Practices in Bundled Payment Program Credit Medical Home Structure for Success

Oncology Business News®, October 2014, Volume 3, Issue 5

In July, UnitedHealthcare (UHC) reported that an innovative program using bundled payment for cancer care resulted in an impressive 34% reduction in medical costs when compared with costs for a control group

Barry Russo, CEO

In July, UnitedHealthcare (UHC) reported that an innovative program using bundled payment for cancer care resulted in an impressive 34% reduction in medical costs when compared with costs for a control group. Moreover, the study found that patient outcomes were the same in both groups.

The study yielded important lessons to oncologists about delivering care under bundled payment. Leaders at 2 clinics in the study, Lee S. Schwartzberg, MD, a senior partner and medical director at the West Clinic in Memphis, Tennessee, and Barry Russo, CEO of the Center for Cancer and Blood Disorders in Fort Worth, Texas, said they learned that their success with bundled payment would not have been possible without also delivering care in a patient-centered medical home.

“We would have had trouble delivering care in this way if we were not organized as a patient-centered medical home,” said Schwartzberg. His practice has 33 physicians in 9 offices and was recently designated a Patient-Centered Specialty Practice by the National Committee for Quality Assurance.

Support Staff Needed

Under the medical home model, the practice gets paid an additional fee to hire nurses or case managers to care for patients between visits to the oncologists. They ensure that patients get the care they need to prevent high-cost emergency department visits and hospital stays.

“In this program, the entire staff of the West Clinic participated and was able to steer patients away from needless emergency room (ER) visits and inpatient care,” Schwartzberg said. “One of the lessons we learned was that when you take out the costs for chemotherapy, the other highest costs are generated through ER visits and hospitalizations. That’s why we intensified our efforts to put more navigating power and resources into the medical home to keep patients out of the ER and out of the hospital.”

Another significant lesson the West Clinic physicians learned was the importance of standardizing care by identifying what each patient needed and then choosing and following the appropriate treatment pathway for each, Schwartzberg said.

The Value of Data Analysis

Identifying patients’ needs also was critical to his group’s success in improving patient outcomes. UHC shared the extensive data it had on each patient’s history and course of treatment, helping the physicians to understand all patients’ treatment needs.

“UnitedHealthcare has records on all patients’ treatment. We don’t have the hospital records on these patients or records from the ER. It makes sense that the payer would share that data with us, but they don’t normally do that,” Schwartzberg said. “They had staff working full time on this project,” he added. “It would be difficult for any practice to collect and analyze the data that UHC had on its patients.”

The bundled payment program also helped the practice develop a close working relationship with UHC, he added. Such relationships are rare because usually practices and payers argue about coverage and payment for cancer care.

Eliminating Uncertainty

“In the past, there was a great degree of uncertainty and suspicion between physicians and health plans. But since we launched this bundled payment project, the entire attitude has shifted,” Schwartzberg said. “Now, it’s clear that insurers and providers have to work together in a way that is patient-centered.”

Lee S. Schwartzberg, MD

For Russo’s group, the infrastructure needed to support its medical home effort allowed the practice to deliver care to patients in the bundled payment successfully. The center has 19 physicians in 9 offices and is participating in the Come Home project for Medicare patients and a shared-savings program for Aetna patients.

“To make bundled payment work financially you have to do a medical home because you have to have the infrastructure, meaning the staff and the hours, to manage the costs. If you’re in a bundled payment or shared-savings arrangement, you’re getting a flat rate. That means you have do a medical home to make that work because you need a way to manage costs,” he said.

“The UnitedHealthcare program began in 2009, when we were just learning how to deliver value-based care. Since then, we learned that we need specific triage and case management functions to manage this population better, and adding those functions costs money,” Russo added.

Through the medical home projects, the center gets additional funds from the Come Home medical home program and an Aetna shared savings contract to hire 3 to 4 nurse-care managers and to stay open until 8 PM on weeknights and from 10 AM to 2 PM on weekends.

Preventing ER Visits Whenever Possible

“By having nurse-care managers doing triage on the phone, we can get patients into the office if needed. We’re open longer so that we can manage those patients better here in our practice, which keeps them out of the ER and out of the hospital,” he said.

Every oncology practice has a triage system, but Russo’s practice uses triage to manage patient care more closely than most.

“We revised our metrics to base our triage success on how many patients we could keep out of the ER and how many patients we could get into the clinic so we could solve problems before they became bigger problems,” he said. “That’s a different metric than typical triage, which is a nurse working in the chemotherapy area making sure everyone is fine,” he said. “It’s a mindset change.”

Like the West Clinic, the center got extensive data and expert data analysis from UHC.

“Under this program, physicians aren’t making decisions on what drugs to use based on reimbursement because the reimbursement is capped. Instead, they are making decisions based on what is right for the patient. On top of that, we had a micro focus on our patients through case management and aggressive triage. Putting in all those steps successfully improves patient management and reduces costs,” Russo explained.

Increased Costs of Care

Most practices don’t add staff or micromanage patient care because doing so is costly, he said. “In the typical shared savings or medical home program, you get a case management fee so that you can recover the costs you’ve incurred to micromanage patients. If you don’t get reimbursed for the infrastructure you need, then you would have no way to pay for the additional staff or the longer hours,” Russo explained.

“Compared with the savings possible from micromanaging patient care, the costs are minimal. That’s why I believe the medical home idea of being responsible for managing all the needs of each cancer patient is where cancer care will be moving in the future,” he said.

It’s possible to produce savings from a bundled-payment or shared-savings program without a medical home, but the savings would not be sustained over time, he said.

“If you don’t put in new processes and procedures to optimize patient care, there will be no shared savings. Or, if there are savings, they will be short-lived. When you change your processes so that you can micromanage each patient’s case, then you can start to get long-term value out of shared savings or bundled payment,” he concluded.

Unexpected Outcome Found in UHC Bundled Payment Project

Debra A. Patt, MD, MPH

The bundled payment project that UnitedHealthcare launched in 2009 was effective at reducing the cost of cancer care while also delivering quality care. But one result from the initiative was surprising: while it aimed to keep chemotherapy costs under control, those costs rose.

“You have to look carefully at the results of this pilot program,” commented Debra A. Patt, MD, MPH, a medical oncologist and hematologist at Texas Oncology in Austin. She also is medical director of Healthcare Informatics for McKesson Specialty Health and The US Oncology Network where she leads a team of physicians and researchers in health economic and outcomes research.

“One goal of the program was to remove physician incentives for prescribing chemotherapy. That’s important because in many practices—not all—the physician compensation depends directly on chemotherapy revenue,” she said.

Because the bundled payment project sought to remove incentives for increased utilization, but also not reward inappropriate decreased utilization, the UnitedHealthcare study is important for oncologists seeking new ways to pay for cancer care, she added.

“Recognizing that chemotherapy is a real driver of costs in cancer care, it is an important step to remove the perverse incentives for chemotherapy prescribing,” Patt commented. “But what this study actually found was that while costs were reduced by having an episode of care model of payment, the practices didn’t actually decrease chemotherapy cost. Instead, costs were reduced in ER visits and hospitalizations.”

Another important aspect of the project pilot was that it measured and reported on quality of care in addition to cost.

“It is important to not address the cost aspect alone, but [also] the value of the care being provided. A value assessment cannot be accomplished without also evaluating the quality of care provided,” Patt said.

“As many people seek to control costs and answer the question of how do we provide value, which is really outcome over cost, how can we do so through cost cutting?” she asked. “In this study, whenever they sought to control the costs of care, they also had some measurements of quality of care, which is significant, especially for a study done by a payer.”

Any innovative payment model for cancer care likely will focus on what the physicians addressed in the UnitedHealthcare project: chemotherapy costs, ER visits and hospitalizations, she said. In addition, Patt added, oncologists also should focus on costs at the end of life.

“For care surrounding the end of life, we need to ensure that it is appropriate, thought out in advance, and respecting the values of the patients,” she said.

In conclusion, she offered a suggestion that any oncologist would welcome. “For a physician in a practice with patients who contract with many different payers, it would be difficult to operate under different systems of payment reform for different payers. What might be easier is if there is a more universal strategy to control the levers influencing cancer costs,” she said.