Bundled payment for cancer shows promise

Cancer treatment costs are among the highest in the healthcare industry. Insurer UnitedHealthcare created a pilot in an attempt to lower costs that has yielded some promising, though somewhat mixed results.

In a three-year alternative reimbursement pilot with five medical oncology practices covering 810 patients with breast, colon and lung cancers, UnitedHealthcare says it found significant cost savings without negatively impacting outcomes.

It achieved the cost savings by paying oncologists upfront for an entire treatment regimen, regardless of the drugs used. This change in financial incentives yielded a 34 percent reduction in medical costs compared to predicted spending, UnitedHealthcare and other pilot participants found in a study published the Journal of Oncology Practice.

The pilot 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.

This arrangement, wrote Lee Newcomer, MD, senior vice president of oncology at UnitedHealthcare and a study co-author, separates oncologists' income from drug sales while preserving the ability to maintain regular patient visits, which were reimbursed on fee-for-service contract rates.

In patients with cancer recurrence, the bundled payments were renewed every four months, letting oncologists continue to see the patients even if a therapy was no longer effective. Payments were also continued for patients no longer receiving chemotherapy or enrolled in hospice.

Physicians from the oncology practices, including the Northwest Georgia Oncology Centers and the Fort Worth, Texas-based Center for Blood and Cancer Disorders, worked with UnitedHealthcare to establish about 60 different measures of quality and cost to evaluate the pilot program. They also measured the number of emergency room visits, rate of complications, side effects and health outcomes across the patients and five medical groups.

While there wasn't sufficient analysis for survival outcomes, there wasn't "any measurable effect on quality outcomes or toxicity," the study authors wrote, arguing that the finding "challenges the assumption that any reduction of resources results in worse outcomes for cancer."

One of the medical groups was determined to be something of an outlier, with higher hospitalization rates across the three cancer types. The authors learned that follow-up appointments several weeks after a hospital discharge may have been too long and contributed to frequent readmissions, and now evaluates patients within 48 hours of discharge.

While the study found the pilot reduced spending by 34 percent, with the goal of removing the link between drug selection and oncologist reimbursement, drug costs were still higher. That finding suggests that the bundled payment approach was able to reduce overall medical spend through other channels, and although those aren't exactly clear, reduced hospitalizations is probably a large factor.

"These new payment models benefit patients, doctors, payers and the entire health system, and are particularly important as the nation faces ever-increasing healthcare costs," Newcomer said in a media release.

The ongoing goal of pilots like this is to measure comparative effectiveness of different treatment options, uncover best practices, and "identify and reduce unnecessary drug administration that does not improve the patient's health," he added.

About 11 percent of UnitedHealthcare's commercial health plan spending is devoted to cancer therapy, and the company expects that to increase consistent with national trends. Annual national cancer therapy costs stood at $124.6 billion in 2010 and could reach as $207 billion by 2020, according to National Cancer Institute estimates.

This story is based on a report appearing on Healthcare Payer News.