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New payment model saved oncology groups $33 million, study finds

The total cost of caring for patients with three types of cancers was lowered by more than a third, in a new study detailing use of an experimental physician-payment method, an alternative to the widely used fee-for-service model. The results are encouraging, oncology and health policy leaders say. More initiatives that provide optimal care in a cost-efficient manner are needed to help curtail the skyrocketing and unsustainable cost of cancer care in the U.S., the leaders agree.

In a pilot launched in October 2009, five medical oncology groups collaborated with the insurer UnitedHealthcare to use an episode payment model, which reimbursed physicians on a fixed-price, based on episodes of best-practices and patient outcomes. The collaboration explored an alternative to the fee-for-service method, which ties financial incentives to billing for chemotherapy drugs.

By December 2012, use of the episode payment model for treatment of breast, lung and colon cancers in 810 patients had led to a net savings of more than $33 million, when compared to the anticipated costs, according to the study published Tuesday in the Journal of Oncology Practice, an American Society of Clinical Oncology publication.

“This was a pretty dramatic change,” said Dr. Lee Newcomer, lead author of the report and senior vice president of oncology at UnitedHealthcare, who said other pilot projects have seen reductions in the 5% range. The savings seen by the oncology groups in the pilot can be turned into lower premiums for the employees served by the insurer, he said.

There was, however, a “paradoxical increase” in use of chemotherapy drugs overall. The actual costs were more than $13 million greater than what was predicted. Before starting the program, Newcomer said each oncology group picked the drug regimen they thought best to treat a specific cancer, something that prompted initial concern from the pharmaceutical industry and others that certain treatments might be excluded.

“But, as you can see, drug usage actually went up. This didn't hurt pharma at all in terms of utilization,” Newcomer said. The pilot also found the oncology groups performed comparably well to the national average on more than 60 measures of quality and costs, including, admissions for treatment-related symptoms, patient relapse time periods, survival rates, radiology use, and drug costs per episode.

ASCO, which in May also announced a consolidated payment method for oncology, said it supports payment reform, and that new approaches should aim not only to improve efficiency, but cover the full range of patient services that constitute high-quality cancer care. That's something, Dr. Richard Schilsky, ASCO's chief medical officer, says is not reimbursed by current payment systems.

“By shifting the focus from the volume of services provided to the quality of care delivered, we can improve the value of cancer care while better accounting for patients' individual needs,” he said. In a statement he said he is encouraged by the early signs of success.

The National Comprehensive Cancer Network agrees new payment schemes that provide optimal patient care while controlling health care costs are needed, and applauds UnitedHealthcare for performing the study. However, chief executive officer, Dr. Robert Carlson says the study was small and more research is needed understand what drove down the costs.

“It is possible that merely the knowledge that participation in the study or that the costs of care were being monitored changed physician behavior and not the method of payment,” Carlson said. “Whether the use of bundled payments will help to achieve both goals remains to be seen.”

In the meantime, the annual costs of cancer care are projected to rise to more than $173 billion in 2020, up from $104 billion in 2006, according to a 2014 report on the state of cancer care in America. Access to high-quality cancer care will be sustained and expanded only if these rising costs are addressed, the report said.

Health economists who reviewed the study agree it is an important first step. “As far as I can tell, this is the first assessment of quality and cost metrics for these cancers in the outpatient setting, that are fully baked and have actually been implemented with participation from both medical providers and insurers,” said Rena Conti, assistant professor of health policy and economics at the University of Chicago. “I think we're in a period of very significant change, and I am very supportive of models that change the incentive for physicians and hospitals to be oriented toward quality of care.”

Newcomer said other oncology groups have expressed interest in the episode payment model. He plans to triple the size of the program next year, and says the five original oncology practices—Northwest Georgia Oncology in Atlanta; the Center for Cancer and Blood Disorders in Fort Worth, Texas; Dayton Physicians in Dayton, Ohio; Advanced Medical Specialties of Miami; and West Clinic in Memphis—all intend to continue.

The problem with the current fee-for-service model, Newcomer explained, is that it does not incentivize sitting down and talking to a patient, or spending the extra time needed to carefully map out a treatment plan.

“None of those things are paid for,” he said. “By its very nature, it (fee-for-service) encourages people to do more and more and more. Most groups see this as a failing way to pay physicians.”

Follow Sabriya Rice on Twitter: @MHSRice


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