It is widely agreed that the cost of medical care is rising at an unsustainable rate. Employers and the public face rising and eventually unaffordable health insurance premiums, and Medicare is in trouble. The Obama health plan makes an attempt to lower medical costs while including those currently not covered by health insurance, a difficult or impossible feat depending on one's view. (The attempted Republican repeal of the entire Obama plan is still a lurking possibility.)
A wide variety of fixes has been proposed over the years to address this issue, ranging from a single-payer system by many on the left to outsourcing all or most health care insurance to the private sector by some on the right. In the midst of all this, polls show that Americans, especially those with insurance, are generally satisfied with the medical systems as they are today and are wary of any changes that would reduce their choice of doctors or the scope of their care.
If our politicians cannot contain their political agendas and their participation in disgusting conflicts of interest caused by pandering to lobbyists, forces not in their hands may determine the eventual outcome. At the extremes, employers may stop offering health insurance—this has already begun but is not yet widespread.
Rationing of care is now done informally by refusals to treat uninsured patients, but absent a usable national plan, formal rationing by insurers, led by Medicare, could ensue. Many doctors refuse to treat Medicaid patients; this trend may spread, and they may even stop treating Medicare patients as well. And with the economy still struggling, we may end up with a two-tier system of health insurance haves and have-nots, with the latter growing dramatically.
Oncology will not be immune to change, whether planned or not. The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) caused a severe reduction of reimbursement for chemotherapy sales and administration to cancer patients. This reduction in reimbursement has already caused a substantial movement of individual oncologists to larger practices and to employment by hospitals or health systems. Thus, many small practices are struggling or just going out of business.
The effect of the MMA was an indirect byproduct of increasing Medicare's pharmaceutical benefits for seniors. But there have also been specific attempts to rein in the cost of cancer care over the years, without much success except in integrated systems like Kaiser-Permanente and the Geisinger Health System.
Payers and policy mavens have also tried to draw up a system of reimbursement that reduced costs without a major impact on “appropriate” care. Dr. Peter Bach, a physician and well-known cancer policy expert who is based at Memorial Sloan-Kettering Cancer Center, was on the staff at the Centers for Medicare and Medicaid Services (CMS) during the Bush-2 administration. He and his colleagues Joshua Mirkin and Jason Luke wrote an article in the March 2011 issue of Health Affairs, “Episode-Based Payment for Cancer Care: A Proposed Pilot for Medicare,” that offers a cost-saving model for cancer care.
“Episode-based” or “bundled” payments have been used for many years, but most have dealt with hospital costs (prospective payment system or PPS) and the management of chronic diseases like diabetes and renal failure.
Medical Oncology Well Suited for Episode-Based Payment
The authors point out that medical oncology is especially suited for an episode-based payment system because it has a large evidence base that is regularly updated—e.g., NCCN, ASCO, and ACoS guidelines, that often have multiple treatment options, many differing in cost; importantly, guidelines address the use of many of the most expensive drugs for supportive care as well as anti-cancer agents. The authors believe guidelines could also be used to develop quality standards. Thus the means are in place for assessing both relative cost and quality, essential for structuring episode-based payment.
The model is constructed as follows. A single payment would be made to a medical oncologist for an episode of care based on the average cost for all facets of care provided, including chemotherapy and supportive therapy agents. A patient with metastatic non-small cell lung cancer who undergoes one month of treatment is used as an example. Because the course of lung cancer varies widely, a new “episode” would be initiated for each month of care. For early stage patients, the episode would include the entire course of initial care.
Since the course of care varies in length and cost by the regimen chosen and the payment is a fixed average amount for the episode, there would be an incentive to choose among equally effective regimens those with lower costs.
The authors believe that such a system would also put pressure on manufacturers to lower the cost of drugs to meet the budgets of medical oncologists. This has already happened in some European countries.
The authors list potential administrative challenges this model may face and possible solutions. These include: how to handle the introduction of new, more expensive agents—provide a “pass through” payment for the added cost until a new episode cost is developed; oral drugs covered under Medicare Part D—would be deducted from the episode-based payment; standards of care—Medicare would need to recognize guidelines, such as NCCN, that include different regimens of similar efficacy. They also address other potential issues.
It is difficult to argue against a Medicare pilot study to test the concept to see if it is even feasible without adversely affecting cancer care. It is also easy to see that this model could be applied to surgery and radiation oncology, both of which usually deliver care in discrete episodes. Medicare has used pilot studies before and has the appropriate data set to track costs.
Tracking quality in medical oncology is a more difficult challenge. The authors propose that following accepted guidelines and choosing treatment options that are listed among those deemed equally effective is de facto evidence of quality care. That may be true if quality is viewed from 30,000 feet, but the complexity and non-uniformity of patients, even when grouped by histological diagnosis and stage, is a challenging maze to sort out and compare.
Despite these concerns, I believe the pilot program should be tried using the tools that are readily available. I would carefully select participating practices that have experience in data collection and evidence of a commitment to quality care in some tangible way.
One might criticize such a selection process because it would not be a “real world” experiment. But it is more important to see if the concept can work among highly motivated and interested practices that can also provide useful input for tweaking and adapting the model; if it doesn't work with them, it certainly won't work with the rest.
It is certainly preferable to engage oncologists in testing and developing such a model, as proposed by the authors, than having politicians use the “lawn-mower” approach to cutting costs by intent or by default, reducing reimbursement across the board instead of testing a model that can be modified.
Because of the difficulty of this problem, history tells us the lawn mower is the preferred cost-cutting tool for politicians looking at the horizon of another election.