Transforming Oncology Payments From Fee for Service to Value

Cheryl Alkon | May 06, 2014
Jay Sultan

Jay Sultan

Cancer is challenging in many ways. Trying to contain the costs of disease management may be the biggest challenge of all.

For a patient without cancer who simply needs a hip replacement, for example, the surgical procedure is the same whether the patient is a 25-year-old tennis player or a sedentary but elderly 70-year-old.

“There are variations in care, as well as comorbidities such as whether the patient is morbidly obese or is positive for hepatitis C,” said Jay Sultan, the chief product portfolio architect for the TriZetto Corporation, a health care IT company headquartered in Englewood, Colorado.

“But overall, the evidence-based guidelines are well established and the outcomes are much simpler. There is less reason for warranted variation in care.”

But for the patient diagnosed with any kind of cancer, it’s not so straightforward. “Cancer is not the same for everyone,” said Matthew Farber, MA, the director of provider economics and public policy for the national Association of Community Cancer Centers, based in Rockville, Maryland. “What works for one person doesn’t necessarily work for another.”

It’s not just cancer itself that’s complicated— treatments can be, too. With the development of targeted therapies over the past few years, as well as differences in the genetic development and stage of the disease, a patient who learns she has breast cancer may have one of 25 variations of that particular cancer. Determining how to treat patients and keep spending down, in light of spiraling health care costs, is paramount.

Different payer models and concepts have emerged as an alternative to the traditional fee-for- service method, which reimburses physicians for whatever treatment they prescribe; it is based on the quantity of care. Collectively, these alternative models focus on value, as insurance companies pay physicians for following particular standards of care. They include treating via clinical pathways (standardized treatment plans for particular diagnoses), establishing accountable care organizations (ACOs) (practitioners being paid based on saving money and having their patient outcomes meet certain quality standards after receiving medical care), and bundled payments (payers paying based on specific medical episodes and expected costs of those episodes), among others. There’s a lot of overlap, notes Farber.

“Many of these have pieces similar to others, and providers are keeping a close eye on all of them,” he said. “It’s not as if we operate in a vacuum.” What does this all mean for the community oncologist trying to navigate the changing landscape?

You Can’t Be an Ostrich

Physicians shouldn’t ignore how payment reform is affecting the world of oncology, said Farber. “While there’s lots of waiting to see how different payer models will play out, we tell our members that ‘sticking your head in the sand’ and doing nothing is not an option,” he said.

Doing so will only ensure that change will continue around you and leave you behind. As an example, Farber said that an oncology practice in one state may decide not to join a local ACO when approached to do so. But that practice may find that local primary care physicians involved in that ACO will refer their cancer patients only to oncologists in the ACO network, “even if the non- ACO oncologists have a prior relationship with those patients,” he said.

Lessons From an ACO Model

So what can oncologists do when faced with changing trends in how their work is reimbursed by insurance payers?

Leonard A. Kalman, MD, has some insights. As the chairman of Advanced Medical Specialties in Miami, Florida, Kalman’s group has been involved as a partner in an oncology- specific ACO with insurer Florida Blue and Baptist Health South Florida for the past 1½ years as part of a 3-year program. As reported on Onclive.com in December 2013, Kalman said the ACO had a –2% trend in its first year, a change from an annual 10% increase up until the year before the pilot began.

As a shared savings program, the ACO operates on a fee-for-service basis, but the partners share any savings as long as quality criteria are met. In the December Onclive.com article, Kalman admitted that he wasn’t sure exactly where the savings had come from, though he suspected that a reduced per member per year spend on chemotherapy was a major source in the first year. In the second year, there are plans to focus on reducing hospital admissions, especially toward the end of life.


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