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New Cancer Care Payment Model Benefits Doctors and Patients

cancer costsBy Anju Sikka, M.D.

A new study shows that changing the way insurers pay for cancer care can lower costs by 34 percent without affecting the health outcomes of the patient.

UnitedHealthcare conducted the study with five medical oncology groups around the country over a course of three years.  The study covered 810 patients with breast, colon and lung cancer, which are among the most common cancers in the United States, according to the National Cancer Institute.

The pilot program compared the traditional “fee-for-service” payment model with a bundled payment model.  Under the traditional fee-for-service payment model, oncologists are paid for each service they perform and drug they prescribe.  Instead of rewarding quality care, the fee-for-service model tends to reward volume of care and the use of more expensive drugs.

Under the new payment system, UnitedHealthcare paid oncologists upfront for an entire cancer treatment program, based on the expected cost of a standard treatment regimen for the specific condition as predetermined by the doctor.  The oncologists were paid the same fee regardless of the drugs administered to the patient – in effect, separating the oncologist’s income from drug sales while preserving the ability to maintain a regular visit schedule with the patient. Patient visits were reimbursed as usual using the fee-for-service contract rates, and chemotherapy medications were reimbursed based on the average sales price.

The oncology groups collaborated with UnitedHealthcare to develop more than 60 measures of quality and cost to compare the performance across groups and determine how to improve quality and reduce costs over the course of the study. There were no differences between the groups on the quality measures evaluated, which challenges the assumption that any reduction in resources, such as medical staff, would result in worse outcomes for patients.

Researchers evaluated the treatment regimens based on the number of emergency-room visits, incidence of complications, side effects and, most importantly, health outcomes to determine which treatment regimens do the best job of helping to fight cancer. By measuring the comparative effectiveness of different treatment options, the program aimed to uncover best practices, and identify and reduce unnecessary drug administration that does not improve the patient’s health.

The upfront fee to the oncologists covered the standard treatment period, which is typically six to 12 months. In cases of cancer recurrence, the bundled payments were renewed every four months during the course of the disease, which allowed the doctor to continue overseeing his or her patient’s care even if drug therapy was no longer effective. The payments also were continued for patients who were no longer receiving chemotherapy or who enrolled in hospice care.

This approach was designed to reward oncologists at current levels for patient care while simultaneously severing the link between drug selection and income. Physicians could earn increased episode payment by improving their patient results. UnitedHealthcare did not play a role in determining which treatment plan the oncologists chose.

With a 34 percent reduction in costs and no adverse effects on patient health, the results of the study suggest that the new cancer care payment model have the potential to benefit patients, doctors, insurers and the entire health system.

The details of the study were published in the Journal of Oncology Practice.


Dr. Anju Sikka is the medical director for UnitedHealthcare of New Jersey and Pennsylvania.  She can be reached at (Photo by Phil and Pam Gradwell (to be) via Flickr)

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