Payor Perspectives on Oncology Reimbursement Reform
Recently I attended the 2nd annual Cancer Center Business Summit held in Chicago, October 20 and 21. One of the sessions titled “Payor Perspectives on Oncology Reimbursement Reform” was of particular interest amongst 2 days of sessions and workshops. Below you’ll see a summary of this session.
The session was moderated by Peter Eisenberg, MD, of California Cancer Care, the panel included Michael Koloziej, MD, Medical Director, Medical Oncology Services, US Oncology, Allen Lichter, MD, CEO, ASCO, Lee Newcomer, MD, Senior Vice President, Oncology, United Healthcare, and William Rogers, MD, Medical Officer, Office of the Administrator, Director Physicians Regulatory Issues Team, Centers for Medicare and Medicaid Services.
They all did a great job of providing differing perspectives in the payer/provider realm and a lively discussion ensued. Following are some of the ideas that were expressed by the opinion leaders about this topic.
US Oncology’s Innovent Oncology
Opening the discussion, Dr Koloziej explained how US Oncology’s new model—Innovent Oncology—is proposed to provide resources that can enable more collaboration and communication between providers and payers which can lead to agreed upon treatment algorithms that maintain quality while controlling the cost of care. Dr. Koloziej called Innovent a “matchmaker” and said that the idea behind Innovent is to provide oncologists with pathways, disease management, and advanced care planning support tools and services.
Dr. Lichter: Shifting the Cost of Therapy
Dr. Lichter spoke about an interesting new insurance model that the University of Michigan is experimenting with. The hypothesis behind the experiment is that if you shift the cost of therapy to patients—meaning you force them to take on greater financial burden associated with their therapy in the form of co-pays—you will decrease compliance. In the experiment, they are cutting co-pays to $0 so that the drugs are free to patients, and then compliance is being monitored. The study is underway and results are pending.
Viewpoint from CMS
CMS is the nation’s largest insurer and, Dr. Rogers reminded the audience, it is the only insurance company that is managed by Congress. This puts CMS in a very unique situation and in some cases limits what CMS is allowed to do. For example, some believe that co-pays for cancer therapies could be adjusted according to outcome i.e., the cost of cancer care could be shifted to patients by creating a tiered co-pay structure for cancer care. In this scenario, a patient may pay a 2% co-pay for Avastin-based therapy in an approved indication with a predictable outcome, but using Avastin-based therapy with an unpredictable outcome in an unapproved cancer indication, that same patient would have to pay a 40% co-pay. However, what many don’t realize is that this scenario is not possible at CMS unless it is mandated by Congress. By statute, CMS has to require a 20% co-pay from everyone, regardless of their condition.
Dr. Rogers also reviewed some of the other thoughts currently going on at CMS:
Dr. Newcomer, probably in an intentional effort to elicit an audience response, brought up a new initiative that United Healthcare is piloting called “episode-based payments”. To buy into episode-based payments, one has to believe that the buy and bill system, as it stands today, is fundamentally flawed in that it does not align incentives properly.
United is piloting episode-based payments in 3 or 4 practices in the country where patients are divided into similar groups (such as ER+ metastatic breast cancer, or HER2+ metastatic breast cancer). Those practices are then given a payment up front on day 1 of treatment for those patient types. United is calculating the profit normally acquired by the practice for a 6-month course of therapy in that patient type, and then sends the practice a check up front. Drugs are otherwise paid on a cost pass-through basis with no mark-up. If the patient and doctor decide not to continue the course of therapy throughout the 6-month time period, the check stays with the practice.
Dr. Newcomer described the episode-based payment model as a revenue neutral approach to the practice, but aligns the incentive into the right place. One of the interesting aspects of episode-based payment is that it takes away the incentive for one more course of therapy and therefore improves end of life therapy. There is a lot of data showing that patients are receiving treatments within the final weeks of life, and this could fix that problem.
Dr. Newcomer noted that this model is a pilot, an intermediate step, and that there are big logistical challenges. As he said, if United takes steps toward aligning the incentives better, and others learn from it, then they have made a beneficial difference in the way healthcare is delivered in the US. If the pilot doesn’t work, then other carriers will, at the least, know what not to do.
The Cancer Center Business Development Group (CCBDG) is a business forum that explores cancer care relationships through mergers, and consolidations or affiliations. Their goal is to bring together cancer care providers—who are concerned with the current economics in the oncology practice model—with key thought leaders from the financial and business world.
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The session was moderated by Peter Eisenberg, MD, of California Cancer Care, the panel included Michael Koloziej, MD, Medical Director, Medical Oncology Services, US Oncology, Allen Lichter, MD, CEO, ASCO, Lee Newcomer, MD, Senior Vice President, Oncology, United Healthcare, and William Rogers, MD, Medical Officer, Office of the Administrator, Director Physicians Regulatory Issues Team, Centers for Medicare and Medicaid Services.
They all did a great job of providing differing perspectives in the payer/provider realm and a lively discussion ensued. Following are some of the ideas that were expressed by the opinion leaders about this topic.
US Oncology’s Innovent Oncology
Opening the discussion, Dr Koloziej explained how US Oncology’s new model—Innovent Oncology—is proposed to provide resources that can enable more collaboration and communication between providers and payers which can lead to agreed upon treatment algorithms that maintain quality while controlling the cost of care. Dr. Koloziej called Innovent a “matchmaker” and said that the idea behind Innovent is to provide oncologists with pathways, disease management, and advanced care planning support tools and services.
Dr. Lichter: Shifting the Cost of Therapy
Dr. Lichter spoke about an interesting new insurance model that the University of Michigan is experimenting with. The hypothesis behind the experiment is that if you shift the cost of therapy to patients—meaning you force them to take on greater financial burden associated with their therapy in the form of co-pays—you will decrease compliance. In the experiment, they are cutting co-pays to $0 so that the drugs are free to patients, and then compliance is being monitored. The study is underway and results are pending.
Viewpoint from CMS
CMS is the nation’s largest insurer and, Dr. Rogers reminded the audience, it is the only insurance company that is managed by Congress. This puts CMS in a very unique situation and in some cases limits what CMS is allowed to do. For example, some believe that co-pays for cancer therapies could be adjusted according to outcome i.e., the cost of cancer care could be shifted to patients by creating a tiered co-pay structure for cancer care. In this scenario, a patient may pay a 2% co-pay for Avastin-based therapy in an approved indication with a predictable outcome, but using Avastin-based therapy with an unpredictable outcome in an unapproved cancer indication, that same patient would have to pay a 40% co-pay. However, what many don’t realize is that this scenario is not possible at CMS unless it is mandated by Congress. By statute, CMS has to require a 20% co-pay from everyone, regardless of their condition.
Dr. Rogers also reviewed some of the other thoughts currently going on at CMS:
- PQRI was intended to test the ability to collect quality data through the claim form. At this point it is clear that oncology offices have not been compensated at a fair rate for their time in compiling that data and there is basic recognition within CMS that PQRI has room for improvement.
- Conceptually through MIPPA (Medicare Improvements for Patients and Providers Act) CMS should be able to collect data and create a report card which compares the way one MD treats a condition, such as congestive heart failure, with the way peers are treating that same condition.
- Recovery Audit Contractors (RACs) are here and Congress is under the impression that RACs are a low cost way to recover a lot of money from fraud and abuse. But you don't have to worry too much about them visiting your office in the near future, because their incentive is to go after the big bucks, which is in the Part A hospital setting. That is where their efforts are likely to be focused.
- Regarding comparative effectiveness, Dr. Rogers pointed out that Medicare doesn’t have the authority or expertise to implement anything based on differential payments for comparative effectiveness. But, at any time, Congress can pass a law giving them authority. Right now the only tool they have is National Coverage Decisions, which is a blunt tool for implementing the results of data-driven studies. As Dr. Rogers sees it, if given the authority by Congress, CMS could implement such a program, which could improve outcomes and help oncologists. Dr. Rogers mentioned that NICE, the National Institute of Chemical Excellence, the UK authoritative healthcare body, has a cap of £36,000/patient/year for any given condition, and that is it. This will not work in the US, so he is not sure in what direction the model is going.
Dr. Newcomer, probably in an intentional effort to elicit an audience response, brought up a new initiative that United Healthcare is piloting called “episode-based payments”. To buy into episode-based payments, one has to believe that the buy and bill system, as it stands today, is fundamentally flawed in that it does not align incentives properly.
United is piloting episode-based payments in 3 or 4 practices in the country where patients are divided into similar groups (such as ER+ metastatic breast cancer, or HER2+ metastatic breast cancer). Those practices are then given a payment up front on day 1 of treatment for those patient types. United is calculating the profit normally acquired by the practice for a 6-month course of therapy in that patient type, and then sends the practice a check up front. Drugs are otherwise paid on a cost pass-through basis with no mark-up. If the patient and doctor decide not to continue the course of therapy throughout the 6-month time period, the check stays with the practice.
Dr. Newcomer described the episode-based payment model as a revenue neutral approach to the practice, but aligns the incentive into the right place. One of the interesting aspects of episode-based payment is that it takes away the incentive for one more course of therapy and therefore improves end of life therapy. There is a lot of data showing that patients are receiving treatments within the final weeks of life, and this could fix that problem.
Dr. Newcomer noted that this model is a pilot, an intermediate step, and that there are big logistical challenges. As he said, if United takes steps toward aligning the incentives better, and others learn from it, then they have made a beneficial difference in the way healthcare is delivered in the US. If the pilot doesn’t work, then other carriers will, at the least, know what not to do.
The Cancer Center Business Development Group (CCBDG) is a business forum that explores cancer care relationships through mergers, and consolidations or affiliations. Their goal is to bring together cancer care providers—who are concerned with the current economics in the oncology practice model—with key thought leaders from the financial and business world.
Return to OBR homepage
Subscribe to OBR in print
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