August 2015, Vol 4, No 4
Alternative Payment Models and the Future of Personalized MedicineThe Last Word
Alarmed by the escalating price of cancer drugs, the American Society of Clinical Oncology (ASCO) last month published for review a new “value framework” to consider the cost of those drugs to both patients and society. In a radical departure for American medicine, which has, until now, focused predominantly on what is best for the patient, ASCO has challenged the pharmaceutical industry to justify the price it charges based on ASCO’s assessment of what certain patient outcomes ought to cost.
The issuance of ASCO’s “value framework” follows much discussion about putting in place so-called “alternative payment models” (APMs), which would, if the US Department of Health & Human Services (HHS) and private payers have their way, replace the fee-for-service payment system. Widely regarded as inefficient, wasteful, and expensive, fee-for-service should, in this view, atrophy as APMs, including accountable care organizations, bundled payments, and medical homes, are incentivized to replace the older model in which physicians are paid for what they do rather than how well the patient responds.
According to HHS Secretary Sylvia Mathews Burwell, 50% of Medicare payments will be tied to APMs by the end of 2018. And by 2019, 90% of payments will focus on improving quality and reducing costs, as defined by metrics now being developed.
However, as the Personalized Medicine Coalition (PMC) contended in a white paper, Paying for Personalized Medicine, published earlier this year, tying Medicare payments to APMs could either help or hinder the field of personalized medicine. If the push for improved quality incentivizes health systems to do more with less, then APMs could create a virtuous circle in which structural changes that are occurring in the healthcare marketplace lead to better outcomes at lower costs. By keeping patients healthy, by employing rule-out tests before expensive and ineffective treatments are ordered, and by prescribing the right medicine for the right patient, health systems will be able to improve clinical care while reducing their overall costs.
But, as Paying for Personalized Medicine also cautions, if APMs are not structured to promote personalized medicine or, worse, lock physicians into standardized treatment modalities, APMs will set the field back and also stifle innovation on which cancer patients depend. If predetermined clinical guidelines, for example, discourage physicians from ordering sophisticated diagnostic tests that facilitate molecularly targeted individualized treatment strategies, they will not only harm patients but also inhibit progress in healthcare.
How APMs are designed will make a huge difference. For example, if incentives are put in place based on today’s standard of care, they can, as PMC wrote to Andy Slavitt, Acting Administrator of the Centers for Medicare & Medicaid Services (CMS), “have the unintended effect of discouraging the adoption and continued development of medical advances that may increase short-term costs but yield long-term clinical and economic benefits.”
In brief, PMC argues that APMs must not lock treatment options into one-size-fits-all solutions, but rather encourage understanding the patient’s profile and wishes before treatments are delivered.
PMC has some cause for optimism despite the escalating focus on the price of therapy rather than its value. In response to PMC’s letter that outlined our concerns about the unintended consequences of APMs on clinical care and innovation, Mr Slavitt acknowledged PMC’s point and expressed confidence that CMS would put policies in place to protect the use of “new, breakthrough technologies.”
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