

GP Calculations

Medicaid

Managed Care

Part D & Tricare

ERP for Sales &

Payments

States States

Flex On Premise

CLOUD OUTSOURCED – USING CLOUD & VENDOR SYSTEMS

DW

Reporting

OUTSOURCED – Vendor System

Chargebacks

IN HOUSE – USING CLOUD & INTERNAL SYSTEMS

GP Calculation/Reporting

Workflow

Other

Internal Systems

ON PREMISE

Medicaid Rebate Processing/Payment

Commercial/Med D Rebate

Processing/Payment

Tricare Rebate Processing/Payment

Sales/Payment/Credit CBK Feed

OCRData Mart

Approvals/

Workflow

Script

Validation

Membership Management

GPO Admin Fee Proc & Pymt

Data Validation

Formulary Validation

IT Support for GP Module

GP Upgrades

Revenue Manager/Medicaid/MDM

maintenance & upgrades

Analytics (Purdue using vendor

system)

Purdue BPO Implementation Challenges


• Self-imposed timeline of 6-7 months

• Required renegotiation of system license along with negotiation of vendor

services agreement

• 2 projects in 1

• Transition from on-premises to cloud

• Transition to BPO of certain services

2 Simultaneous Projects

2-3 months to complete implementation

Setup/migrate data for test instance

Configuration, system and unit testing, user testing

for all modules

Timing challenges

Reconfiguration of interfaces; testing of GP data

loads

Documentation transfer and process knowledge transfer (Purdue requirements)

Defining validations, processes, procedures, deliverables

Parallel testing

Analytics/report setup, testing

Defining roles and responsibilities of each party

Funding processes, redesign of internal approval & payment process

Customer notifications; change in point of contact


TRANSITION TO CLOUD TRANSITION TO BPO

Purdue BPO Implementation Challenges


PEOPLE

• Managing the change in roles for personnel: processor to reviewer; details to

analytics

• Establishing partnership and communication paths

ORGANIZATIONAL

• Ensuring streamlined processes and appropriate expectations moving forward

Collaboration, Coordination and Communication


• Sharing the Model N application

• Future upgrade scheduling

• Maintenance/downtime

• Security

• Master data updates

• New support model – new system and personnel

• Support/scheduling of internal interfaces

• On-premise Purdue systems to the Cloud Model N system

• New analytic system

• On-going team meetings

• Periodic review of submission volumes

• Refinement of processes

• Coordination of communications with customers

• Oversight of new process

Benefits of the Hybrid Model


SYSTEM RELATED

• Retained historical data in full, with a less risky migration

• GP system still integrated with Revenue Manager and Medicaid

• Able to maintain current chargeback model as is, without extensive reporting

or interface changes

• Reduced IT support/cost

• Systems maintenance functions outsourced – reduction in daily IT

support/cost and IT systems

• Future upgrade projects will be lower in cost, scope, and thus resource

impact

Benefits of the Hybrid Model


ORGANIZATIONAL

• Retained flexibility in terms of future operations model

• Reduced fixed headcount for contract operations, and reduced workload of

AP and Finance due to change in payment process

• In-house resources realigned to analytical and supervisory tasks

• Scalable up/down as required to support the business

• On demand analytics improved


QUESTIONS?

innovative approaches to outsourcing operations€¦ · outsourced fully outsourced total pricing...

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