Value‐Based Physician Payment in Oncology: Public and Private Insurer Initiatives

Abstract

Public and private insurers are implementing payment mechanisms to improve coordination and reduce the cost of drug, hospital, and ancillary services for cancer patients. Some target unnecessary hospitalization, while others create incentives for prescribing lower‐cost chemotherapies and biologics. Physician payment methods in oncology require a balance between incentives for cost control and incentives for patient access to expensive specialty drugs. None of the initiatives adopt bundled methods out of concern for shifting excessive financial risk onto physicians in the context of rapid pharmaceutical innovation. Context High‐value oncology requires physicians to monitor and coordinate all aspects of care, educate and engage their patients, and adopt cost‐effective drug treatments. However, oncology practices in the United States traditionally have been reimbursed based on the number of office visits performed and through cost‐plus margins from prescription of expensive drugs. Public and private payers now are experimenting with methods of payment that include monthly care management fees, annual bonuses, and incentives for conservative choice among alternative drug regimens. Methods This paper uses case study methods to examine oncology payment initiatives at Medicare, Anthem, Aetna, and UnitedHealthcare, the nation's largest public and private health insurance plans. Findings The 4 insurers supplement traditional fee‐for‐service payment with payment methods designed to promote coordination of care and conservative use of health care resources. Medicare, Aetna, and UnitedHealthcare reward oncology practices that reduce per‐patient spending, targeting unnecessary patient visits to emergency departments and hospitals. Anthem offers monthly payments to practices that adhere to lower‐cost drug treatment pathways; Aetna increases the percentage markup on low‐cost generic chemotherapies but not on high‐cost biologics; and UnitedHealthcare removes the linkage between physician payment and spending on office‐infused drugs. As a condition for receiving the new payments, each of the initiatives requires participating practices to report and, in some cases, improve performance on quality metrics. None of the initiatives bundles payment for oncology drugs together with payment for other oncology services, out of concern for shifting financial risk onto physicians and creating access barriers for patients. Conclusions The emerging “value‐based” methods of oncology payment supplement fee‐for‐service and cost‐based reimbursements with per‐month and per‐episode payments, but none of the payers bundle spending on cancer drugs with payments for other services. Payers recognize that bundled payment could create access barriers for patients and undermine innovation in effective but expensive new pharmaceuticals.

Minimizing the burden of cancer in the United States: Goals for a high‐performing health care system

“…As noted above, there is substantial variation in patterns of cancer care and spending in the United States, especially for patients with advanced disease . Developing care delivery models that focus on oncology has been a priority, and several models have been piloted . Most oncology models have focused on the medical oncologist, and especially on patients receiving chemotherapy .…”

“…47,48 Developing care delivery models that focus on oncology has been a priority, and several models have been piloted. 105 Most oncology models have focused on the medical oncologist, and especially on patients receiving chemotherapy. 45,106,107 They share the goals of improving care coordination and reducing spending by avoiding preventable emergency room visits and hospitalizations.…”

“…An early example of a prospective treatment pathways model study is the Anthem Cancer Quality Program (Anthem Insurance Companies, Inc, Indianapolis, Indiana), which that began in 2014 and is being conducted in commercially insured individuals and Medicare Advantage beneficiaries. 105,115 Patients with colon, breast, and non-small cell lung cancer who are receiving chemotherapy in more than 500 practices in 10 states are included. Treatment pathways were developed with physician input and incorporated clinical benefit, survival, quality of life, and treatment toxicity.…”

What drives variation in spending for breast cancer patients within geographic regions?

“…The design and adoption of such interventions may be spurred by the advent of payment reforms for cancer care, such as the Oncology Care Model being tested by the Center for Medicare and Medicaid Innovation and in the private sector . However, initiatives to reduce variation in cancer spending are not without risks . It will be critical to monitor access to care, quality of care, and patient outcomes to ensure that changes in treatment patterns eliminate the provision of low‐value care and while preserving spending that is beneficial to patients.…”

“…31 However, initiatives to reduce variation in cancer spending are not without risks. 32 It will be critical to monitor access to care, quality of care, and patient outcomes to ensure that changes in treatment patterns eliminate the provision of lowvalue care and while preserving spending that is beneficial to patients.…”