September 2014, Vol 3, No 6

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ASCO Workgroup Proposes Consolidated Payments for Oncology Care

Jeffery Ward, MD


Calling the current fee-for-service re­imbursement model “medicine’s dark secret” – one that has jeopardized value-based cancer care – a member of the ASCO Payment Reform Workgroup presented a novel proposal for consolidated cancer care at the Community Oncology Town Hall.

“Working towards a better payment system for oncology care, instead of just complaining about the one that we have, has been liberating and exhilarating,” said Jeffery Ward, MD, the immediate past chair of ASCO’s Clinical Practice Committee and an oncologist at the Swedish Cancer Institute in Seattle, WA.

The diverse group had as its premise the need to hear voices from across the clinical oncology spectrum, the goal being “a uniform reformation of oncology care that can be applied to all cancer care settings.”

Need to Depart From Fee-for-Service

The concept moves the reimbursement system away from fee-for-service. “Fee-for-service medicine is a barrier to personalized care. It’s an antiquated reimbursement system that only pays for care when it involves physician ‘touches’ and the infusion of drugs,” Ward said.

“It only pays for some services, failing to reimburse at all for other essential services provided in oncology offices and clinics. It fails to reward decision making that brings greater quality, efficacy, or value to the care equation, and conversely it incentivizes inefficiency and the overuse of the most expensive services to maximize reimbursed service,” he continued.

At its heart, he said, fee-for-service medicine takes the focus off the patient and centers care around the physician, failing to achieve the personalized care that is the general aim in oncology now.

“It’s time to open the current model to scrutiny, recognize how incongruent it is to the future of cancer care and replace it,” he maintained.

The Workgroup’s Proposal

The group explored numerous concepts for payment reform, and ultimately crafted and released (in May) a consolidated, patient-centered payment model.

“We asked our committee members, if you could throw out all you know and start over – not just tweak a broken system – how would you like to get paid for what you do?” he said. “What we developed has at its core monthly bundled payments that are adjusted for (ie, rewarded for) quality, pathway utilization, resource utilization, and clinical trial participation.”

The model does not ignore the importance of drug purchasing, but contains a vehicle for integrating the current 6% margin into the reimbursement mix, “which will remove the stigma of drug margins from our profession.”

Monthly Payment Tiers

At the model’s core are monthly payments that vary according to the treatment activity of the patient. These payments are developed by taking the gross revenue for typical clinical services and combining them into a lump sum. “It’s forgetting where the revenue came from, and rearranging it into these payments,” Ward explained.

“We believe ASP [average sale price] +6% could be folded into this bucket and added to ‘treatment month’ payments once an alternative to buy-and-bill is developed and sufficiently tested,” he said.

The new payments would not track directly with existing CPT codes; they are intended to cover services that are not compensated today. New aggregate revenue would be no less than the aggregate amount of current revenue for typical oncology practices. The relative sizes of payments would reflect the relative amount of time and cost incurred for the activities in the payment period.

These distinct periods include new patient payments, treatment month payments, active monitoring month payments, and transition-of-treatment payments. These monthly payments would be phased in over time, and some components of fee-for-service would be continued, such as laboratory tests, imaging, and bone marrow biopsy and transplant.

Expected Impact of This Proposal

The adoption of this model should give practices flexibility to build innovative processes of care that will allow them to assume accountability for quality and value of the care they give. Ultimately, the model would also remove the current financial penalty for using lower-cost drugs or for treating with oral drugs. It would also simplify billing, replacing 63 codes with 9.

The end result should be cost savings through reductions in the use of the hospital and emergency department, in testing and surveillance, and in the administration of oncolytics and supportive drugs. Oncologists should be rewarded for participating in these savings.

In closing, Ward indicated, “ASCO is not wedded to this plan….We plan to refine it and may offer other alternative payment plans….We envision the possibility that you will be able to choose from a menu of alternative payment systems.”

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