As the health care industry searches for an alternative to fee-for-service payment, the concept of bundled payments is attracting a lot of attention.
As reported in the 11/25/11 issue, five oncology practices around the country are piloting a bundled-payment program in which they are paid for managing their patients rather than making a profit on chemotherapy sales.
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 others—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.’”