Payer Management of Oncology Gets Serious

Michael Snyder, Lee Goldberg, and Tracey Ryan
Published: Monday, Jul 16, 2012
money Analyzing payer management of oncology over the past few years, a major trend has emerged—payers intend to increase their management of the category. Health plans continue to seek methods to curtail the costs associated with cancer care without diminishing the quality of that care. Indeed, both payers and oncologists anticipate significant increases in the aggressiveness of payer oncology management over the next 2 years. According to the data collected in the most recent edition of The Zitter Group’s Managed Care Oncology Index, just 38% of payers currently feel confident in their ability to effectively manage oncology. Although this number represents a significant increase from the 25% who reported such confidence 6 months ago, it is clear that payers have a long way to go to exert extensive control over cancer care.

In anticipation of the expected management increases, oncologists and practice managers indicate a growing resignation to payer influence on oncology practice. However, oncologists also perceive a slight decrease in the level of payer management aggressiveness from 6 months ago. This decline in reported restrictiveness may be due to adaptation by oncologists and practice managers to the policies already in place, as payers do not cite any corroborating changes in policy.

In their efforts to decrease costs, payers will continue to increase their use of PA requirements, preferred distribution channels, treatment guidelines, clinical pathways, and companion diagnostics.
All stakeholders expect the degree of management intensity to ramp up over the next 2 years. Oncologists, however, expect a more dramatic increase than do payers. Sixty-five percent of oncologists expect a high degree of management aggressiveness by 2013, whereas only 21% of payers say they will have highly aggressive management policies in place by then. Oncologists also perceive the current degree of payer oncology management to be significantly more aggressive than payers report. Currently, only 7% of payers report having highly aggressive oncology management policies, whereas 30% of oncologists feel the level of payer management is highly aggressive (Figure 1).

Waste and Excess Cost

As the cost of oncology care continues to rise, increases in management efforts by payers appear to be inevitable. In fact, payers believe that nearly 23% of current costs could be eliminated from the delivery of cancer care without negatively impacting health outcomes. Oncologists and practice managers share similar sentiments, but not to the degree expressed by payers. Oncologists feel 18% of costs can be shaved, whereas practice managers see that number slightly lower, at just below 16% of costs.

Figure 1. Aggression of Oncology Management

Roll over to enlarge. Figure 1
Payers perceive the greatest degree of wasteful spending coming from excessive end-of-life treatment and inappropriate drug utilization. Eighty-three percent of payers believe inappropriate drug utilization helps to drive excess cost. The majority of payers define inappropriate utilization as utilization outside a compendia-listed use. Conversely, while oncologists believe adherence to compendia improves care, they insist off-label prescribing is critical to providing the best quality care.

Furthermore, 43% of payers see suboptimal distribution of prescription drugs—such as buy and bill versus specialty pharmacy—as a significant driver of excess costs. That said, only 33% of payers currently require drug distribution through a third-party vendor. The number of plans utilizing specialty pharmacy providers (SPPs) and/or pharmacy benefit managers could see a sizable increase as payers attempt to rein in costs without harming care quality.

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