People frequently use the term “unique” when they mean “unusual” or just “I think this is noteworthy even though lots of other people are doing the same thing.”
But when Larry Strieff, MD, used the term “unique” to describe Hill Physicians Medical Group’s (HPMG) payment innovation for cancer care, I think he was using the term correctly.
Strieff is Oncology Chief for HPMG, the largest independent practice association (IPA) in northern California, with more than 3,800 physicians serving more than 300,000 patients.
An IPA is a group of independent physician practices that jointly negotiate contracts with insurers; in Hill Physicians’ case, the IPA receives a flat per-member, per-month fee in exchange for providing all the outpatient services for a population of patients. The IPA then pays the individual physician groups for their work. Thus, the IPA benefits financially if its physician groups curtail unnecessary expenses.
For the last five years, a subset of HPMG’s oncology practices have been experimenting with a bundled payment arrangement they call the Oncology Case Rate, and most of its other practices are clamoring to join. The reason: The Oncology Case Rate has incentivized participating groups to sharply reduce costs while increasing the quality of care and patient satisfaction—and increasing the payouts to physician groups by 11 percent, compared with the physician groups that do not use the Oncology Case Rate model.
To earn the quality management fee, practices must:
· Perform well on the Quality Oncology Practice Initiative measures collected by the American Society of Clinical Oncology;
· Decrease their patients’ hospitalizations and emergency room use;
· Use less expensive drugs; and
· Improve patient satisfaction.
Key is How the Bundle of Care is Defined
All those goals are pretty standard in the cancer care payment experiments we are seeing around the country. The thing that make HPMG’s innovation unusual—and perhaps truly unique—is how the “bundle” of care is defined. The case rate is based on anatomical site, not stratified by stage; thus, the site of the origin of the cancer places the patient into a cohort and the application of parenteral chemotherapy starts the case rate for that particular patient. And the period of care stretches for three years, which is much longer than most bundled payments for oncology.
“That’s swimming upstream, and everyone we spoke to said it isn’t going to work,” Strieff said. “All I can tell you is we have almost six years’ experience and the data that would suggest it’s working for us.”
In a recent interview, Strieff, who practices at Epic Care, a large cancer practice in the East Bay area, told me about the experience with the Oncology Case Rate so far.
How did you come to develop the Oncology Case Rate concept? When did you start using it? And how is it working out so far?
Larry Strieff: “We began looking at ways to control our oncology costs in 2008 and 2009. We were feeling the same economic pressures as others in the health care arena—that is, an escalating spend pattern in the range of 15 to 20 percent per year. That was a clearly unsustainable trend. We then examined our own experience within our network, and we found the primary driver of those increasing costs was the rapid adoption and widespread use of very costly parenteral oncolytic drugs. We also recognized that we were simultaneously facing two realities: The first was a finite amount of financial resources, and the second was there was an explosion in the area of basic research in the area of genomics and submolecular description of the genetic alterations in the human genome that are causally connected to the development of malignant disease.
“This unparalleled development of knowledge in the area led to a virtual arms race among the drug companies to produce more effective and more specific biological and targeted agents. These drugs and these agents held great promise of benefit for our patients, but they were, without exception, very expensive.
“At the same time, it struck us as quite obvious that we were trying to manage these two 21st century realities with a 20th century billing and payment system that was based on the old ‘buy-and-build’ paradigm--that is, my practice would buy the drugs and then sell it to the patient. This, unfortunately, led to a chasing of the profit margin across the spectrum of care that was associated with these new agents. These new agents were both expensive and had a large profit margin. So this old payment system had led inadvertently to an undesirable practice pattern that was rewarding the selling of the drugs over cognitive services of the doctor.
“These cognitive services had always rewarded clinical judgment, skillful patient management, and analytical thinking versus the selling of drugs. We tried to develop a system that would enable the doctors to move away from the buy-and-build mode of practice and to return to the more desirable functions of delivering cognitive services.
“So we launched the program in early 2010 with the initial practice in Sacramento and added a second practice in 2011 in the East Bay Area of San Francisco. At this point we have a little more than five years’ experience with the first practice.”
How does the Oncology Case Rate work?
“This is based on the placement of patients into groups, or cohorts, based on the anatomical site of the primary tumor. For instance, the breast cancer patient would be in the breast cohort. The reimbursement for the care of these patients is paid monthly, and it’s based on our previous three years of financial experience for patients in that cohort, treated within our network with oncolytic therapy. We know from our data what the chronological spend pattern for each diagnostic cohort is, and the payment is structured accordingly.
“There is a unique and quite controversial aspect to our program, which is the manner in which patients are allocated to the cohorts. We allocate on the basis of the anatomical site of the tumor, and whether or not patients have received parenteral chemotherapy. We specifically do not stratify or place patients in cohorts based on the stage of disease or cell type, age, or comorbid status. This is a departure from what almost every other bundled payment program uses as methodology, and actually represents a type of population management.
“Another aspect of our system is that we pay, not the individual doctor, but rather his or her group. This helped to smooth out the statistical risk of an occasional outlier, and at the same time, helps to foster what we term ‘intragroup monitoring’ for best practices.
“An additional aspect we think is unique, at least in our experience, is that we have included a stop-loss provision. This is placed to protect the doctor group from unexpected expense associated with an exceptionally expensive patient, and it avoids the doctors from being financially penalized in doing the right thing at the right time. This avoids the prospect of an expensive outlier patient causing undue financial hardship on the practice.
“The last aspect, or building block, of this program is what we call our quality management program. We survey the practices for three sets of quality measures. The first is the clinical scores on the ASCO QOPI guideline measures. A second area we examine for practice pattern is in the utilization of inpatient services, emergency department and infusion centers. And the third is we survey the practice scores on patient and physician satisfaction.
“This latter part of the program—this quality management program—constitutes 10 percent of the total reimbursement to the doctor, so it has proved to be a very significant agent for change in practice patterns.”
What impact has the Oncology Case Rate payment model had on quality measures? On patient satisfaction? On patient outcomes?
“As I mentioned earlier, we do measure the clinical quality metrics using the QOPI guidelines, and our scores on the QOPI guidelines for our practices are now 98 percent. That’s both self-reported and by chart review confirmation here at Hill Physicians headquarters.
“The utilization on the inpatient side has decreased by 14 percent. We’ve seen no increase in the use of infusion centers. The patient satisfaction remains at over 90 percent.
“Our physician satisfaction metric is a little different from what people might anticipate. We are actually measuring the satisfaction of the referring doctors to the oncologist. The most common complaint patients have in managed care is: ‘My doctor doesn’t talk to my other doctor.’ So we do make sure of the effectiveness of my communication with my colleagues who refer patients to me. We believe that the issue of poor communication represents suboptimal care, so we think that particular measurement is an important one.
“We have also examined our survival figures over the last five years, and they are at least the same—and in some cases slightly better—than those for our oncologists who are in our network and being paid on the fee-for-service basis.”
How has the Oncology Case Rate worked out financially for your practice?
“To answer your question, we decided to look at the financial performance of the fee-for-service practices in our network—because only half of our oncology patients are taken care of on the oncology case rate—and compare that with the financial performance for the groups who are in the case rate. Our most recent data shows that there is a positive yield of more than 11 percent for those practices in the case rate, as compared with their competition in the fee-for-service side.”
Do you think the Oncology Case Rate should be the future of cancer care payment? Why or why not?
“It’s my belief that some form of bundled payment will be the future of oncology going forward. I think that we will have different iterations of bundled payment, depending on local needs and opportunities, and I don’t think that one bundled payment system will necessarily work for everyone across the country. But I do think some variation on a bundled payment, such as a case rate, will be the future.
“I think that the future is going to require adaptation to other needs, including the inclusion of oral drugs, or Medicaid patients, or possibly including combinations of medical oncologists plus radiation oncologists, plus surgeons, and eventually other partners. So I think the approach of a bundled payment system has the most flexibility of any program that I’ve seen so far. Hill Physicians is looking at all of those possible scenarios as we go forward.”
Listen to a podcast of our conversation in OT's July 25 iPad issue.