Cancer-care payment pilot cut costs by a third

The total cost of caring for patients with three types of cancers was lowered by 34%, according to a study detailing an experimental physician-payment method, an alternative to the traditional 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., leaders agree.

In a pilot launched in October 2009, five medical oncology groups collaborated with insurer UnitedHealthcare to use an episode payment model, which reimbursed physicians at a fixed price, based on best practices and patient outcomes. The collaboration explored an alternative to fee-for-service, 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 with the anticipated costs, according to the study published last week 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. He said other pilot projects have seen reductions averaging 5%. The savings realized by the pilot oncology groups can be turned into lower premiums for employees served by the insurer, he said.

But there was a “paradoxical increase” in the use of chemotherapy drugs overall, with actual costs more than $13 million greater than predicted. Before starting the pilot, Newcomer said each oncology group chose a drug regimen it thought best to treat a specific cancer. That prompted initial concerns from the pharmaceutical industry and others that some treatments might be excluded.

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

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

The National Comprehensive Cancer Network agreed that new payment schemes that provide optimal patient care and control healthcare costs are needed and applauded UnitedHealthcare for performing the study. However, CEO Dr. Robert Carlson said the study was small and more research is needed to understand what drove down 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.”

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