February 2014, Vol 3, No 1

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Need for Innovative Strategies for Quality Care Will Continue to Grow

Value-Based Cancer Care

Oncology Reimbursement Requires New Approaches, Says Lee Newcomer

Current economic trends mandate the development of innovative strategies to effect quality and efficiency in cancer care, applying the same rigor as used in clinical trials, according to Lee N. Newcomer, MD, MHA, Senior Vice President, UnitedHealthcare, who addressed cost issues and barriers in provider reimbursement at the 2013 ASCO Quality Care Symposium.

Less Money for Patient Care

Within 2 to 3 years, consumers’ out-of-pocket costs will consume half of the average household income, Newcomer said. Another 10 or 15 years down the road, healthcare costs will require the entire household income, according to a study published in 2012 (Young RA, DeVoe JE. Ann Fam Med. 2012;10:156-162).

Such an impossible situation will mean that providers at every level will have to get by with less. “No one will be exempt from having less money available to take care of even more patients,” said Newcomer. “It won’t matter whether you’re a social worker or a nurse or a physician, a hospital, a pharmacy institute, or a payer. We will all have less money to work with,” he emphasized.

“One of the things we have to learn to do is to eliminate all of the waste. The things that don’t make as much difference to us as quality-of-life money. We have to figure out how to deliver the best outcome with the limited resources we have available.”

Currently, approximately 22% of every UnitedHealthcare oncology dollar goes to pharmaceuticals, the cost of which is increasing by 10% to 15% annually. Hospital costs account for 54% and are also increasing at a rate of approximately 10% annually. Physicians – all physicians, not just oncologists – account for the remaining 24% of the cost, and their costs are in a negative-
inflation status, said Newcomer.

Innovation in Reimbursement

Innovation in payment strategies focuses on 3 basic models: the pay-for-performance model, bundling or episodic payment, and capitation. Pay-for-performance is by far the most popular strategy and is usually tied to clinical pathway adherence. At UnitedHealthcare, currently 80% of the patients with cancer are treated based on predetermined pathways, according to Newcomer.

Measuring the performance and outcome of various payment strategies faces several barriers, he says. The first relates to enrollment of a sufficient number of patients to conduct quality-of-care studies. The majority of patients do not qualify as “typical” patients that would be needed for a study of different reimbursement models. Related to study enrollment is the time required to conduct studies, which require several years to complete.

Identifying an appropriate control or comparison group can also be problematic, including the decision to compare outcomes and costs on a year-to-year basis, or to use a control group followed over the same duration of time as the study group.

Finally, the funding of clinical trials is complicated because everyone wants a share of the savings that result from improved care efficiency and lower costs. Moreover, most healthcare organizations already have relatively slim margins from which to trim additional costs.
“It’s very difficult to find a lot of money to fund pay-for-performance programs,” said Newcomer.

As another example of the difficulties involved in finding reward money for pay-for-performance initiatives, he described an oncology practice that performed better than the national average for virtually all types of cancer; however, that practice already received a 33% premium on payments as a result of a higher fee schedule, and the group’s performance was only slightly better than the national average.

“For pay-for-performance to work, we not only need to get good results, but we need to get results that are proportionate to the payment,” said Newcomer.

Measuring Quality and Cost-Effectiveness

The difficult realities associated with the pay- for-performance approach have led Newcomer, and possibly others, to reconsider the approach to measuring quality and cost-effectiveness. Specifically, he questions whether payers have had the wrong focus in their efforts to achieve cost-efficiency and good outcomes.

Payers can easily compare chemotherapy regimens, he continued. As part of preauthorization, detailed clinical information can be obtained, and then a payer can initiate an intend-to-treat study, specifying the regimen during preauthorization. Within a couple of years, a large organization can accrue hundreds, if not thousands, of patients using various chemotherapy regimens for different types of cancer.

“This would give us a very good start toward comparative effectiveness studies, comparing regimens against each other,” said Newcomer.

Such studies could help fill the void that has resulted from the disappearance of phase 3 cooperative group trials that compared chemotherapy regimens in various types of cancer.

Quality Care Research

To reduce costs, payers need to know which regimens provide the best results at the lowest cost and lowest toxicity. “That is something payers can do and can do effectively, and with a large enough volume that we could start parsing out those regimens that are ineffective, and lowering cost in the process,” Newcomer said.

Moving forward, he concluded, quality care researchers must continue to test solutions, because the need for better quality and efficiency will always be relevant. At the same time, payers, clinicians, researchers, and other interested parties must be realistic about the financial results that can be expected from improvements in quality and efficiency.

Finally, quality care researchers must apply the same rigor as clinical researchers use in clinical trials. “The scientific method applies to business applications as well,” said Newcomer.

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