Reimbursement for Care, Not Drugs

Oncology Business News®, May 2012, Volume 1, Issue 1

A pilot program in Michigan strives to keep oncologists in the community by basing reimbursement on care management.

John Fox, MD, MPH

A new program in Michigan is looking to identify ways to standardize and deliver oncology care more effectively and efficiently in the hopes of eliminating avoidable care. The new program is geared to support community oncologists because it changes the reimbursement emphasis to patient care, instead of drug reimbursement.

Oncology care delivered in a community oncology practice is less expensive than care delivered in a hospital facility, said John Fox, MD, MPH, associate vice president of Medical Affairs at Priority Health, a Michigan health plan that offers a broad portfolio of products for employer groups, individuals, Medicare, and Medicaid.

Priority Health launched the two-year pilot program with seven community-based oncology practices to enhance cancer care while changing the way it reimburses oncologists.

The focal points of the program will be payment reforms and care enhancements. Oncologists will be paid a monthly care management fee independent of the cancer type and drug therapy, and will share in the savings that result from implementation of standard care management programs, according to Fox.

Current fee structures pay oncologists based on the costs of the drugs administered to patients, which creates “an incentive for physicians to prescribe more costly drugs,” he said.

“We are removing the dependency on drug margins from physician compensations,” Fox said.

In addition to standard evaluation and management and infusion services, oncology groups will receive a flat monthly fee of between $150 to $250 per patient for patient support services, such as end-of-life and financial counseling, case management, medication therapy management, survivorship programs, and social work services. This flat payment, which will be independent of cancer type and route of chemotherapy administration, will coincide with paying the acquisition cost of chemotherapy.

We are removing the dependency on drug margins from physician compensations.”

—John Fox, MD, MPH

In return, the physicians group will develop common treatment pathways for high-volume conditions, both in the adjuvant and metastatic settings, develop standardized protocols for telephone management of patients, as well as engagement and education tools for the patients, so all patients receive the same support regardless of which doctor treats them.

“Our expectation is that if we have more standardized pathways, more standardized patient engagement, better standardization of telephone care management protocols, it will reduce emergency room visits and hospitalizations,” Fox said.

“While we like to control drug costs, it is becoming difficult to do because we have better drugs that are more expensive. The focus of this program is controlling costs by reducing avoidable emergency care and hospitalizations, as well as paying oncologists for support services through a case management fee.”

Fox said that although this program has no guarantee of success, Priority Health has decreased costs in other healthcare areas by instituting standardized care delivery.