BY LOLA BUTCHER
Bundled payments — a hot concept on the health care payment front — are getting a try-out in oncology.
In a bundled-payment program, oncologists are paid for managing their patients’ care, freed from relying on drug mark-ups for their incomes, and forced to accept some financial risk for the services they provide.
The concept has emerged as a way to eliminate fee-for-service payments, which reward physicians for the volume of services they provide rather than the value of care they deliver. While most cancer patients are not yet shopping for value -- the best outcome at the lowest price -- public and private payers are definitely moving in that direction, and they intend to educate consumers to be part of the trend.
“If we want people to come to us, we have to be prepared to give them reliable, comparable information about the quality that we offer, and about what it costs to come to us for care, and about the value that we deliver,” said Steve Bonner, President and CEO of Cancer Treatment Centers of America, which operates four regional cancer centers. “That’s a very different way to support the health care buying decision than where we have been historically.”
Earlier this year, CTCA introduced a bundled-payment program for evaluation and treatment planning for four common types of cancer. Meanwhile, five oncology practices are in the second year of UnitedHealthcare’s pilot program to test bundled payments for the treatment of three tumor types.
Dayton Physicians Network, a multispecialty practice in Dayton, Ohio, that includes 17 medical oncologists, is a participant in that pilot. CEO Robert Baird said the program requires a lot of work, but he likes what he has seen so far.
“Being paid for managing patients and being paid for higher quality or higher value care is really what we are moving towards,” he said.
Bundled payments -- sometimes called episode-based payments -- first made headlines in 2006 when Geisinger Health System in Danville, Pa., began offering a guaranteed fixed price for coronary artery bypass surgery, preoperative services, and follow-up care. To offer that price, Geisinger required patients to sign a “compact” agreeing to follow physicians’ orders and physicians to follow evidence-based care protocols.
Since then, Geisinger’s bundled-payment program has expanded to include hip replacement, cataract surgery, obesity surgery, prenatal care, and a few other medical services. Meanwhile, many other health systems and payers have begun experimenting with bundled payments, including the Centers for Medicare & Medicaid Services, which piloted bundled payments for heart surgery and joint replacements.
CMS is sufficiently enthused with the idea to press onward. In August, the agency announced a new bundled-payments initiative that allows health care providers to propose a bundled price for a set of services. In this program, which is much broader than the demonstration project, physicians and hospitals can work together to deliver bundled services that span inpatient and outpatient care or work independently, providing a set of services for outpatient care for a specific medical condition or inpatient care only.
United Healthcare is the first national insurer to try bundled payments for oncology care. At a presentation at the American Society for Clinical Oncology Annual Meeting this spring, Lee N. Newcomer, MD, the company’s senior vice president for oncology, said the goals of the program included identifying and rewarding best practices in cancer care, creating a “learning” atmosphere that allows for changes when new evidence emerges and maintaining oncologists’ incomes at their current levels.
“I’m saying incomes, not revenues. I don’t believe we pay the physician too much, but we have got to pay attention to what you spend as an oncologist,” he said. “So revenues may go down, but we are intending to keep income levels the same. And we want to break the dependency in the oncology world between drug selection and income.”
United’s 19 Categories, 20 Performance Measures
United created 19 different clinical categories for breast, colon, and lung cancer, and asked each of the five practices in the pilot to choose the chemotherapy regimen its physicians would follow for each category.
The oncologists guaranteed that they would achieve 85% compliance with the chosen regimen. Patients who have a contraindication for the standard treatment or are enrolled in a clinical trial are not counted against the 85% compliance requirement.
United is tracking 20 performance measures such as relapse rates and hospital admissions for uncontrolled pain to track health outcomes and overall costs.
Each year, these five groups meet together to review de-identified patient data and compare the results. Over time, this process should identify which treatment regimens generate the best patient outcomes, Dr. Newcomer said.
The oncology practices in the pilot no longer make any profit on the drugs used to treat patients who are insured by UnitedHealth. Rather, the insurer pays the practice a “patient care fee” that includes:
· An amount equal to the profit margin that the practice would have received for the chemotherapy regimen under the buy-and-bill system
· An amount equal to the physician fee associated with the typical level of inpatient care for a given clinical category (i.e., Stage 3 breast cancer)
· A disease management fee.
The patient care fee is paid up-front. If the oncologist decides to change drugs because, for example, compelling evidence about a more expensive agent emerges, United will continue to reimburse the oncology practice for drugs at cost. The patient care fee, however, does not change.
For patients with metastatic disease, the oncology practice receives a patient care fee in four-month increments, regardless of whether the patient receives chemotherapy.
“If you and the patient make a decision to end therapy…the episode payments recur every four months as long as that patient is under your care,” Dr. Newcomer said. “That provides the financial support to do all the very difficult work with end of life care.”
How It’s Working So Far
The bundled-payment program is just what Northwest Georgia Oncology Centers (NGOC), with 21 medical oncologists practicing in 10 locations, has been waiting for.
“This program really plays into our strengths because we are finally getting paid for being thoughtful and not trying to provide chemo to the bitter end because it’s somehow financially better for us,” said Bruce J. Gould, MD, a partner in the practice. “With this program, we are finally getting paid for taking care of hospice patients.”
At Dayton Physicians Network, about 20% of patients are covered by UnitedHealthcare. Baird, the practice’s CEO, said he likes the fact that the practice receives the patient management fee upfront, does not have to worry about the financial consequences of choosing one regimen over another, and does not have to seek preauthorization for its United patients.
“The standardization of the protocols helps our clinical staff to be more confident because there is less opportunity to make any type of error,” he said.
On the other hand, the practice must manage the patients more closely to minimize their trips to the emergency department or hospital.
“The financial risk is whether we are covering our costs to manage these patients more closely, because it is a lot more involved,” he said.
Participation in the United pilot has been relatively easy for NGOC for two reasons, Dr. Gould said. The first is that its physicians use a fully implemented electronic health record system.
“We know the doses of the chemo that we provide, we know the different drugs we use for each of the various illnesses that are a part of this program, and we have very good financial data,” Dr. Gould said. “So we were really able to drill down to every aspect of our cost of providing care.”
The second is that the practice has been using standardized treatment protocols for a given disease state for at least 15 years. So agreeing on the regimens to be used for UnitedHealthcare patients presented no problem.
Of course, many oncology practices have no experience using standard treatment protocols or EHR systems that allow analysis of practice patterns and the costs associated with them.
“The biggest barrier to implementing this program on a larger basis is that many practices, particularly once you get beyond some of the very large, sophisticated practices, are not going to have the ability to drill down and know their cost and fully understand their data,” Dr. Gould said.
Cancer Treatment Centers of America
Cancer Treatment Centers of America, which operates four regional cancer centers, is approaching the bundled payment concept from a different angle by offering a package of diagnostic services and a treatment plan delivered in a guaranteed timeframe for a flat rate.
Through its CareEdge program introduced this summer, CTCA provides a medical oncologist consultation; imaging and pathology services; consultations with a surgeon, radiation oncologist, urologist, or other specialist if needed; and consultations with a registered dietitian, a licensed naturopathic provider certified in oncology and a psychosocial therapist—and a treatment plan delivered within five days from the beginning of the diagnosis evaluation process. The patient can proceed with treatment at CTCA or take the plan to another cancer center.
The array of services costs $12,200 for a breast cancer patient, $11,400 for colorectal cancer, $14,500 for lung cancer, and $10,000 for prostate cancer.
Those price points were developed from an analysis of CTCA’s costs. Since there is no cancer care marketplace, it is impossible to know how those prices compare with what other oncologists are paid for a similar range of services.
“We don’t know whether we’re average-cost, high-cost, or low-cost,” said Steve Bonner, CTCA’s President and CEO. “Our guess is, depending on how you want to look at it, we are high on some things and low on some other--but if we don’t know, how does the consumer know?”
CTCA, which reports quality data on its website, introduced the CareEdge program to help transform the health care industry to operate like other service industries—and to get experience with new payment methods required by that transformation.
Mr. Bonner said he believes the oncology cost crisis would benefit from market forces that influence purchasing decisions for other goods and services. He hopes for the day when cancer patients can compare CTCA’s price and quality data with that of those of oncologists across town—or across the country.
“It’s just not going to be a very efficient market until we can provide that kind of information and assurance to patients,” he said.
He noted that while CTCA started its bundled-payment experiment with diagnostic and treatment planning services for the most common tumors, it does not intend to end there. Fixed prices for diagnostic and treatment planning for all cancer types will be available by the end of this year, and the company plans to eventually offer fixed prices for cancer care as well.
And while no insurers have contracted with CTCA for fixed-price services yet, Bonner said he thinks it is just a matter of time until they do so.
“Nobody is ready to sign up for it on a wholesale basis, but the patients who have wanted to come to us for the evaluation have brought their insurance companies to the conversation and we have been able to find out a way to make it work on a case-by-case basis,” he said.
How to Prepare for Bundled Payments
The first step to thriving with bundled payments is to make sure all oncologists in the practice understand what they must do to make the new payment system work, said Robert Baird, CEO of Dayton (Ohio) Physicians Network. Having one or more physicians opt out of the requirement to follow pre-determined treatment regimens will kill the program for everyone, so it is essential that the practice can monitor compliance.
“Everybody can’t be out there kind of doing their own thing anymore,” said Bruce J. Gould, MD, a partner in North Georgia Oncology Centers. “In my practice, I’m the moderator, and if there is a treatment plan that falls out of our treatment guidelines, it comes to me, and then I call that doctor up and see exactly what the story is.”
If there is a justification, Dr. Gould approves it.
“If Doctor X reads a Phase II study with 20 patients and wants to use that on his or her patient, then I don’t approve those,” he said.
· Fully commit to using electronic health record technology. A bundled payment program requires the ability to monitor, document, and report treatment regimens and analyze costs. That requires an EHR system that allows clinical information to be integrated with financial data, Dr. Gould said.
· Know your costs so you can negotiate a fair fee. Since the practice receives a flat fee for physician services, negotiating the right fee is critical to success. Dr. Baird says practice managers must understand costs associated with every step of a patient’s interaction with staff members and physicians, including the cost of scheduling an appointment to getting insurance claims paid.
“If you are going to accept a bundled payment but you have negotiated too low of a fee, you are going to be losing money,” he said.
· Manage your practice to keep costs below negotiated fees. While UnitedHealthcare’s bundled payment program does not penalize oncologists who choose high-cost chemotherapy regiments, practices that have inefficient back offices, for example, may lose money. “This program is likely to hurt those who over-utilize resources, and they’re going to have to change the way they do things if they want to be on board with this program,” Dr. Gould said.
· Measure your performance. “Organizations that can measure their performance can begin to manage it,” said Lee Newcomer, MD, Senior Vice President for Oncology at UnitedHealthcare. “What you do need to do, starting right now, is begin to think of ways that you can measure your performance, and that will allow you to change and adapt and manage.”
· Assume risk in small bites. Physicians traditionally have not been financially responsible for the care they deliver, and it takes time to build the capacity to do so. Thus, oncologists should enter into bundled payment arrangements on an incremental basis.
· Think about how bundled payments may evolve. Dr. Newcomer encourages oncologists to consider organizing patient care by disease because bundled payments may grow to include surgery, radiation therapy, and medical oncology services.
“If you can begin to think now about how to integrate yourself with the breast surgeon, with the urologist, with the radiation oncologist in a way that you could offer a full spectrum of services in a very unbiased way, that would be an extremely positive thing for the future,” he said.
· Seek opportunities to participate in pilot programs. Dr. Baird said the opportunity to help find a replacement to fee-for-service payment is worth the trouble associated with doing so -- “We would rather be in the driver’s seat, being able to influence those policies, instead of just having them just handed to us, saying, ‘This is what you’re going to do now.’”