UnitedHealthcare found that gathering oncologists together to share and compare their performance data produces new knowledge—and improves value. 

Lee NewcomerAs payers and providers experiment with new ways of paying for healthcare services, the importance of payment reform is becoming clearer. Indeed, payment reform could slow healthcare spending by $2 trillion by 2023, according to a January 2013 report by the Commonwealth Fund Commission on a High Performance Health System. Link:  

But exactly which payment models are going to work is far from clear. Currently, there is no consensus on terminology—one person’s definition of accountable care is another’s medical home or bundled payment—let alone the mix of incentives and risks that yield the best results. 
What has become clear, however, is that collaboration and data sharing among payers and providers will be key on the road to new payment models.

Northwest Georgia Oncology Centers is in the third year of an episode-of-care payment pilot with the insurer UnitedHealthcare, which requires the five participating oncology practices to share and compare performance data. Bruce Gould, MD, medical director of Northwest Georgia Oncology Centers, says he has been shocked to see the variation in costs of different oncology practices treating patients for the same condition—and, for that matter, the costs themselves.

“I’ve been a practice manager for 15 years, and I have only learned about the costs of health care within the past year or two because of all the emphasis on payment reform,” he says. “This is the first time we have received very structured feedback in terms of what it costs to take care of patients, not only with chemotherapy, but also with hospital and radiologic services. That’s been a very eye-opening experience.”


Revamping Cancer Drug Payment

UnitedHealthcare is one of many payers searching to improve the value of cancer care. New drugs, some of which cost $5,000 or more a month, may extend life only a few weeks; yet, current payment systems encourage their use. “Most new drug molecules are priced at $5,000 per month or more and, in many cases, the cost-effectiveness ratios far exceed commonly accepted thresholds. This trend is not sustainable,” wrote oncologist Thomas Smith, MD, and a co-author (Smith, T.J. and Hillner, B.E., “Bending the Cost Curve in Cancer Care,” New England Journal of Medicine, May 26, 2011, vol. 364, pp. 2060-2065).

The UnitedHealthcare pilot, which started in 2010, seeks to escape the “buy-and-bill” system that dominates cancer care payment today. In that system, oncology practices make the most of their income by buying chemotherapy agents and marking up the price when they bill payers after the drugs are administered. That system encourages oncologists to select the most expensive drugs and discourages the use of low-cost generics.

In UnitedHealthcare’s pilot, each oncology group chooses the treatment regimen it wishes to use (e.g., a certain drug at a certain dose, additional drugs for side effects) for each of 19 specific cancer scenarios (e.g., Stage 3 colon cancer). The physicians then commit to at least 85 percent compliance with the chosen therapy.

UnitedHealthcare calculates the profit that the practice would have received under the buy-and-bill system, adds on a small case management fee (generally between $40 and $200, depending on the episode), and arrives at a practice-specific episode payment for each of the 19 clinical episodes. A single episode fee that covers the entire course of treatment is paid to the oncologist as soon as the patient is registered with UnitedHealthcare. Other services are paid and billed for on a fee-for-service basis.

All the oncology practices in the pilot are required to meet annually to compare results on performance measures including patients’ survival, relapse-free survival, hospitalizations for complications, and the total cost of care for an episode.

Holding Physician Pay Steady

Northwest Georgia Oncology’s Gould is pleased with the results of the pilot, which is now in its third year. The payment system is designed to hold oncologists’ pay steady while decreasing overall costs through standardization and improved quality of care. Gould says that Northwest Georgia Oncology Centers is doing somewhat better with UnitedHealthcare’s payment pilot than originally anticipated.

UnitedHealthcare is optimistic that, when the pilot ends, the insurer will find that it decreased its costs, says Lee M. Newcomer, MD, senior vice president-oncology, UnitedHealthcare. In his view, the episode payment is proving itself to be worthy for situations in which care is delivered in episodic fashion: cancer care, joint replacement surgery, and some cardiac procedures. “It will be a tool in a big tool chest” of payment approaches in the future, he says.

Gould, meanwhile, sees the episode model as an evolutionary step on the way to something better. “I don’t see it as the final end of payment reform for cancer care,” he says. “Under this model, I could be a high utilizer of radiologic and hospital resources and still get the same episode-of-care payment that I’ve been getting,” Gould says. “We need to be controlling the cost not only of chemotherapy, but also hospital and radiologic utilization.”

Changing Physician Practices

Oncologists can increase their episode payments if they improve the value of the care they deliver. If patients’ survival times increase or the total cost of care decreases from one year to the next, UnitedHealthcare increases the episode payments.

Beyond that, the data-sharing requirement has great potential for improving the cost and quality of cancer care. When the five practices met to review first-year results, one of them had a much higher hospitalization rate than the other four. Practice leaders quickly pulled patient charts to look for clues and found that hospitalized patients were being readmitted before they had an outpatient visit.

“They changed their processes to guarantee a clinic visit within 48 hours, and, according to the manager, they immediately started seeing a drop-off in hospitalizations,” Newcomer says.

At that same meeting, Gould was intrigued by the apparent efficacy of a treatment regimen his practice has not historically used. “That changed my thinking about what drug regimen we should be using as a practice, not only for UnitedHealthcare patients, but for all our patients,” he says. If the second-year comparison data verifies that thinking, then oncologists at Northwest Georgia Oncology Centers will change their protocol.

Redesigning Clinical Care

The other solid finding from payment reform initiatives to date: The redesign of clinical care delivery to reduce costs and improve quality, as required under value-oriented payment arrangements, is not easy.

In the UnitedHealthcare pilot, all the participating physicians committed to a single treatment regimen for a certain cancer situation. However, nearly half the patients received a different therapy during the first year of the program, says Newcomer. “That taught us that the operational work behind doing this, about being consistent, about trying to change a group of people who are working together usually as individuals and not as a team, is really, really hard work,” he says.

Lola Butcher is a freelance writer and editor based in Missouri.

Interviewed for this article (in order of appearance): Bruce Gould, MD, is medical director, Northwest Georgia Oncology Centers, Marietta, Ga. Lee Newcomer, MD, is senior vice president-oncology, UnitedHealthcare, Minnetonka, Minn.

Publication Date: Thursday, May 23, 2013