The Positioning and Payment for Oncology Within Accountable Care Initiatives. A 2011 Research Survey Conducted by the Cancer Center Business Summit

The Cancer Center Business Summit (http://www.CancerBusinessSummit.com) is a nationally recognized educational resource which deals with oncology/cancer care delivery, oncologist-hospital alignment and integration, and the business, legal, and financial models associated with such initiatives.

Each year, in conjunction with its annual conference, the Summit conducts a research survey of current trends affecting the oncology/cancer care sector. In keeping with this year’s theme, Achieving Accountable Cancer Care, the 2011 survey explored the positioning and payment re-design for oncology services within accountable care initiatives, whether such initiatives are in direct response to federal health reform (accountable care organizations – ACOs) or otherwise.

Phone interviews were conducted with 36 pre-qualified healthcare organizations to identify:
• The structuring/positioning of oncology services within integrated and ACO-like organizations and
• Payment/reimbursement re-design methodologies being undertaken in oncology

Key Findings from the Survey

1. In the context of ACO planning, oncology/cancer services are not considered an organizational priority for achieving cost savings compared to other chronic health conditions, for example, diabetes, chronic obstructive pulmonary disease (COPD) or heart disease.

Reasons cited were:
• Oncology too complex with a wide range of cost variability and unpredictability
• No clear definition of what constitutes cancer care
• Difficulty in segregating cancer-related costs from other costs for cancer patients with co-morbidities
• ACO principles are derived from primary care experience resulting in familiarity and predictability in non-cancer diseases

2. Despite low priority attention in the context of ACO planning, commercial payers are actively pursuing non-traditional and innovative methodologies for payment re-design for oncology services, typically at the community oncology level.

Much of this interest in bending the cost curve has surfaced within the last 6 months. Local and regional initiatives in oncology payment re-design are underway with United Healthcare (5 demonstration sites nationally), Aetna and a variety of Blue Cross plans, including oncology-specific payment re-design projects identified in Maryland, New Jersey, Tennessee, Michigan, Indiana, South Carolina and Southern California.

3. Re-design methodologies are focusing on drug cost reduction achieved through clinical pathways compliance. The predominant model has been to compensate oncologists at a premium for compliance with agreed upon clinical pathways. Typically, 80% compliance results in enhanced reimbursement and non-compliance results in penalties.

4. Trends are emerging to incorporate programs that result in reduced treatment-related emergency room visits and hospitalizations, and in rationalized end-of-life planning—all features of the so-called “oncology medical home” model.

A new sub-industry has surfaced to serve as middlemen in matching health plans with oncologists in transforming to the new oncology accountable care processes. Current front runners in this “match making” business include Aetna (through its acquisition of Medicity), Cardinal P4 and Proventys (through its affiliation with NCCN).

5. Despite the initial lack of interest in oncology as foundational to an ACO, community oncologists should not be discouraged. A viable strategy is “watchful waiting,” that is remain attuned but uncommitted to any ACO dynamics taking place in the local market.

In the interim, take the initiative with other like-minded oncologists to organize to scale as a specialist “neighbor” to someone else’s ACO. One example of organizing to scale is for oncology practices to develop regional, clinically-integrated oncology networks based on the care process transformation and payment re-design principles of the oncology medical home model.

Trends to Watch for Moving Forward into 2012

1. Expect to see an acceleration in health plan experimentation beyond pathways with programs that incorporate care processes to manage ER utilization, hospitalization and advance care planning—the features of the oncology medical home model.

2. Expect to see increased interest in oncology practices organizing to serve as specialist “neighbors” of primary care medical homes—the building block of ACOs.

3. Expect to see renewed interest in compatible oncology practices organizing to scale as clinically integrated oncology networks with common treatment pathways and third party health information exchanges (HIE) bringing data connectivity and advanced informatics and reporting capabilities to such networks.

4. Watch for oncology “bundled pricing” as the next oncologist-hospital alignment frontier. The recently announced CMI “Healthcare Innovation Challenge” may be a potential foot-in-the-door with Medicare in this regard.

By:
Ronald Barkley, MS, JD is President of Cancer Center Business Development Group and Co-Founder and Co-Chair of the Cancer Center Business Summit. Mr. Barkley can be reached at 603.472.2285 or rbarkley@ccbdgroup.com.

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  1. Indeed the times they are achanging…. Current reimbursement models have worked well in the past but for lots of reasons are unsustainable going forward ( rising costs, misalligned incentives others). All of the proposed newer models ( ACO’s, bundling, episodes of care, medical homes) assume some component of risk and limited payments. The survey makes a number of key points. Oncology care is very complex. A recent article in Health Affairs reported on the Promethius Bundled Payment Experiment. In three pilot programs no bundled payments had been made yet. The reason was that “the pilots have taken longer to set up because of the complexity of the payment model and the healthcare system….. it may take more time and considerable effort to materialize.” It was also pointed out that considerable expense is found not just in drugs but in ER visits and hospital admissions (in personal discussions with a national medical director he suggested these expenses far outweighed drug cost as part of the rising expense of oncology care). In many instances the oncologist really has little control over these costs. The survey alluded to the concept of medical homes and indeed demos are being put in place as potential new payment methodologies to look at oncology medical homes. But even there I have concerns on the role of the physician. OBR just recent reported on a medical oncology home being develped in Michigan where the prime movers were ION, Priority, and PRM ( a pharmaceutical company, an insurance company and a physican management company….. where are the docs?….) So new payment models are definitely in play. Watchful waiting is indeed a reasonable option but as with prostate ca not all of these changes are indolent….

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