Practice Matters

News from Lola Butcher about health policy and practice management issues of importance to oncologists

Wednesday, July 9, 2014

Look Who Cut Cancer Care Costs by 34%

One of the early pilot programs for a new way to pay for cancer care just released its results. And my reaction is “Wow!” and “Huh?”


The results of UnitedHealthcare’s pilot with five oncology practices is now available online as an Early Release article in the Journal of Oncology Practice. (For OT’s previous coverage, click here and scroll down to “United's 19 Categories, 20 Performance Measures” heading and here.)


The “wow” is this: The use of a bundled-payment system for cancer care yielded a 34 percent reduction in predicted total medical cost without harming patient outcomes.


The “huh?” is this: The key feature of the experimental payment system was to reduce the connection between treatment selection and physician income, on the idea that this would reduce chemotherapy costs. However, chemotherapy drug costs were 179 percent higher than predicted based on a comparison with similar practices.


Despite spending $13 million more on drugs than would have been expected—and UnitedHealthcare was actually expecting to reduce its drug bill—the pilot still saved $33 million on the cost of treating 810 patients during the three-year pilot.


Lee Newcomer, MD, senior vice president for oncology, genetics and women’s health at UnitedHealthcare, and his co-authors (Bruce Gould, MD; Ray D. Page, DO, PhD; Sheila A. Donelan, MS; and Monica Perkins, PhD) say the study data does not allow them to fully understand how the costs savings were achieved—or why the drug costs were so much higher than expected. They do know that hospitalization use and use of therapeutic radiology both decreased, but whether one or both is the magic bullet is not clear.


The authors say they do think that simply getting together to share information was important: “Collaboration was an essential element to the success of the pilot,” they write. “The data for the project were available to all participants. Variation was explicitly discussed as an opportunity for improvement and not a failure of health care delivery. Problem solving involved the participation of physicians, the medical group business executives, nursing staff, and payer staff.”