Kaiser Responds to Association's Concerns

Oakland, Calif.

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

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

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

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

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