March 2016 Edition Vol.11, Issue 3

Better Care, Better Payment, and Savings: A Win-Win-Win Approach to Payment Reform

Better Care, Better Payment, and Savings: A Win-Win-Win Approach to Payment Reform (continued)

Rewarding for outcomes, not volume

In the current fee-for-service payment system, doctors are paid for volume of services performed, but are not held accountable for the outcomes or “value” of those services. In addition, the same amount is paid for services regardless of how many services are delivered, but the cost per service is higher when fewer services are delivered.

“Because oncology practices and hospitals have significant fixed costs, the fewer services they deliver, the more money they lose.  So it’s an inherently win-lose situation when patients are kept healthy or when avoidable services are reduced,” said Miller.

Citing the hospital emergency room as an example, Miller explained how we all want the hospital ER to be there, ready to deliver services, whether it has any emergencies or not, "however, the only way a hospital can cover the costs of the ER is to get more patients to use the ER, which means that financial goals and quality goals are misaligned."

Miller’s answer to this scenario is to align financial and quality incentives with a patient’s condition instead of to the services received. “If you pay based on the patient’s condition, then higher payment is only made when the patient has higher needs.”

Instead of renegotiating multiple individual service payments with a payer, a bundled payment, based on the patient’s condition, would provide the flexibility to deliver high-quality care, while also increasing accountability for the total costs of services delivered, he suggested.

Miller explained that practices get much higher reimbursement for the administration of IV chemotherapy than for administering an IV saline solution to a patient who is dehydrated due to nausea. IV hydration is a very high-valued but "undercompensated" service that potentially spares that patient from being admitted to a hospital, thereby reducing the total cost of care.

“Bundled payment lets you do both things,” said Miller. “It lets you pay for the treatment that’s considered a high-value service and it encourages reducing costs by avoiding emergency room visits and hospitalizations.”

Patient-centered oncology payment reform

The American Society of Clinical Oncology (ASCO) also weighed in on the theme of removing the barriers created by the current payment system to delivering high-quality, affordable care. In a recently released proposal, ASCO calls for the restructuring of the way oncologists are paid for cancer care by providing payments that support the full range of services they provide to their cancer patients.

The basic concept behind the Patient-Centered Oncology Payment model is to give more payment to practices where it’s needed, Miller explained. Practices may then be able to afford to pay for triage nurses, for example, or for providing the expanded clinic hours necessary so patients can access care when experiencing complications and potentially avoid going to the ER or be admitted to a hospital.

In turn, practices are asked to take accountability for following the ASCO guidelines and to reduce avoidable services such as hospital admissions and ER visits, the unnecessary use of supportive drugs, the use of expensive chemotherapy where lower cost drugs are available, and the unnecessary treatment that occurs at the end of life.

Focusing on reducing avoidable services in order to achieve savings, Miller indicated, avoids providing incentives to practices to reduce desirable services or ration care. Moreover, practices are not put at risk for costs they can’t control.

“The problem with current shared savings models,” said Miller, “is that oncology practices are given more money only if they reduce spending elsewhere… Practices that stint on care would be rewarded financially for doing so, even though it would harm patients.” However, by providing significant and predictable resources, matched to where practices actually incur cost, providers are rewarded based on their ability to follow appropriate use criteria that may keep patients out of the hospital. Resources are tied to appropriate use, not to savings, he said.

It’s not about giving oncologists “incentives” to do something they’re resistant to, he added; it’s about enabling them to deliver a service that they want to provide but can’t under today’s payment system.

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