After months of delay, the Medicare Administrative Contractor (MAC), with jurisdiction over most molecular diagnostic tests used to treat cancer, made a series of decisions this fall that will allow Medicare reimbursement for several well-known tests, including 3 used in the treatment of prostate cancer.

On September 23, 2014, Palmetto GBA’s MolDx program issued a draft local coverage determination (LCD) for the ConfirmMDx test, made by MDxHealth, which is designed to avoid repeat biopsies.

 On October 16, 2014, Palmetto GBA issued an LCD for Myriad’s Prolaris test and for Decipher Prostate Cancer Classifer, made by GenomeDx Biosciences, for different indications.

Myriad’s Prolaris test received draft language for reimbursement for approximately 50% of prostate cancer patients defined as low and very low risk, while the Decipher test received draft reimbursement language for using the test with men who have undergone radical prostatectomy. Per Medicare rules, the draft LCD is subject to a minimum 45-day public comment period; once comments are considered, the final language goes into effect after a minimum notification period of 45 days.

Ten days after Medicare’s reimbursement announcement, Myriad announced that Prolaris had been included in the prostate treatment guideline of the National Comprehensive Cancer Center (NCCN), regardless of risk category. In its statement, Myriad said NCCN guidelines are considered the “gold standard” in cancer treatment.

Palmetto GBA’s action on reimbursement for molecular diagnostic tests for prostate cancer drew plenty of attention across the industry, given this year’s disputes with CMS on reimbursement issues. In recent years, CMS generally, and Palmetto GBA, specifically, have been under scrutiny over the MolDx program, which was developed to handle reimbursement questions involving this emerging industry. MolDx increasingly required testing companies to build evidence that demonstrated “clinical utility,” a standard that means a test makes a difference in physicians’ treatment decisions.

But what should be required became a matter of disagreement. On April 18, 2014, the California Clinical Laboratory Association sued the HHS, of which CMS is a part, over what the plaintiffs claimed was an unlawful transfer of CMS’ authority to set reimbursement policy and, especially, to allow diagnostic companies to appeal an unfavorable LCD.

. Last year, during a presentation at Oral Oncolytics in Philadelphia, Pennsylvania, MDxHealth officials said ConfirmMDx still uses an intial biopsy as the “gold standard,” while recognizing the standard 12-core method might miss cancerous tissue. ConfirmMDx seeks to confirm the presence of an epigenetic “halo” that exists around a tumor, which might be present even though the cells look normal under a microscope.

The test relies upon DNA methylation, a biochemical process that can alter gene expression as cells divide and result in the silencing of tumor suppressors. When DNA methylation goes awry, unfolding either too quickly or too slowly, cancer can result. This process does not happen all at once; thus, DNA methylation can be used as a readout for a pre-cancerous or cancerous state.

If a patient has a negative biopsy but a positive result with Confirm- MDx, the doctor can either treat as if the patient had a positive pathology result, or limit additional cores to the area of known “hot spots,” reducing costs, discomfort, and side effects. Thus, the ConfirmMDx test can not only limit costs but also improve quality of life.

. The Prolaris test, which came on the market in 2010 and costs $3400, is a 46-gene test designed to gauge the aggressiveness of prostate cancer in individual patients, based on the expression of cell cycle regulator genes. Unlike the prostate-specific antigen (PSA), which offers a snapshot of the cancer on a given day, Prolaris’ supporters say it offers a window into the future, assigning a score that increases along with the risk of progression.

 GenomeDx describes Decipher as a “unique genomic test intended for men who have had prostate surgery and are considered by guidelines to be at high risk for their cancer returning.” It is designed for men with specific risk factors for cancer recurrence, including positive surgical margins, stage T3 disease (seminal vesicle invasion, extraprostatic extension, and bladder neck invasion), or rising PSA after an initial drop-off.

On October 15, 2014, BioTheranostics announced that it had received a positive local coverage determination from Palmetto GBA for its Breast Cancer Index, or BCI, test, a gene expression test that assesses risk during the following periods:

		Late recurrence beyond 5 years after diagnosis

In a statement, BioTheranostics said that the draft Medicare language calls for covering BCI to predict risk of late (5—10 years) distant recurrence in women with early stage, estrogen receptor-positive breast cancer who are considering extended therapy but are concerned about continuing anti-hormonal therapy because of documented toxicity or possible significant patient-specific side effects.

“We are pleased that we have attained such a significant milestone within the first eight months of full commercialization of the Breast Cancer Index— the only molecular test covered by Medicare that accurately assesses a patient’s individualized risk of breast cancer recurrence after 5 years and is validated to identify which patients will benefit from extended hormone therapy,” Nicolas Barthelemy, who recently joined BioTheranostics as president and CEO, said in a statement. “This critical information will allow many women to avoid unnecessary treatment and potential side effects that can adversely affect their health and quality of life.”

			MDxHealth’s ConfirmMDx for prostate cancer test qualifies for Medicare coverage effective November 3, 2014 [press release]. Irvine, CA, and Herstal, Belgium: MDx Health; September 23, 2014. http://mdxhealth.com/news-and-events/press-releases-and-events?detail=1857455.

			Myriad receives draft Medicare coverage for Prolaris [press release]. Salt Lake City, UT: Globe Newswire; October 16, 2014. http://investor.myriad.com/releasedetail.cfm?releaseid=876733.

			Centers for Medicare & Medicaid Services publishes draft coverage decision to reimburse Decipher test for intermediate and high-risk cancer [press release]. San Diego, CA: Genome Dx; October 16, 2014. http://genomedx.com/press-releases/centers-medicare-medicaid-services-publishes- draft-coverage-decision-reimburse-decipher-test-intermediate-high-risk-prostate-cancer/.

			Myriad announces inclusion of Prolarid in NCCN guidelines [press release]. Salt Lake City, UT: Globe Newswire; October 27, 2014. http://investor.myriad.com/releasedetail.cfm?releaseid= 878212.

			Caffrey MK. When science outpaces payers: reimbursement in molecular diagnostics. Am J Manag Care. 2014;20(SP7):SP234-SP236.

			Caffrey MK. A test to prevent repeat prostate cancer biopsies? perhaps, if the bar of “clinical utility” can be met. Am J Manag Care. 2014;(SP2):SP30-SP31.

			Studies see value of Prolaris cancer diagnostic test, but will CMS pay for it? Am J Manag Care. 2014;20(SP11):(SP323-SP327).

			BioTheranostics gets Medicare coverage for Breast Cancer Index test [press release]. New York: GenomeWeb; October 15, 2014. http://www.genomeweb.com/clinical-genomics/biotheranostics- gets-medicare-coverage-breastcancer-index-test.

Articles

Medicare Reimburses 3 Prostate Cancer Diagnostic Tests

With the FDA approval of several oral chemotherapy agents, the cost of medications to treat cancer is increasing rapidly. To control costs, legislators, patient advocates, and physicians have pushed for oral chemotherapy parity laws.

But, according to a recent viewpoint article by Bo Wang, PharmD, and colleagues at the Brigham and Women’s Hospital and Harvard Medical School published in a November 2014 edition of JAMA Internal Medicine, these parity laws are an inadequate response to the problem of escalating medication costs.

In a traditional chemotherapy reimbursement setting, medical benefits cover the cost of outpatient administration of chemotherapeutic drugs. These flat co-payment costs contrast with the tiered cost structure of pharmacy benefits, which may be higher for more expensive medications.

With the move to oral oncologic drugs, the out-of-pocket cost is increasing. In the past, a patient receiving treatment for chronic myelogenous leukemia might have paid a flat co-payment of $20 to $50 per session for outpatient intravenous chemotherapy. Today, the same patient might pay in excess of $2500 per month for treatment with oral oncologic drugs.

Chemotherapy parity laws approved by a bipartisan congressional effort in 2013 help some patients, but do not address the important issue of the high cost of oral cancer drugs. Rather than providing a solution to high drug costs, parity laws ignore the cost of each agent per quality-adjusted life-year gained, and simply mandate that insurers cover the cost of very expensive chemotherapeutic drugs. By ignoring the balance between cost and quality, Congress is ultimately promoting the inefficient use of limited healthcare dollars.

In addition, the law has led to unfair competitive practices between hospitals and private practice in offering services at a lower cost to patients— outcompeting many outpatient oncologists. For instance, a 2010 provision of the Affordable Care Act expanded the 340B discount purchasing program to enable hospitals to obtain chemotherapeutic agents at a highly discounted price. As a result of anticompetitive 340B pricing, many private-practice oncologists are being forced to merge into larger practices, while other oncologists are selling their private practices to hospitals to take advantage of the more competitive reimbursement rates. Some physicians may even retire as a result of the pricing differences.

For insurers, the high cost of oral oncologic agents may require exclusion of these agents from formularies. The lack of competitive pricing has forced insurers like Express Scripts to stop covering high-cost medications such as the oral rheumatoid arthritis drug, tofacitinib. Expensive oncologic agents may be the next drugs to be affected by this policy. Ultimately, Congress will need to enable pricing of drugs based on rational pharmacoeconomic decisions, rather than a patchwork of policies that endanger the availability of outpatient care while saddling insurers with arbitrary costs. Chemotherapy parity laws do not remedy the problem of high drug costs; they simply ignore the real question of balancing cost and quality in healthcare.

	Wang B, Joffe S, Kesselheim AS. Chemotherapy parity laws: a remedy for high drug costs? JAMA Intern Med. 2014;174(11):1721-1722.

Chemotherapy Parity Laws Ignore Cost, Quality Question

Sweeping changes to the way America delivers care at the end of life would better serve patients and their families, while achieving the goals sought in the Affordable Care Act (ACA) of better health, cost savings, and especially patient satisfaction, according to the Institute of Medicine report,

 Dying in America: Improving Quality and Honoring Individual Preferences Near the End of Life

The 507-page report outlines how end-of-life care falls short at almost every point in the process, but it particularly faults the “perverse incentives” that waste money and do harm: patients land in the hospital instead of receiving at-home care, ambulance drivers take patients to the emergency department just to get paid, and the sickest patients, such as those receiving chemotherapy, are kept out of hospice when they would benefit the most.

		Compensation and reimbursement at all levels, especially in government- funded care, must shift from rewarding care in hospitals to providing pain management or other palliative services, including care at home.

		Professional medical societies must set standards for better end-of-life care, and payers must support them in reimbursement schedules.

		Clinicians must get better education about end-of-life care, and accrediting bodies must place increased focus on this area. Managed care organizations have long called for these changes, and some commercial insurers have made them, too. However, the Medicare reimbursement system is at fault in many areas cited in the report; notably, it does not allow compensation for doctors to have conversations with patients about advanced care planning. Medicare is considering such a change, more than 4 years after an effort to include such a provision in the ACA brought accusations that the Obama administration was promoting “death panels.

A foreword to the report takes harsh aim at those who promoted such talk for political gain, saying it set back the nation’s ability to make dying less traumatic and expensive for patients and their families. “The controversy on this topic and the political desire to avoid it do not alter the fact that every person will face the end of life one day, and many have had hard experience with the final days of a parent, a spouse, a child, a sibling, another relative, or a dear friend,” the report states. “At a time when public leaders hesitate to speak on a subject that is profoundly consequential for the health and well-being of all Americans, it is incumbent on others to examine the facts dispassionately, assess what can be done to make those final days better, and promote a reasoned and respectful public discourse on the subject,” it continues.

Meanwhile, data in the report show that a portion of patients at the end of life account for some of the highest medical spending. Of the estimated 18.2 million persons each year who are in the top 5% for healthcare costs, 11%, or 2 million, are in the final year of life. Of the 2.5 million deaths in the United States each year, 80% were among those who incurred healthcare costs that put them in the top 5% of healthcare spenders. Some of the highest spending takes place in the realm of cancer care, where discussions about palliative care can be especially beneficial. In November 2013, The American Journal of Managed Care welcomed keynote speaker Amy Berman, RN, to its conference, Patient- Centered Oncology Care, where she discussed how a less invasive, palliative approach to treating her breast cancer has given her a good quality of life. Unfortunately, she said, that’s not how things usually happen. “We have a system that is perfectly designed for someone to show up in the emergency department, where we don’t want them to show up,” Berman said.

Beyond the overall recommendations, Chapter 5, “Policies and Payment Systems to Support High-Quality End-of-Life Care,” targets specific ways to change reimbursement structures such that it would benefit patients and provide meaningful, low-cost solutions for overburdened families. The report paints a portrait of a reimbursement system both grossly and dangerously out of touch with modern life and demographic reality: the reimbursement system is designed to pay for high-tech solutions but won’t help an adult daughter, who is trying to remain employed, with the cost of making sure her elderly mother is fed and bathed every day.

Too many families are caught in the middle—they are not poor enough for Medicaid, but they lack the resources for high-quality nursing home care. At the same time, with the population aging, the need for help with basic needs such as dressing, eating, bathing, and taking prescriptions will only increase. When patients can remain at home for these activities, the savings are enormous, but families need support for this to occur, according to the report. “Communities are testing new approaches to training and paying EMS personnel to assess and intervene with soluble problems at home, such as a fall without evidence of injury, rather than routinely transporting all patients who call 911 to the emergency department.”

Managed care disincentives. The report explains how generally, capitation policies in managed care work against the sickest patients making it to hospice, because their per-day costs may exceed what their managed care is paying for hospice care. Of note, in 2012, Medicare Advantage gave physicians an incentive to use hospice for these enrollees because once the patient reaches hospice, Medicare becomes the payer. “This hospice ‘carve-out’ makes it attractive for a plan to shift patients likely to be high cost from its rolls to the Medicare Hospice Benefit, but also decreases the incentive for the plan to develop high quality palliative care services.”

Medicaid has experimented with managed care models for dual eligibles, but a study by MedPAC identified several barriers: lack of awareness; difficulty in providing social supports, especially behavioral health; and conflicts between Medicare and Medicaid coverage as well as provider rules.

Palliative care and hospice. These programs are often misunderstood. They aim to meet a patient’s emotional, social, practical, and spiritual needs, as well as medical ones. The seriously ill patients that benefit are not all at the end of life, but they share an interest in receiving skilled communication about what to expect, and, according to the report, not receiving treatments that will provide little benefit and may provide harm. Palliative care as an alternative to what is called “futile care,” or interventions that are unlikely to help patients or will be of marginal benefit, may yield great savings.

The chapter on redesigning reimbursement strategies made a series of recommendations:

		A fundamental redesign of Medicare and Medicaid is needed.

		Pursue integration of healthcare and social services.

		Increase transparency and accountability.

		Provide financial incentives for medical and support services that reduce emergency department and acute care services.

		Provide financial support for coordination of care across settings and providers.

		Improve shared decision making, and pay doctors or nurses to guide patients in this process.

		Require the use of interoperable electronic health records that include advance care directives across time, settings, and providers. Include the alternative decision maker.

		Encourage states to implement a physician’s Orders for Life-Sustaining Treatment paradigm program that meets national standards.

			1. Committee on approaching death: addressing key end-of-life issues. Dying in America: improving quality and honoring individual preferences near the end of life. National Academic Press. http://books.nap. edu/openbook.php?record_id=18748. Published September 17, 2014. Accessed October 30, 2014.

Sweeping changes to the way America delivers care at the end of life would better serve patients and their families, while achieving the goals sought in the Affordable Care Act (ACA) of better health, cost savings, and especially patient satisfaction

"Perverse Incentives" Add Costs to Dying Patients

Chief Innovations Officer, Professor, and Vice President of Cancer Services

		John Theurer Cancer Center at Hackensack University Medical Center

President, Regional Cancer Care Associates, LLC

It is always fun to try to predict the future. Invariably you will be wrong. Nonetheless, the current issue will attempt to outline future states of oncologic care delivery and reimbursement. What will oncology care look like in 2020?

Will oncologists all be working in an employed model, an extension of the current trend that was emphasized in a recent New York Times article: “The private practice oncologist is becoming a vanishing breed, driven away by the changing economics of cancer medicine.1” The article cites the Community Oncology Alliance statistic that says since 2008 of the 1447 independent oncology practices in the US, 544 were purchased by or entered into contractual relationships with hospitals, another 313 closed, and 395 reported that they were experiencing difficult financial situations.

Or, will there be a reverse in course to the private practice setting because of the increased expense of oncology care delivery in the employed, hospital-based setting? I guess only time will tell.

What is clear is that the science of oncology, cost of oncology care, and methods of therapy will likely be vastly different by 2020. Immune-based therapies alone are likely to substantively change the economics of oncology and oncology care delivery. Will their cost be additive or supplant existing total cost? Only time will tell. Add to this the personalized genomic revolution. Will we have a test by 2020 that will allow patients and their doctors to avoid therapies with no chance of working? Will this reduce total cost or increase them? I do not know.

Regardless of our inability to predict the future, policy makers and markets are affecting change in oncology care delivery. Various methodologies of reimbursement including bundles, episodes of care and capitation, all with and without shared savings, are in trial or development.

Early results indicate that bundles/episodes of care can reduce total cost of care in controlled settings. Is this universally applicable? Only time will tell. How will advancement in technology and information exchange affect all of this? You got me.

There is a great expression I once heard that seems appropriate to share here—never let the truth get in the way of a good story. It will be wonderful if we can save on total cost while improving outcomes for all patients suffering with cancer. I have written about the Goldilocks formula before&mdash;do just the right amount of care…not too much and not too little. Previously we have addressed the promise of big data and how big data may enable the Goldilocks formula.

Our population is aging and cancer prevalence is increasing in large part because of our collective good work. Prevention and early detection remain key. However, as outcomes improve with new and more expensive agents for advanced disease, the math may not work on total cost of care savings because the expensive therapy is the best therapy. It would be nice if we could have 20/20 vision when it comes to the future, but I guess only time will tell.

	Kolata G. Private oncologists being forced out, leaving patients to face higher bills. New York Times. November 23, 2014. Accessed on November 26, 2014. http://nyti.ms/1vlB32v.

It is always fun to try to predict the future. Invariably you will be wrong. 

Will Oncology Care in the Future Look Vastly Different From Today?

Think back to what healthcare was like in the early 1980s. Thirty years ago, electronic health records and oral chemotherapy were hardly blips on the radar, and vertical integration was in its infancy. Even though the healthcare environment was very different, many of the challenges we face today are the same. Rising costs, an aging population, and higher rates of chronic disease were issues back then for private and government payers, providers and patients, just as they are now. Several initiatives that have a dramatic impact on healthcare today were born during that time—managed care, transitioning away from inpatient care toward outpatient care, and the introduction of clinical pathways.

Originally, pathways focused on standardizing care as a way of managing the quality of care provided. The goal was to reduce unnecessary variability in clinical practice and improve outcomes. Evidence-based guidelines were developed and adopted throughout healthcare from general practice to specialties—including oncology. Over the years, the role of pathways has evolved and expanded significantly. Today, they are not only effective tools for improving the quality of care, but also for driving value in healthcare.

The idea of driving value with pathways has gained the attention of payers, providers, and many thought leaders in cancer care. Treatment of cancer, in particular, has been identified as one of the fastest-rising cost centers in healthcare and has come under scrutiny for high drug costs, high rates of hospitalizations, and potentially unnecessary and expensive end-of-life care. Several studies from McKesson Specialty Health and The US Oncology Network reported over the last decade support for the use of evidence- based guidelines, specifically Level I Pathways, as an effective method of lowering cost while still demonstrating outcomes similar to those in the published literature. Level I Pathways, which were developed nearly 10 years ago by The US Oncology Network, are now refined into Value Pathways powered by the National Comprehensive Cancer Network (NCCN)—the result of the recent collaboration between the NCCN, McKesson Specialty Health, and The US Oncology Network.

A study conducted by The US Oncology Network and Milliman compared patients with colon cancer whose care followed physiciandeveloped Level I Pathways (also known as “on-pathway”) with other patients (“off-pathway”). The study found mean per patient cost differences of more than 30 percent (favoring the on-pathway group).

Another study looked at patients with non-small cell lung cancer (NSCLC) treated in the community outpatient setting. Cost of care over a 12-month period and overall survival were compared between patients treated on-pathway versus off-pathway, and the study found overall outpatient costs to be 35 percent lower for on-pathway versus off-pathway choices (average 12-month cost, $18,042 vs $27,737, respectively) with no difference in overall survival observed.

 Results of both of these studies suggest that treating patients according to clinical pathways is a cost-effective strategy for delivering care, and highlights opportunities for oncologists to help rein in cancer care costs.

Pathways help reduce costs by standardizing care. One of the biggest cost drivers in healthcare is high variability in care. This is especially true in the treatment of cancer, given the high and variable costs of oncology drugs. Following pathways leads oncologists down a path that ultimately results in a treatment option that has been proved the most clinically effective and cost-effective option. Pathways were developed with clinical efficacy, toxicity, and cost taken into consideration. In other words, when developing a pathway to treat a specific type of cancer, if 2 drugs offer the same efficacy and toxicity, the lower-cost drug, often a generic drug, is selected as the pathway treatment option. This also improves the predictability of cost for payers and patients.

Value Pathways powered by NCCN are an example of pathways that follow this formula. They are up-to-date, peer-reviewed, evidence-based practice algorithms for cancer treatment, and are designed to maximize survival, minimize toxicity, and provide cost-saving opportunities.

 They represent the same rigor that we put into creating and maintaining Level I Pathways over a decade ago, but now have the expert contribution of NCCN Clinical Practice Guidelines in Oncology (NCCN Guidelines) panel members. Value Pathways powered by NCCN differ from NCCN Guidelines. They are a subset of NCCN Guidelines that take not only efficacy, but toxicity and cost into consideration to come up with a more succinct list of treatment choices that drive value. Currently, Value Pathways for chemotherapy decision making have been developed for more than 12 different diseases, and Value Pathways for radiation therapy are on the horizon.

To bring Value Pathways powered by NCCN and NCCN Guidelines to the point of care, McKesson Specialty Health offers Clear Value Plus, a regimen support tool that provides Value Pathways and NCCN Guideline choices at the point of care. Clear Value Plus also allows a provider to see the relative costs of selected regimens to help patients make informed decisions that take both efficacy and cost to patient into consideration. Clear Value Plus can be used as a stand-alone Web-based tool, integrated in the physician workflow through clinical interfaces with multiple electronic medical records (EMRs), or fully embedded with McKesson Specialty Health’s iKnowMed Generation.

 In all instances, Clear Value Plus delivers clinical and financial transparency along with real-time reporting.

Some wonder if pathways are here for the duration or if the introduction of personalized medicine will eliminate the need for standardized care. On the surface, the idea of individualized care determined by genetic testing might suggest pathways will be rendered obsolete. However, Value Pathways take into account the cancer causing mutations that require specific treatment choices. So, if anything, the progression toward individualized medicine will actually lead to more refined pathways and ultimately better outcomes as the most effective treatments are used.

Likewise, questions arise about the effects of different payment scenarios using pathways. Payers are exploring a myriad of payment options to address spiraling costs, including bundled payments for treatment. Pathways inherently make cost of treatment for different types of cancer more predictable and can be a great tool in helping physicians and payers estimate costs and negotiate appropriate bundled payments.

Thus far, practices using Clear Value Plus are giving very positive feedback. Users like having access to Value Pathways powered by NCCN, NCCN Guidelines, and financial information, all at the point of care. Also, because treatment decisions are recorded in Clear Value Plus, participating practices can use reports for quality improvement and payer contracting around value-based initiatives. Oncologists understand that when patients receive standardized care anchored in clinical quality and evidence-based medicine, the opportunity for positive outcomes increases, and oncologists can help keep costs in check. With this in mind, pathways will likely be an integral part of oncology care delivery for the foreseeable future.

			Hoverman JR, Cartwright TH, Patt DA, et al: Pathways, outcomes and costs in colon cancer: Retrospective evaluations in two distinct databases. J Oncol Pract. 2011;7(suppl):52s-59s.

			Neubauer M, Hoverman JR, Kolodziej M, et al. Cost effectiveness of evidence-based treatment guidelines for the treatment of non—small cell lung cancer in the community setting. J Oncol Pract. 2010;6(1):12s-18s.

			McKesson Specialty Health: Connecting payers and physicians for improved patient care. http:// www.innoventoncology.com/web/. Accessed November 18, 2014.

Several initiatives that have a dramatic impact on healthcare today were born during that timeâ€“managed care, transitioning away from inpatient care toward outpatient care, and the introduction of clinical pathways.

Clinical Pathways Can Lead to Cost Savings, Better Care

Faced with steep regulations, slashed reimbursement rates, and a shift in focus from fee-for-service (FFS) to delivering value, insurers and physician groups are experimenting with new forms of payment incentives.

But don’t look for a new model in payment reform to be widely adopted overnight. Physician associations like the American Society of Clinical Oncology (ASCO), the federal government, and private payers have been at the forefront, but payment reform is going to take a slow, incremental shift with many stakeholders weighing in. Overall, there are 4 broad categories of payment reform incentives: pay-for-performance (P4P) programs, bundled or episode payments, pathways, and capitation P4P programs are the most prevalent model and reward physicians for meeting pre-specified goals and following established treatment protocols.

Early results by insurers and physician groups have been reported by CareFirst Blue Cross and US Oncology.

 Episode or bundled payments provide physicians a fixed amount of money for a defined time period. Although this form of payment minimizes the financial risk to physicians, the cost of therapy is a factor that requires vigilance.

“I happen to think that episode-based payment or bundled pricing for cancer care probably makes the most sense,” said Thomas Feeley, MD, head of the Institute for Cancer Care Innovation at the University of Texas MD Anderson Cancer Center. The Institute studies new and existing models of cancer care delivery and reimbursement.

The third innovative model promotes the use of pathways—specific treatment regimens identified by insurers. Given the complexity of cancer and all of the unique individual circumstances, it would not be possible to have a pathway for every specific situation. It is up to the oncologist to determine if one pathway treatment is a better option than another, given the patient’s circumstance.

“So if you have 2 to 3 different treatment options and 1 of them is clearly more efficacious, that option becomes the physician’s first choice,” said Jeffery Ward, MD, a private practice oncologist at the Swedish Cancer Institute in Edmonds, Washington. “That option takes precedence in your pathway and could be the only option in your pathway if the data are strong enough.”

After efficacy is determined, the second factor to consider is toxicity, said Ward. “Once you’ve addressed efficacy and toxicity, the third factor to consider is cost. So the pathway order of preference is to determine what works best, what is best tolerated, and what is the most value.” In the last category—capitation&mdash;physicians bear the cost risk for the care of a patient population. Capitation also tends to curtail freedom of choice, innovation, and research (see 

“We tried capitation in the 1980s and while it’s highly effective at controlling healthcare costs, it really curtails freedom of choice and can restrict access to care and certainly doesn’t promote innovation and research, which is essential in oncology,” said Deborah Schrag, MD, professor in the Department of Medicine at Harvard Medical School and chief, Division of Population Sciences, Department of Medical Oncology. Her research focuses on utilization of new cancer treatment technologies at the population level.

Ward says capitation might work for the big hospital system with employed doctors or a huge multispecialty clinic but a community oncology practice will have challenges. “If you give a community practice capitated dollars for patient care, how is the practice going to pay the surgeon, the radiologist, or the radiation oncologist? In addition, the practice is responsible for purchasing and administering chemotherapies, which the practice has no price control over and, which keeps increasing exponentially. How can anyone be expected to take on that risk?” Ward asked.

		Table 1. Alternative Payment Models to FFS

					Highly effective at controlling costs

					Promotes evidence-based practice, high quality

					Provides incentives to teams to work together to get good outcomes

					Easier to construct for short episodes and a wellspecified team

		Source: Schrag D. Aligning Incentives and Designing Payment Systems to Promote Excellence in Cancer Care and Innovation. Dana-Farber Cancer Institute. Presentation, November 7, 2014.

Feeley cautions that while there is no dominant form of payment model emerging, nonetheless, “major cancer centers all understand that the current payment model will change over the next several years.”

The glacial pace of new payment reform may be attributed to today’s insurance and healthcare industry, which has fostered the fee-for-service system. That results in “a lot of billing, a lot of claims that require managing, and an incredible administrative burden for both physician organizations and for payers,” said Feeley. “Whatever change happens, has to happen incrementally.”

“Oncology care is financed by a cross subsidization model,” said Schrag during a briefing sponsored by the Alliance for Health Reform. Her presentation was titled “21st Century Cancer Care: Will New Models Lead to Better Care at Lower Cost?”

In cancer care, the buy-and-bill model for chemotherapy dominates. “Chemotherapy drugs go from the pharmaceutical manufacturer to a wholesaler, to a drug distributor, to the medical oncology practice, which buys the product and administers it to the patient,” said Schrag. The services that are reimbursed involve the administration of chemotherapy, she said. “But here’s what’s not adequately reimbursed—the services that matter to patients. That includes counseling about decision making, symptom management, care coordination, phone calls, social work, nursing, genetic counseling, financial counseling, survivorship care planning and research.”

Insurers and physician groups have many demonstration projects underway that look at value-based medicine reimbursement, but it’s still too early to determine how well they are working, said Schrag during the briefing. Comparing alternative payment models to traditional models, Schrag said there is a shift “to pay for the kind of cognitive services and individual treatment planning that really matter to people.”

This results in a gradual transition away from fee for service, “but tries to reframe the way we reward care,” she said. “Ultimately, the issue is not just to shift it, but to shrink the overall [expenditure size] so that we are spending less overall in cancer care. The other thing you will notice is that we are not trying to skip giving drugs to patients. We are trying to get people to spend less time in the hospital and the emergency department and reward high value, high touch care,” said Schrag.

“To really improve care and get value,” Schrag said, “is to make research the number 1 priority. To get to high value, we need better treatments and better drugs. We need more alternates within therapeutic classes and more personalized drug regimens. We can’t do it without research. That is what we need in order to maximize value.”

To maximize value, Schrag said all the stakeholders need to be involved and contributing to a solution: patients, physicians, payers, employers, and the public.

Feeley sees employers playing a bigger role in the future with these new models of payments. “We are starting to see large employers reach out directly to large provider organizations and contract directly with them,” he said.

It’s a trend to keep an eye on “especially as episode-based payment models appear where there is a bundled price for a single treatment or course of treatment. That is certainly something that a large major employer could handle on their own without the need of an insurance company. We’ve seen this happen with the Cleveland Clinic. We’ve seen this happen with Walmart and Boeing,” said Feeley.

But what does this mean for the 900-pound gorilla in the room—Medicare? He emphasizes that this isn’t the end of the Centers for Medicare & Medicaid Services (CMS) just yet. “We’ll never replace CMS; don’t get me wrong. It is a vital part of healthcare for the elderly and disabled and people with chronic conditions. But for the working person in America, there may be some other changes,” Feeley said.

“We are watching these market trends carefully in terms of future cancer care delivery. It is harder and harder to be a private physician these days opening up a practice, a small group practice, although that is still the dominant model of care in the United States,” Feeley said.

Although there are distinct advantages that come with being a large, multidisciplinary cancer center, said Feeley, there is a trade-off when it comes to being nimble in business dealings. For example, MD Anderson is looking at time driven activity-based costing (TDABC), a costing methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each. This model assigns more indirect costs (such as overhead) as representative of direct costs compared to conventional costing.

“In some ways, small community practices applied these principles in that they were quick to use lower cost providers in the ambulatory setting. These small practices realized that they could do more with physician assistants and nurses, while having the physician functioning at a level that provides high quality care,” said Feeley.

“TDABC recognizes that a large proportion of our expenditures come from the people who provide healthcare,” said Feeley. “At a large center like MD Anderson, more than 65% of our budget is our people. We focus a lot on drug costs, which are without question outrageous, but we sometimes forget that some of our biggest costs are in the people providing the care.”

Feeley continued: “That is where a small practice can use these types of techniques and understand where the costs are in their system. In addition, if you tie costs to what you are being reimbursed for, it can help you understand where you are being reimbursed and where you are not. Most small practices know this very well without a sophisticated time driven activity-based cost accounting system,” concluded Feeley.

A proposal by the American Society of Clinical Oncology (ASCO)—Consolidated Payments for Oncology Care (CPOC)&mdash;advocates scrapping the current system for a bundled payment approach to cancer care.

The tenets of the CPOC proposal focus on flexible payment that is patient centered, with a simpler billing structure, a focus on coordinated care, more predictable revenue, and incentive-based, high-quality, high-value care.

“We are working on a proposal to get rid of buy-and-bill, but that’s fraught with a lot of infrastructure issues,” said Ward, who is also chair of ASCO’s payment reform committee. “But right now, CPOC is built on paying oncologists fairly for doing the things we do. The proposal uses pathways and P4P programs to incentivize oncologists to follow best of care in treating their patients and to decrease utilization of expensive emergency departments and hospitalizations where possible,” said Ward. In addition, extra bundles for surgical oncology, radiation oncology, and imaging could be incorporated.

The CPOC model takes “a disease-agnostic approach,” said Ward. “So payment is dependent on the performance status of the patient—how sick he is&mdash;and how complicated the therapy is. It’s agnostic to an oral chemotherapy agent versus an IV chemotherapy agent.”

The other payment model under consideration is from the Center for Medicare & Medicaid Innovation (The Innovation Center). The Innovation Center is developing an oncology payment model, currently referred to as the Oncology Care Model (OCM), to test the effect of better care coordination, improved access to practitioners, and appropriate clinical care on improving health outcomes at a lower cost.

The OCM would target chemotherapy treatment and the spectrum of care provided to a patient during a 6-month episode following the start of chemotherapy treatment. Participants would be physician practices that furnish chemotherapy treatment, and would be expected to engage in practice transformation to improve the quality of care they deliver. This transformation would be driven by the requirements practices must fulfill in order to participate in the OCM.

But Ward says there are some concerns with The Innovation Center’s model. “My concern with those kinds of bundles is that in a single small practice, they can become inherently unstable,” said Ward. “Trying to figure out what the dollar amount should be for an individual practice may be difficult because 1 patient who has a complicated treatment regimen and who uses a lot of dollars may skew the numbers.”

Private insurers are also promoting their payment models. Each model has their advantages and disadvantages. At this point in time, payers and physicians must continue searching for better payment methods. The current payment model has inadequacies, and more experiments and pilots are needed to find ways to reduce costs and preserve quality. Any proposed model will benefit by undergoing rigorous testing, which will hopefully lead to important insights into the affordability and value of cancer care.

			Kreys ED, Koeller JM. Documenting the benefits and cost savings of a large multistate cancer pathway program from a payer’s perspective. J Oncol Pract. 2013;9:e241-e247.

			Neubauer MA, Hoverman JR, Kolodziej M, et al: Cost effectiveness of evidence-based treatment guidelines for the treatment of non-small-cell lung cancer in the community setting. J Oncol Pract. 2010; 6:12-18.

December 2014 | Oncology Business News®

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