Bundling Payments: UnitedHealthcare Dips a Toe in the Water

August 2015 Vol 8, Special Issue: Payers' Perspectives in Oncology
Caroline Helwick

UnitedHealthcare is determining the best way to institute payment bundling, according to Lee N. Newcomer, MD, MHA, UnitedHealth Group’s Senior Vice President of Oncology, Genetics and Women’s Health, who described the payer’s pilot project conducted at M.D. Anderson Cancer Center at ASCO 2015.

First discussing the various payment models that are currently in place or are emerging, Dr Newcomer explained the levels of the “risk continuum” and offered their advantages and disadvantages.

The least risky model is fee for service, although he cautioned that this payment model is not risk-free. Fee for service “creates disincentives.…It invites utilization management that sucks up time, energy, and resources,” he maintained.

Pay for performance is typically a model that offers bonus pay for measures such as the use of pathways. “But payment never covers the cost of the problem and does not get to outcomes,” Dr Newcomer pointed out.

Although this model has “been big” with accountable care organizations, and it works well for improvements such as maintaining optimal hemoglobin A1c levels in patients with diabetes, it does not have the same impact in oncology.

Game-sharing (episodes programs) is a classic example of a model with a fairly minimal risk for physicians and potential “upsides,” but physicians must “perform” to gain, Dr Newcomer pointed out. He describes this program in an accompanying article (see article, page 11).

Bundled payments offer a much greater level of risk and operate much like hospital diagnostic-related groups; however, if bundled payments are managed correctly, there are wins on all sides. Physicians receive a single payment for a diagnosis, and all the care that it includes.

Not included on Dr Newcomer’s list was capitation. “I don’t think physicians are prepared to take full capitation for cancer care. I discourage you from looking at this model until you have experience with the rest of this continuum and experience in managing risk,” he told oncologists at an ASCO session.

Why Bundling?

“A single payment rewards quality, because provider profits increase with fewer complications, with the elimination of unnecessary tests or procedures, and with improved coordination among specialists,” Dr Newcomer indicated.

“You get better in this program….And if you do these things, you will make more money in a bundle than with fee for service,” he said.

UnitedHealthcare selected M.D. Anderson Cancer Center as a site for a pilot bundling program in head and neck cancer. “They value mapping of all processes, they have established measures of quality in place, and they have an understanding of costs,” Dr Newcomer said. “We found that they were totally integrated and ready to have discussions.”

Patients are evaluated by a multidisciplinary team and are given up to 4 options, or “packages,” that include a mix of treatment modalities. Payment is based on the package, but it is important to note that all 4 packages have the same profit margin. “There is no incentive to push the patient toward one or the other,” Dr Newcomer said.

Overall survival will be the primary outcome measure. “I think this is mandatory for any risk contract,” he said.

UnitedHealthcare has shown that survival in patients with metastatic non–small-cell lung cancer is comparable between patients who receive treatment under an episode-based payment model and those who receive treatment under the fee-for-service model, even though the episode-based payment model uses 34% fewer resources.

Currently, 18 patients have enrolled in the head and neck cancer bundling project. “We don’t expect this to be a large-volume process,” Dr Newcomer acknowledged. “We want to set a precedent to move into bigger areas.”

A number of lessons have already been learned, he said. Collaboration is essential, which means working together and not being adversarial. Financial incentives help to focus attention “and bring us to the table,” and data highlight the priorities.

A comparison group is critical, and this must be contemporary and case-­adjusted. Survival and quality measures are “a must,” because they counterbalance the risk of undertreatment.

Dr Newcomer concluded by advising oncologists to limit their risks to learn how to succeed. “Some risk is a good thing, because it focuses you,” he said, “but don’t make it too large. You are not insurance companies.”

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