In July, UnitedHealthcare (UHC) reported that an innovative program using bundled payment for cancer care resulted in an impressive 34% reduction in medical costs when compared with costs for a control group. Moreover, 

 that patient outcomes were the same in both groups. 

The study yielded important lessons to oncologists about delivering care under bundled payment. Leaders at 2 clinics in the study, Lee S. Schwartzberg, MD, a senior partner and medical director at the West Clinic in Memphis, Tennessee, and Barry Russo, CEO of the Center for Cancer and Blood Disorders in Fort Worth, Texas, said they learned that their success with bundled payment would not have been possible without also delivering care in a patient-centered medical home.

“We would have had trouble delivering care in this way if we were not organized as a patient-centered medical home,” said Schwartzberg. His practice has 33 physicians in 9 offices and was recently designated a Patient-Centered Specialty Practice by the National Committee for Quality Assurance.

Under the medical home model, the practice gets paid an additional fee to hire nurses or case managers to care for patients between visits to the oncologists. They ensure that patients get the care they need to prevent high-cost emergency department visits and hospital stays.

“In this program, the entire staff of the West Clinic participated and was able to steer patients away from needless emergency room (ER) visits and inpatient care,” Schwartzberg said. “One of the lessons we learned was that when you take out the costs for chemotherapy, the other highest costs are generated through ER visits and hospitalizations. That’s why we intensified our efforts to put more navigating power and resources into the medical home to keep patients out of the ER and out of the hospital.”

Another significant lesson the West Clinic physicians learned was the importance of standardizing care by identifying what each patient needed and then choosing and following the appropriate treatment pathway for each, Schwartzberg said.

Identifying patients’ needs also was critical to his group’s success in improving patient outcomes. UHC shared the extensive data it had on each patient’s history and course of treatment, helping the physicians to understand all patients’ treatment needs.

“UnitedHealthcare has records on all patients’ treatment. We don’t have the hospital records on these patients or records from the ER. It makes sense that the payer would share that data with us, but they don’t normally do that,” Schwartzberg said. “They had staff working full time on this project,” he added. “It would be difficult for any practice to collect and analyze the data that UHC had on its patients.”

The bundled payment program also helped the practice develop a close working relationship with UHC, he added. Such relationships are rare because usually practices and payers argue about coverage and payment for cancer care.

“In the past, there was a great degree of uncertainty and suspicion between physicians and health plans. But since we launched this bundled payment project, the entire attitude has shifted,” Schwartzberg said. “Now, it’s clear that insurers and providers have to work together in a way that is patient-centered.”

For Russo’s group, the infrastructure needed to support its medical home effort allowed the practice to deliver care to patients in the bundled payment successfully. The center has 19 physicians in 9 offices and is participating in the Come Home project for Medicare patients and a shared-savings program for Aetna patients.

“To make bundled payment work financially you have to do a medical home because you have to have the infrastructure, meaning the staff and the hours, to manage the costs. If you’re in a bundled payment or shared-savings arrangement, you’re getting a flat rate. That means you have do a medical home to make that work because you need a way to manage costs,” he said.

“The UnitedHealthcare program began in 2009, when we were just learning how to deliver value-based care. Since then, we learned that we need specific triage and case management functions to manage this population better, and adding those functions costs money,” Russo added.

Through the medical home projects, the center gets additional funds from the Come Home medical home program and an Aetna shared savings contract to hire 3 to 4 nurse-care managers and to stay open until 8 PM on weeknights and from 10 AM to 2 PM on weekends.

“By having nurse-care managers doing triage on the phone, we can get patients into the office if needed. We’re open longer so that we can manage those patients better here in our practice, which keeps them out of the ER and out of the hospital,” he said.

Every oncology practice has a triage system, but Russo’s practice uses triage to manage patient care more closely than most.

“We revised our metrics to base our triage success on how many patients we could keep out of the ER and how many patients we could get into the clinic so we could solve problems before they became bigger problems,” he said. “That’s a different metric than typical triage, which is a nurse working in the chemotherapy area making sure everyone is fine,” he said. “It’s a mindset change.”

Like the West Clinic, the center got extensive data and expert data analysis from UHC.

“Under this program, physicians aren’t making decisions on what drugs to use based on reimbursement because the reimbursement is capped. Instead, they are making decisions based on what is right for the patient. On top of that, we had a micro focus on our patients through case management and aggressive triage. Putting in all those steps successfully improves patient management and reduces costs,” Russo explained.

Most practices don’t add staff or micromanage patient care because doing so is costly, he said. “In the typical shared savings or medical home program, you get a case management fee so that you can recover the costs you’ve incurred to micromanage patients. If you don’t get reimbursed for the infrastructure you need, then you would have no way to pay for the additional staff or the longer hours,” Russo explained.

“Compared with the savings possible from micromanaging patient care, the costs are minimal. That’s why I believe the medical home idea of being responsible for managing all the needs of each cancer patient is where cancer care will be moving in the future,” he said.

It’s possible to produce savings from a bundled-payment or shared-savings program without a medical home, but the savings would not be sustained over time, he said.

“If you don’t put in new processes and procedures to optimize patient care, there will be no shared savings. Or, if there are savings, they will be short-lived. When you change your processes so that you can micromanage each patient’s case, then you can start to get long-term value out of shared savings or bundled payment,” he concluded.

		Unexpected Outcome Found in UHC Bundled Payment Project

	The bundled payment project that UnitedHealthcare launched in 2009 was effective at reducing the cost of cancer care while also delivering quality care. But one result from the initiative was surprising: while it aimed to keep chemotherapy costs under control, those costs rose.

	“You have to look carefully at the results of this pilot program,” commented Debra A. Patt, MD, MPH, a medical oncologist and hematologist at Texas Oncology in Austin. She also is medical director of Healthcare Informatics for McKesson Specialty Health and The US Oncology Network where she leads a team of physicians and researchers in health economic and outcomes research.

	“One goal of the program was to remove physician incentives for prescribing chemotherapy. That’s important because in many practices—not all&mdash;the physician compensation depends directly on chemotherapy revenue,” she said.

	Because the bundled payment project sought to remove incentives for increased utilization, but also not reward inappropriate decreased utilization, the UnitedHealthcare study is important for oncologists seeking new ways to pay for cancer care, she added.

	“Recognizing that chemotherapy is a real driver of costs in cancer care, it is an important step to remove the perverse incentives for chemotherapy prescribing,” Patt commented. “But what this study actually found was that while costs were reduced by having an episode of care model of payment, the practices didn’t actually decrease chemotherapy cost. Instead, costs were reduced in ER visits and hospitalizations.”

	Another important aspect of the project pilot was that it measured and reported on quality of care in addition to cost.     

	“It is important to not address the cost aspect alone, but [also] the value of the care being provided. A value assessment cannot be accomplished without also evaluating the quality of care provided,” Patt said.

	“As many people seek to control costs and answer the question of how do we provide value, which is really outcome over cost, how can we do so through cost cutting?” she asked. “In this study, whenever they sought to control the costs of care, they also had some measurements of quality of care, which is significant, especially for a study done by a payer.”

	Any innovative payment model for cancer care likely will focus on what the physicians addressed in the UnitedHealthcare project: chemotherapy costs, ER visits and hospitalizations, she said. In addition, Patt added, oncologists also should focus on costs at the end of life.

	“For care surrounding the end of life, we need to ensure that it is appropriate, thought out in advance, and respecting the values of the patients,” she said.

	In conclusion, she offered a suggestion that any oncologist would welcome. “For a physician in a practice with patients who contract with many different payers, it would be difficult to operate under different systems of payment reform for different payers. What might be easier is if there is a more universal strategy to control the levers influencing cancer costs,” she said.

Articles

In July, UnitedHealthcare (UHC) reported that an innovative program using bundled payment for cancer care resulted in an impressive 34% reduction in medical costs when compared with costs for a control group

Practices in Bundled Payment Program Credit Medical Home Structure for Success

For the past 10 years, John Sprandio, MD, has been standardizing care delivery processes for cancer patients.

This effort has transformed his practice in Drexel Hill, Pennsylvania, into a patient-centered medical home. In 2010, his Oncology Patient-Centered Medical Home (OPCMH) became the first cancer practice that the National Committee for Quality Assurance certified as a PCMH. In the same year, the American Society of Clinical Oncology’s Quality Oncology Practice Initiative (QOPI) also certified the practice.

“About a decade ago, it became clear that we needed to standardize our care to minimize variation. We had to improve patients’ level of engagement in their care and reduce the barriers that physicians face when trying to deliver more consistent care in terms of quality and costs,” said Sprandio. “That’s why we streamlined processes and removed clinically irrelevant activities from the physicians so they could concentrate on delivering patient care. We developed a physician-led care team model of practice and then held members of the team responsible for the care they delivered,” Sprandio explained.

In 2010, Aetna and Innovent Oncology, a program supported by The US Oncology Network, started developing a similar model of care for cancer patients in Texas. Just as Sprandio does, these programs use evidence-based guidelines to reduce variation in care delivery. Nurses supplement the work of oncologists, thus helping to improve cancer care quality and reduce the side effects that patients experience.

The oncology medical home has attracted the interest of the federal Centers for Medicare and Medicaid Innovation (CMMI), which awarded $19.8 million in 2012 to Innovative Oncology Business Solutions, Inc, in Albuquerque, New Mexico, to implement and test community oncology medical homes in 7 practices in 6 states.

At the time, CMMI estimated that the 3-year savings from the project, called the COME HOME program, would reach $33.5 million. The program will serve patients with breast, colon, lung, pancreatic, and thyroid cancers, and those with lymphoma and melanoma.CMMI wants oncologists to address some of the failings in the way care is delivered to cancer patients, such as the fragmented nature of care, suboptimal outcomes, high costs, and patient dissatisfaction. “Through comprehensive outpatient oncology care—including extended clinic hours, patient education, team care, medication management, and 24/7 practice access and inpatient care coordination&mdash;the medical home model will improve the timeliness and appropriateness of care, reduce unnecessary testing, and reduce avoidable emergency room visits and hospitalizations,” CMMI said when awarding the funds.

Sprandio’s OPCMH aims to meet these same attributes. Under contracts with Independence Blue Cross and Aetna, the OPCMH serves Medicare Advantage and commercial members. Sprandio also has a contract with Keystone First to serve Medicaid patients. These 3 contracts cover 54% of the practice’s patients.

“Many complications that cancer patients experience related to disease or therapy are potentially avoidable. If you can avoid those problems, you decrease unnecessary resource utilization without restricting care,” he explained. This is the heart of patient-centered care.

“We’re not restricting or rationing care but instead we engage patients and encourage our physicians to target potentially avoidable complications, provide better service and track internal performance on a significant scale,” he explained.

“The physicians accept accountability for the success of their efforts because their goal is to become value-based providers and not volume-based providers.”

To improve patient outcomes, OPCMH physicians follow 22 internal performance metrics. Streamlining processes allowed the practice to increase patient volume by 30% and reduced the number of full-time equivalent staff per physician, Sprandio said.

To avoid unnecessary emergency department (ED) visits and inpatient stays, the practice introduced algorithms for a telephone triage system to get patients the care they need when they need it.

“For years we’ve been interested in reducing ED utilization because it’s inconvenient for patients and a source of bad decisions, such as unnecessary imaging, laboratory testing and other interventions,” Sprandio explained. “Nervous ED physicians were admitting patients in the middle of the night without calling us. We wanted to change that.”

“So we went on a patient engagement rampage and indoctrinated our patients with the idea that we are the point of triage for any symptom they have at any time, excluding emergent cardiovascular, orthopedic, or central nervous system events,” Sprandio said. “Now patients use our telephone triage service to get same-day visits or for us to provide management at home.”

Among OPCMH patients who called with symptom-related complaints last year, 86% were managed at home, 4% were seen that day, 3.4% of patients were seen the following day based on their level of illness, and only 2.4% resulted in ED visits. The result was a 70% drop in ED visits among patients.

By combining the telephone triage results with that of other components of the OPCMH, Sprandio estimates that the practice reduced hospital admissions by 50%. “These reductions in utilization were achieved in the most vulnerable subset of the patient population, those who are receiving intravenous chemotherapy,” he added.

A study published in 2010 showed that the ED use rate among chemotherapy patients nationwide was 2.0 visits annually. “Our rate in 2013 was 0.741 ED visits per chemotherapy patient per year,” he said.

	The Center for Cancer and Blood Disorders

The Center for Cancer and Blood Disorders in Fort Worth, Texas, uses a similar approach with its PCMH, according to CEO Barry Russo. The center is one of the practices in the COME HOME program.

“Compared with standard care for most cancer patients, our approach to patients in our medical home is to give them much more intense oversight. Case managers keep track of patients’ treatment so we can keep them out of the ED and out of the hospital because those are the 2 largest expenses that we have,” Russo said.

The 20-physician practice has about 70 patients in the COME HOME program and has a contract with Aetna that started in March to develop an oncology medical home for 15 patients, he said. It also has a 4-year contract with UnitedHealthCare for an episode-of-care program that began in 2010.

“In the United fee-for-episode program, we followed specific clinical pathways with the intent that standardization would reduce costs and improve quality. The same is true with the COME HOME and Aetna programs,” Russo said.

Just as Sprandio did in his practice, Russo’s practice redesigned its triage program. “The revamped triage program is making a significant difference in how we manage patient complications and even patient satisfaction,” he said. “In addition, we have extended hours until 8 each weeknight, and we’re open on Saturdays and Sundays. All these initiatives give patients more options to see one of our physicians besides going to the ED. By keeping ED visits down, we can show that we’re catching patients’ issues early and solving problems for them.”

The practice also has nurse case managers call chemotherapy patients to ask about symptom management. “If these patients are not feeling well or running a fever, our case managers advise them on how to handle their symptoms and prevent them from becoming acute episodes,” he said.

Such aggressive management of cancer patients requires an investment of time and money, said Marcus Neubauer, MD, the medical director of Oncology Services and Innovent Oncology for McKesson Specialty Health and The US Oncology Network. The US Oncology Network has a medical home project with Aetna for Medicare Advantage members.

Aetna pays Innovent Oncology a fee to help cover the cost of enhanced clinical services for cancer patients, according to Michael Kolodziej, MD, Aetna’s national medical director for oncology solutions.

“Some payers are willing to sponsor innovative payment models such as oncology medical homes,” he said. “Innovent Oncology is one such program that enhances quality care and uses the practice EMR to extract data and measure performance. The program recognizes the major cost drivers of cancer care and offers solutions.

One cost driver is the highly variable use of services such as chemotherapy. Physicians in the Innovent program follow evidence-based clinical pathways. Adherence rates are documented and then reported to the payer sponsor. We also receive claims data on hospitalization rates from the payer and those rates are compared to a control group. One of the goals of the program is to reduce avoidable hospitalizations.”

Such innovative models of cancer care have captured the attention of institutional oncology programs and community practices, according to Sprandio. Kolodziej agrees, saying, “Everyone is looking at where the opportunities are to lower costs and improve quality. What we need now is a lot of good dialogue between payers and providers about performance metrics.”

Amid Calls for Standardization, Oncology Medical Homes Grow

For oncology practices today, the keys to negotiating successful contracts are size and a willingness to contain costs while improving quality.

Having a large presence in a market helps an oncology practice demonstrate that it has the scale to serve a large number of patients. A secondary but related factor that drives success in negotiations with health plans is a willingness to move away from fragmented feefor- service contracting and to follow protocols. By following protocols, oncologists can demonstrate that they are controlling costs and improving quality.

The problem in many markets is that health plans tend to dictate contract terms, as oncologists and other physicians have seen in Tennessee recently. The Tennessee Medical Association has documented how health plans have been changing payment terms in mid contract, thus forcing many practices to accept these terms, says Yarnell Beatty, vice president of advocacy for the Tennessee Medical Association (TMA). For oncologists in Tennessee, drastic changes in contract terms have resulted in a big drop in payment just since the start of this year, he added.

“Health plans are so big and powerful that they have what amount to take-it-or-leave-it clauses in their contracts. These clauses allow them to amend contracts and the fee schedule at any time,” he says. As of last year, Blue Cross Blue Shield of Tennessee said it would cut what it pays to practices that have in-office pathology laboratories by 52 percent, and most large oncology practices have in-office labs.

Jeffrey F. Patton, MD, the CEO of Tennessee Oncology in Nashville, said his practice has been adversely affected by this change. “We couldn’t accept a cut of that size,” Patton says. “We have 80 oncologists working in 40 sites in Tennessee, and our size means we can refuse such unilateral changes.”

At each site where it delivers care, Tennessee Oncology needs an in-office laboratory. In addition, it has a central lab, Patton says.

“We need an analyzer at every site to check the blood counts before you deliver care, and we have a central lab to do chemistry analysis as well,” he says. “A cut of 50 percent would have been significant, and we were fortunate to have the size to reject that cut.”

Tennessee Oncology said it would not accept the cut, and because of its size and geographic coverage in the Volunteer State, it retained the contract, Patton says.

Small practices, however, do not have the market clout to say no to payers, Beatty says. The TMA supports legislation to prevent health plans from making unilateral changes in mid contract.

As of mid-March, that legislation was under consideration. “We just want some predictability for medical practices so that they will know what they will be paid during the year,” Beatty says. “We need this legislation to level the playing field, particularly for smaller independent practices.

“There needs to be predictability on the provider side so that they can be more efficient and know how much staff to hire and which services to deliver,” he adds.

Another important element when negotiating contracts with payers today is a willingness to move away from fragmented fee-for-service payment. Oncologists are just starting to get involved in negotiating shared savings and other payment arrangements with health plans. Just as size is important to controlling costs, these new payment methods are designed to provide a financial reward for keeping costs low and for improving the quality of care oncologists deliver.

To control costs and coordinate care more effectively, health plans are asking oncologists to participate in accountable care organizations and patient-centered medical homes. But progress in developing these arrangements for oncology has been slow, hampered by the complexity of cancer care.

While they recognize that fee-for-service arrangements need to be replaced and are interested in new forms of payment, oncologists remain wary of negotiations over new reimbursement models.

“Everyone understands that we need to develop a more value-based system that includes some risk sharing,” says Patton. “There are lots of discussions about new forms of payment, and new programs are being developed, but the vast majority of reimbursement remains as fee for service. Oncology is complicated and understanding where all the costs are is a challenge.

Practices are blind to hospital costs, and that’s the biggest part of the cost equation. For us to do a bundled payment or go at risk would be difficult until we fully understand hospital pricing,” he explains.

“To do that would require a lot of collaboration with payers because health care is fairly well behind other industries in terms of information technology. Without the right data and the proper tools to measure costs in real time, it’s difficult to do risk contracting,” he adds.

In order to negotiate favorable terms under these new payment arrangements, oncologists will need data on the full costs of care, including hospital and other costs that they normally do not see. Only then would they be able to trust the other parties involved in these negotiations.

“Once we have data we can start to come up with a solution together for how to do valued- based reimbursement for oncology,” he comments. In Tennessee, oncologists are just starting to have these conversations with payers.

Oncologist Marcus Neubauer, MD, medical director of oncology services with McKesson Specialty Health and the US Oncology Network, agreed, saying changes in cancer care payment have been slowed by the need for more data.

Nonetheless, Neubauer has seen that payers are starting to negotiate more sophisticated forms of payment that reward oncologists for delivering value, which health plans define as high-quality care that keeps costs under control.

Previously, Neubauer was in a private practice in Kansas City that was 1 of 5 oncology groups to adopt an episode of care payment system in 2010.

That practice, the Kansas City Cancer Center, contracted with UnitedHealthcare in a program designed to measure the effects of replacing feefor- service reimbursement. In the 4 years since then, he has seen more interest in moving away from exclusive fee-for-service payments.

“But oncology is an incredibly difficult specialty to attach bundled or episodic payments to. It’s not like cardiac, hip, or sinus surgery, where the care delivery is more uniform. If anything, cancer care is getting more heterogeneous with the expanding list of cancer-causing mutations and corresponding targeted agents,” Neubauer adds.

The cost of medications alone can complicate negotiations because one patient may be given a drug that costs $50 per month while another patient with a similar (but not identical) condition may receive a therapeutic regimen that costs $7000 per month, he explains. Another complicating factor is how patients are treated at the end of life, where care can be extremely costly, Neubauer says.

“For all these reasons, it’s very hard to say that a health plan will give an oncologist 1 payment for the treatment of any 1 type of cancer. Still, we need to get to value-based payment systems,” he said. Given these complicating factors, it might be best to begin a negotiation for an innovative payment program with radiation therapy because there is less variation in radiation oncology than there is in medical oncology, Neubauer adds.

The US Oncology Network has developed new payment models for radiation oncologists and is starting to build patient-centered medical homes (PCMHs) that would use fee-for-service payment to start and then shift to alternative payment models such as shared savings, he says.

A few oncologists have developed PCMHs and experienced some success negotiating favorable terms for these arrangements, notably Consultants in Medical Oncology and Hematology, a practice in Drexel Hills, Pennsylvania, that has a medical home and has contracts with a number of payers, according to oncologist John Sprandio, MD, who founded the practice.

In many settings, health plans require oncologists to follow care guidelines. The medical home model supported by McKesson Specialty Health and The US Oncology Network is called Innovent Oncology and encourages oncologists to follow protocols designed to improve patients’ overall health and decrease hospitalization rates and emergency department visits.

“With Innovent, we consider some risk-shifting models such as quality metrics and shared savings that are short of a bundled payment arrangement. Once we show that oncology care can be managed tightly at the provider level, we will be in a better position to negotiate a bundled payment model,” Neubauer says.

Under bundled payment, a health plan might negotiate a contract to pay for all care for a cancer patient for 1 year and pay that amount out every month over 12 months. Then at year’s end, it could continue the same payment or adjust the payment up or down depending on the patient’s level of illness. The oncologists negotiating such a contact would need to know all of their costs and may be responsible for paying for care in a hospital or other setting.

Therefore, getting fixed payments over the year would require the oncologists and everyone on the integrated care team to keep costs low and minimize costly complications.

Under such arrangements, oncologists may negotiate a clause that allows them to get out of the bundled payment arrangement if a patient develops catastrophic complications.

Experts believe such an out clause could be the difference between success and failure when caring for some patients because if cost exceeded the payments, the oncologist and the providers would assume those increased costs. But if all care costs are lower than the bundled payment, the oncologists and others on the care team would share the savings.

Joseph Burns

Articles

Practices in Bundled Payment Program Credit Medical Home Structure for Success

Amid Calls for Standardization, Oncology Medical Homes Grow

In Negotiations, Oncologists Find That Size Does Matter