BEST PRACTICES FOR DETERMINING FAIR MARKET VALUE FOR ALLIED HEALTH PROFESSIONAL SERVICES Presented at CBI conference: FMV of HCP and Investigator Payments May 20, 2015
AGENDA Section I Overview of the Challenge Section II Overcoming the Challenge Section III Case Studies Section IV Exception Process Section V Open Discussion Audience Experience
SECTION I OVERVIEW OF THE CHALLENGE Realizing Value Delivering Results
OVERVIEW OF THE CHALLENGE Developing fair market value ( FMV ) hourly and program rates for speaker program, advisory board, consulting, etc., services provided by allied health professionals ("AHP") may be particularly challenging. Examples include: Nurses and Nurse Practitioners Physician Assistants PhDs Pharmacists Payers Office Managers / Practice Administrators Medical Directors Chief Medical Officers Throughout this presentation Allied Health Professional is used to refer to individuals who are not MDs, but who may have influence over products prescribed, purchased, etc.
OVERVIEW OF THE CHALLENGE Typically FMV hourly rates are developed using the compensation of the AHP as a base, with adjustments to convert the hourly compensation to a consulting rate. Where the specialized experience includes qualifications not generally considered as required for the positon, the base compensation rarely captures the breadth and depth of these specialized AHPs. For example, even at the 90 th percentile, compensation for nurse practitioners will not capture managerial experience, clinical research experience, etc. Limitations in available compensation information may also be a problem. For example, the most detailed information for PhDs is based on academic salaries and likely does not include any additional compensation for research activities. Throughout this presentation Allied Health Professional is used to refer to individuals who are not MDs, but who may have influence over products prescribed, purchased, etc.
OVERVIEW OF THE CHALLENGE Examples of experience that nurses and nurse practitioners may have, which may not be captured in the FMV hourly rates: Advanced Education Additional Certifications or Licenses Management Experience Involvement in clinical research Leadership role in a professional organization Participation in a speakers bureau Author of publications in a relevant therapeutic area Throughout this presentation Allied Health Professional is used to refer to individuals who are not MDs, but who may have influence over products prescribed, purchased, etc.
OVERVIEW OF THE CHALLENGE The typical FMV rate card and tier criteria may also not be able to accommodate the specialized experience needed of some AHPs or MDs: Certain disease states such as multiple sclerosis Clinical trial design FDA regulatory approval process Development in certain areas such as vaccines Throughout this presentation Allied Health Professional is used to refer to individuals who are not MDs, but who may have influence over products prescribed, purchased, etc.
OVERVIEW OF THE CHALLENGE When considering the experience of the AHPs being used, remember you are paying for a service and not a person. The rates should only be adjusted to reflect the experience of the AHPs if that experience is relevant for the activity for which they are being engaged. It is only a problem if the experience is not reflected in the hourly rate, and if that experience is needed for the service the AHP is performing. Throughout this presentation Allied Health Professional is used to refer to individuals who are not MDs, but who may have influence over products prescribed, purchased, etc.
OVERVIEW OF THE CHALLENGE Even in situations where the FMV hourly rate reflects the AHP s specialized experience, the tier criteria used for AHPs, which is often the same as or based on the tier criteria for MDs, may not give the AHP credit for the experience. Tier criteria often excludes advanced degrees, additional licenses, management experience, etc. MD and AHP tier criteria is typically not specific to a disease-state and may not include the most significant experience considered when deciding to engage with the AHP or MD. Throughout this presentation Allied Health Professional is used to refer to individuals who are not MDs, but who may have influence over products prescribed, purchased, etc.
SECTION II OVERCOMING THE CHALLENGE Realizing Value Delivering Results
OVERCOMING THE CHALLENGE Isolate the issue and ensure there really is an issue. Talk with the requestor to understand why the current FMV rates do not adequately address the services for which the AHP is being engaged.» Are the qualifications needed for the service being requested, qualifications that are not typical of what might be expected by the AHP s position?» The AHP should be compensated based on the knowledge and experience required to provide the services in question. If the AHP is requesting a higher rate because of their experience and that experience is not relevant for the service they are being asked to provide, then an adjustment to the rate may not be warranted.» Are the qualifications already addressed in the criteria used to assign a tier to the AHP? Conclude if there is an issue with the current FMV rates or tier criteria or both. Throughout this presentation Allied Health Professional is used to refer to individuals who are not MDs, but who may have influence over products prescribed, purchased, etc.
OVERCOMING THE CHALLENGE If it is determined that the current FMV rates need to be adjusted or new rates need to be developed, CVs of the AHPs can provide insight on qualifications to consider when revising the rates: Consider past and current qualifications, positions, licenses, etc. Both may be relevant for the service in question. AHPs often hold management or administrative level positions in additional to the AHPs current clinical position. If the qualifications identified from the CV are relevant for the AHP to effectively provide the service in question, market compensation for these positions should be considered in determining the FMV rates for AHP. Throughout this presentation Allied Health Professional is used to refer to individuals who are not MDs, but who may have influence over products prescribed, purchased, etc.
OVERCOMING THE CHALLENGE If it is determined that, even after the FMV rates have been adjusted, the tier criteria are not sufficient to appropriately assess the level of the AHP, consider making revisions to the tier criteria. Applying the tier criteria for MDs to AHPs is likely to result in underestimating the AHP tier. The tier criteria for MDs and AHPs may need to be adjusted to reflect relevant experience needed that is specific to a disease state or specialized qualifications. Throughout this presentation Allied Health Professional is used to refer to individuals who are not MDs, but who may have influence over products prescribed, purchased, etc.
OVERCOMING THE CHALLENGE The following are examples of factors that may be relevant when assessing the tier level for nurses and nurse practitioners that may not be included if one set of criteria is used to assess all healthcare professionals: Education level Specialty certifications Management and administrative positions of specialty center or hospital Consulting experience
OVERCOMING THE CHALLENGE The following are examples of factors that may be included in one set of tier criteria, however, the level of experience associated with a tier may not be the same for all healthcare professionals: Specialty certifications Teaching experience and academic appointments Editorial board experience Clinical research experience Publications in relevant therapeutic area
SECTION III CASE STUDIES Realizing Value Delivering Results
CASE STUDY NURSE PRACTITIONER LIFE SCIENCE SERVICE PROVIDER Scenario Company XYZ would like Jane Doe, a nurse practitioner with a specialization in neurology, to provide certain consulting services. When offered Company XYZ s current FMV rate for a nurse practitioner with a specialization in neurology, Ms. Doe declines the engagement. Service Description Ticker NYSE: NCI Market Cap $840 million Professionals 2,500+ Headquarters Chicago, IL CV Highlights The services include Ms. Doe s participation in a speaker program event. The topic of the event is an overview of a new a drug used to treat patients with multiple sclerosis. Current Clinical Position: Nurse Practitioner Current Administrative Position: Director of Multiple Sclerosis Clinic.
CASE STUDY NURSE PRACTITIONER (CONT.) LIFE SCIENCE SERVICE PROVIDER The issue with Ms. Doe s hourly rate was addressed as follows: Upon reviewing Ms. Doe s CV and the services she was being contracted to provide, it was determined that the knowledge and experience she has gained from her current management position as a director of a multiple sclerosis clinic is extremely relevant for the services in question. Therefore, along with nurse practitioner compensation, consideration was appropriately given to compensation for non-physicians with management positions at specialty clinics and hospitals in calculating a revised FMV hourly rate for Dr. Smith. After including the compensation for these additional positions, Ms. Doe s FMV hourly rate was increased by more than 50 percent.
CASE STUDY - PHD PROVIDER Scenario Company ABC would like Dr. Smith, a respected expert in the field of patient reported outcomes, to provide certain consulting services in connection with product development. When offered Company ABC s current FMV rate for a PhD in community health, Dr. Smith declines the engagement. Service Description Ticker NYSE: NCI Market Cap $840 million Professionals 2,500+ Headquarters Chicago, IL CV Highlights The services include Dr. Smith s participation in an expert meeting where Dr. Smith s research and expertise are directly relevant and will benefit Company ABC s project team as they prepare for a Phase 2 trial. Education: PhD Community Health Current Position: Professor of Public Health at University Past Positions / Experiences: Director of Social and Behavioral Sciences at University, worked for FDA
CASE STUDY - PHD (CONT.) The issue with Dr. Smith s hourly rate was addressed as follows: Upon reviewing Dr. Smith s CV and the services he was being contracted to provide, it was determined that the knowledge and experience he gained from working for the FDA, as well as his past position as the Director of Social and Behavioral Sciences at a major university, were very relevant for the services in question. Therefore, along with PhD compensation, in calculating the FMV hourly rate for Dr. Smith, consideration was given to compensation for director level PhDs and consulting rates for AHPs with FDA experience. Ticker NYSE: NCI Market Cap $840 million Professionals 2,500+ Headquarters Chicago, IL After including the compensation for these additional positions, Dr. Smith s FMV hourly rate was approximately 25 percent higher than the rate initially offered.
SECTION IV EXCEPTION PROCESS Realizing Value Delivering Results
EXCEPTION PROCESS Establish a committee comprising representatives from legal and compliance to review requests for rates that fall outside FMV. The business presents a case, with any additional information gathered from research, which the committee then reviews. The committee s decision is then documented. Establish an aggregate spend group with an oversight committee comprising representatives from all business functions (legal, compliance, finance and human resources). The committee has control over all contractual relationships with HCPs and AHPs and is leveraged to make a decision when a proposed payment is outside the range of established FMV. Where the FMV rate included in the rate card is not the maximum established by an independent third party analysis, use the ranges provided by the third party analysis to support payments that are above the current rate, but still within the range of FMV. Throughout this presentation Allied Health Professional is used to refer to individuals who are not MDs, but who may have influence over products prescribed, purchased, etc.
SECTION V OPEN DISCUSSION Realizing Value Delivering Results
PLEASE SHARE YOUR EXPERIENCE When it is not practical or timely to have a third party valuation analysis performed and the request falls outside your rate card and exception policy, what do YOU do?
CONTACT INFORMATION Julie DeLong, CFA, CVA Managing Director Navigant Consulting, Inc. 404.602.5021 jdelong@navigant.com
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