MD Anderson Cancer Center bets on bundled payments

"For the last five years, MD Anderson and its Institute for Cancer Care Innovation have been looking at how to best approach a single price for treating cancers."

UnitedHealthcare and the University of Texas MD Anderson Cancer Center are piloting an episode of care, or bundled, payment model for patients being treated with head and neck cancers, a collaboration they describe as among the first to use bundled payments in a large, comprehensive oncology center.

“For the last five years, MD Anderson and its Institute for Cancer Care Innovation have been looking at how to best approach a single price for treating cancers,” said Thomas Feeley, MD, head of Anesthesiology and Critical Care at MD Anderson. “Bundled pricing is something that patients and care providers want, and this is our first opportunity to better understand how we can manage costs without sacrificing quality care and patient outcomes.”

The pilot will run for three years, enrolling up to 150 patients with cancers of the salivary glands, oral cavity, throat and larynx who are covered by UnitedHealthcare’s employer-sponsored health plans in the bustling greater Houston region.

The clinical side program is based on MD Anderson’s research-based regimens for the range of diagnostics, treatments, follow-up care and supportive services used in head and neck cancer. A pre-priced payment system will offer “an incentive to focus on the essential elements of care and to avoid unnecessary steps,” the organizations said.

“Our partnership with MD Anderson Cancer Center marks an important step toward expanded bundled care payment models and away from the traditional fee-for-service payments for oncology care,” said Lee Newcomer, MD, UnitedHealthcare’s vice president of oncology, genetics and gynecology. “MD Anderson’s work with value-based workflows makes them a natural partner for bundled payments.”

United’s “total care” reimbursement model has been gaining traction since the advent of health reform, now accounting for $36 billion across clinical areas and projected to reach $65 billion by 2018, the company said.

Cancer treatment in particular is an area that United believes it needs to ply this model, with cancer therapies accounting for 11 percent of its commercial health plan spending. Nationwide, cancer care is expected to exceed $200 billion by the end of the decade, amid the aging of society, earlier detection and new and expensive drugs.

Newcomer, who practiced oncology in Oklahoma before working in insurance, pointed to United’s previous oncology pilots as proof that the costs of cancer care can be controlled or reduced without adversely affecting quality or access.

In a three-year bundled payment pilot with five medical oncology practices covering 810 breast, colon and lung cancer patients, medical costs were 34 percent less than projections based on fee-for-service costs.

The pilot, outlined in the Journal of Oncology Practice, based episode-of-care payments on expected costs for standard six to 12 month treatment regimens as determined by doctors, with chemotherapy medications reimbursed at the average sales price, as a proxy for actual cost.

At MD Anderson, UnitedHealthcare members with head and neck cancer being treated in the pilot program will have the same care, approach, treatment and diagnostics as would otherwise, the organizations said. What is different is that they will be billed just once, with costs of tests, treatment and other services priced upfront.

While head and neck cancers are fairly uncommon, accounting for about 3 percent of cancer cases nationally. United said if the demonstration with MD Anderson is successful, it could apply the similar bundled payment models for more common cancers, like lung, colon and breast cancer, and on larger scales.