Washington, DC—Payer-directed programs, including the integration of oncology into accountable care organizations (ACOs), are likely to become increasingly important for managing the total cost of cancer care, said Michael Kolodziej, MD, National Medical Director, Managed Care Strategy, Flatiron Health, New York, NY, at the Sixth Annual Conference of the Association for Value-Based Cancer Care.
Payment for oncology services will certainly be episode-based, because this model has succeeded for other medical conditions, he added.
Perceived Cost Drivers
Rapidly increasing costs in cancer care are the result of the cost of chemotherapy, poor end-of-life care, and unnecessary hospitalizations and emergency department visits. Dr Kolodziej dissected each of these perceived cost drivers. Although cancer drugs are expensive, the “sticker price” of the drug is not the major vexation.
Rather, “the cost at the time of a drug’s release into the market has very little correlation with the magnitude of benefit,” he said. “The price of the new drug is whatever the price of the old drug was, plus some percent, which is determined in a boardroom. That is just not sustainable.”
Payers have few options in managing cancer drugs, said Dr Kolodziej. The paradigm for formulary inclusion and coverage is drug approval by the FDA and coverage by the Centers for Medicare & Medicaid Services (CMS), followed by commercial coverage. There is little latitude with respect to coverage of cancer drugs in particular, because the coverage policy is dictated by state insurance laws, and cancer drugs are considered a “protected class.” Noncoverage is therefore a nonstarter, he said.
Poor end-of-life care is undoubtedly a cost driver, he said. Nearly 33% of patients with cancer spend time in an intensive care unit during their last month of life, and the average length of hospice stay is only 1 week. “The translation to this for the health plan is we spend a lot of money on hospital costs in the last 120 days of life,” with little cost attributed to chemotherapy at the end of life, he said.
Although preventing hospitalizations and emergency department visits receives much attention, the number of hospital admissions per patient annually has been declining, and is less than 1 at some institutions, according to Dr Kolodziej.
Clinical Pathways Lead the Way
Clinical pathways programs are the most common value-based contracting programs. Patient outcomes, including overall survival, are generally not compromised, and costs are significantly lowered when clinicians adhere to evidence-based guidelines for the treatment of cancer in the community setting compared with clinicians who do not adhere to evidence-based guidelines.
The use of clinical pathways may help to reduce the cost of chemotherapy. For example, using protocol-directed bevacizumab (Avastin) as first-line chemotherapy for metastatic colorectal cancer instead of cetuximab (Erbitux) reduces chemotherapy costs and acute care by more than 33%.
Patients undergoing cancer treatment who have health insurance with Anthem follow a clinical pathways program using updated medical evidence and best practices that drive quality care. Treatments are tailored to the patient’s characteristics and have demonstrated cost-effectiveness. Providers receive financial incentives to treat patients according to the clinical pathways as a way to make up for prescribing less costly but equally effective drugs that carry a lower profit margin.
Emerging Delivery Models
Aetna and Cigna are pursuing patient-centered medical home (PCMH) pilots. Dr Kolodziej praised the PCMH as a “good model for oncology.” The core components of the PCMH, as it applies to oncology, are evidence-based medicine, enhanced access to care, shared decision-making, care coordination, quality reporting, and payment reform that recognizes the added value provided to patients in the PCMH.
In a Medicare Advantage population, using a PCMH model was shown to generate approximately a 20% savings in chemotherapy costs, inpatient costs, and emergency department costs compared with not adopting a PCMH model, he said.
Physicians are “a little uncomfortable with the shared-savings model, but I think it’s going to evolve over time to much more of a management fee based model, but the payers have to start where they’re comfortable,” said Dr Kolodziej.
CMS’s Oncology Care Model is another medical home program (Figure). Features of the program include payment of a management fee plus shared savings for a 6-month episode of care. The Oncology Care Model requires that a navigator is present, that patients have 24-hour access to care, and that data are collected to record quality improvement and adherence to evidence-based guidelines.
The challenges that practices must overcome to succeed in the Oncology Care Model include:
- Data collection and reporting
- Reform of care delivery (ie, phone triage, scheduling of same-day appointments, delivering palliative care)
- Management of analytics.
Hospitals will need to evolve as well. Because cancer care is lucrative for hospitals in the current reimbursement model, which is attributed in part to the 340B drug discount program, they do not want to change, Dr Kolodziej said.
“Transformed oncology practices are going to be the best oncology practices for an ACO, because they’re going to be thoughtful about the care they deliver. They’re going to get paid by the ACO by an episode,” he said.