Julie Miller

Julie Miller was the former Managed Healthcare Executive Editor in Chief until May of 2014.

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Thanks to advances in medical innovation, survival rates for cancer patients have increased substantially in the past 30 years. However, such clinical improvements have come at a cost. Analysis from the National Institutes of Health indicates cancer spending increased 27% over 10 years, estimated to reach 

Much of the rise is attributed to the surge in newer and more costly drug therapies. For example, the median annual list prices of new cancer drugs coming on the market 

between 2013 and 2017. Meanwhile, payers and the 

 patients who will be diagnosed with cancer this year are often left with difficult financial propositions.

It’s this combination of high prevalence and high treatment costs that’s driving a fundamental shift toward value-based reimbursement models in oncology. Both Medicare and commercial payers are seeking strategies that optimize care while reducing spending.

“Five years ago, there was a lot of resistance to value-based care, clinical pathways and making physicians responsible for outcomes,” says Andrew Hertler, MD, FACP, chief medical officer for New Century Health, an oncology specialty management company. “But over the last two years, there’s been a willingness to embrace these alternative payment models.”

 (OCM), a pilot involving 175 practices and about a dozen commercial payers. OCM includes real-time monthly payments of $160 to reimburse providers for enhanced services, in addition to usual fee-for-service payments and retrospective quality bonuses. Currently, OCM providers have taken only upside risk, but CMS intends to transition providers to two-sided risk.

Rhonda Henschel, director of value-based commercial programs for McKesson, says CMS is leading the way in alternative payment, and commercial insurers are looking to gain insights from Medicare’s experience.

“Commercial payers want to be operating in value-based models, but there are barriers with legacy claim systems and their ability to execute the models,” Henschel says. “Claim systems are designed on fee-for-service. So it’s challenging for payers and providers to operate on a bundled case rate or episodic payment structure.”

She says payer and provider must come to the table to create a partnership, working out the logistics collaboratively because each participant will likely be at a different point of relative readiness for a value-based arrangement. “The key is to be deliberate with your strategy,” Henschel says.

Success hinges on oncologists being incentivized and enabled to deliver high-quality care alongside measurable cost savings. Experts say there are some emerging opportunities that stakeholders must examine in order to realize value in today’s oncology reimbursement models.

Treating cancer is much different now than in years past. In many cases, it’s become a chronic disease that can be managed with drug therapy over many years, and payment structures must reflect that, says Hertler, who is an oncologist. Innovative treatments include immunobiologics and agents that target cancer cells based on their genetic mutations.

“How do we create value-based care in a world in which we have the ability to keep cancer controlled, with patients living quite normal lives as long as they take very expensive drugs? The key is going to be using these new tools,” Hertler says.

For example, in lung cancer, there are several known genetic mutations. With genetic analysis, oncologists can choose the drug therapy most likely to be effective for the patient’s specific type of lung cancer, rather than using a trial-and-error approach. In the past, trial and error was the only treatment strategy, Hertler says, and it caused a lot of waste in the form of ineffective drug treatment.

He believes the upfront costs of genetic tests are offset by the value of choosing the right drug treatment from the outset. For example, a lung cancer liquid biopsy might cost $6,000, but he says it makes sense when drug therapies cost $20,000.

Value-based models in general seek to reduce emergency department (ED) use and hospitalizations by favoring outpatient and preventive care. For oncology, symptom management presents an opportunity to save by shifting care to a less-costly setting when appropriate.

Hertler says the large majority of hospitalizations related to cancer are attributed to complications from therapy, and as many as half of those hospitalizations are avoidable. Changing therapies, addressing nutrition and hydration issues, prescribing preventive antibiotics, and even adding home care services can help.

“When we’re globally managing a patient, the biggest cost of care is drugs, and the other is hospital admissions and emergency room visits,” says Ray D. Page, DO, PhD, FACOI, an oncologist and hematologist. “If we can identify and manage patients to keep them out of the ED and out of the hospital, that’s to our practice’s advantage.”

Page says symptom management and triage pathways have been proven to reduce ED visits and hospitalizations for cancer patients. Pathways are essentially care protocols based on evidence. Value-based programs are beginning to integrate pathways into quality metrics.

 in December 2018, Page and colleagues found that two practices were able to create $3.85 million in annualized cost savings by avoiding 222 ED incidents with associated hospitalizations. Nurses triaged the incidents-which included symptoms such as nausea and vomiting-via phone and followed symptom pathways to direct patients to physicians’ offices for assessment rather than the hospital.

“We did a lot of practice transformation around the triage system to show we can better manage those patients at risk of emergency room or hospitalizations, and by keeping them out, we save money for the payers,” he says.

Page, who is immediate past chair of the American Society of Clinical Oncology’s (ASCO) Clinical Practice Committee, says clinical pathways started gaining traction about three years ago as a means to increase value. They help care teams avoid ED and hospitalizations while also increasing efficiency and treatment effectiveness. ASCO estimates

“I would guess that 20% to 25% of oncology practices across the U.S. are under a treatment pathway model or in the process of implementing it,” he says. “We have a ways to go.”

3. Align provider payment without full risk

Oncology has historically relied on a misaligned financial model. In the future, value-based oncology strategies will shift payment structures toward more rational reimbursement that accounts for the actual cost of care.

“We need to change the financial alignment with providers, and we need to pay for the care that they deliver,” Hertler says. “I’m not advocating that they be paid less. I’m advocating that they be paid differently.”

For most practices, the majority of the provider’s profits traditionally have come from the markup on chemotherapy drugs, he says. And that extra 20% or more in markup drove the organization’s finances, compensating for other unreimbursed services.

Some of the unreimbursed services include case management provided by nurse practitioners or physician assistants who can’t bill directly. Cancer patients often need nutritional counseling-another activity that isn’t reimbursed under fee-for-service. And many practices in the past have defaulted to in-person office visits-again, because they’re billable-in cases where a phone consultation might suffice.

“Everyone’s trying to do what’s right for the patient,” Hertler says. “But you’re also painfully aware that you are running a business, and you need to keep it solvent.”

He suggests payment models based on case rates with shared savings and incentives tied to quality and outcomes-but not total risk allocated to providers. The payer and provider must work in partnership to craft a fair model. While providers have been reluctant to adopt value-based pay in the past, it’s time to make the change, he says.

“Physicians are not insurance companies, and they have a small volume of patients,” he says. “The trick is to offer incentives for good outcomes, pay for the services provided, but not expect them to take on total risk. No one would start an insurance company with 1,000 cancer patients. That’s obviously not a great business model.”

“Value-based care requires that everyone has command of the data,” Page says.

His practice uses an artificial intelligence tool that stratifies patients to determine who might be at the highest risk for pain, hospitalization, 

, physical decline, or death within 30 days. Weekly reports prompt case-manager outreach to help mitigate risks and refer patients to services, such as pain management or palliative care. He says preliminary results seem positive, but the program is a work in progress.

Henschel agrees that providers are going beyond traditional medical records to integrate more advanced technology stacks that provide predictive analytics as well as other holistic data points, such as social determinants of health. Being responsible for outcomes means treating more than just the cancer diagnosis.

“If a patient lives in an underserved area, they might need more outreach and more help with navigation,” she says. “If a patient has more chronic conditions, they probably need more touchpoints as well.”

The oncologist-or clinical staff-might create pain management care plans, for example, or screen for comorbid depression, Henschel says. Otherwise, the non-cancer conditions can lead to ER visits and hospitalizations.

“It’s been on everyone’s radar, and with the greater uptake of financial risk built into value-based programs, we’ll see greater movement to adopt these technologies,” Henschel says.

Decision support tools also help providers sift through the growing list of diagnostic inputs and map them against today’s many treatment options. With such a high volume of data points, providers are relying more on machine learning than ever before.

“When I was a young oncologist three decades ago, I pretty much walked around with most of the treatment options in my head,” Hertler says, but now there is far too much information for any provider to maintain from memory alone. He says machine learning is becoming more important because it’s able to work out algorithms quickly in the background, suggesting optimal care plans.

Julie Miller is a freelance writer based in Cleveland.

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Strategies to get the most value out of current and future oncology payment models

4 Ways to Adapt to New Oncology Value-Based Models

Effective leadership skills are best developed through direct experiences. However, in today’s dynamic healthcare ecosystem, even the most confident CEOs are drawing added inspiration from personal and professional mentors.Getting ahead of the competition is one of the primary goals that executives have in mind when they reach out for professional mentoring, according to Linda Henman, PhD, author and executive coach. She believes the realities of market competition often guide the overall leadership strategy, even among not-for-profit organizations.In other words, those focused on a mission need a healthy margin to support the ongoing fulfillment of that mission. Meanwhile, the for-profits, with their focus on revenue targets, also need to be driven by a greater good, such as building a healthy community.Organizations should define their culture by defining their passions, Henman says.“People talk about culture as if it were only tied to tradition, but that’s an outdated way of thinking that just doesn’t work today,” she says. “Traditions are important, but they’re not the reason you’re going to be successful.”Leadership as a team sportExecutives must evaluate who is making strategic decisions within the company, what decisions they’re making and why. Many boardrooms would be surprised to find out where the practical decision-making authority actually lies and how it affects the business, Henman says.For example, Henman once advised a rural provider that was struggling with claim denials. As it turned out, the physicians weren’t coding correctly, resulting in ongoing rejections and lost reimbursement, impacting as much as $10 million in revenue. But administrative employees didn’t think it was acceptable to challenge physician leadership, much less company executives.“The CEO had created a culture of fear,” she says. “No one wanted to bring him bad news.”Related article:Â Three Emerging Leader Qualities That Guarantee SuccessOnly the CEO could make the decision on how the company would hold physicians accountable for proper coding. Henman says the situation could have been avoided if the corporate culture had allowed for open discussion, rather than autocratic leadership.“Many executives have trouble changing the culture because it seems like giving up power,” she says. “In reality, they’re gaining power that way.”She recommends that executives create a culture that allows the business to innovate. Leaders should focus on a mission, be open to learning and act as agents of change within the organization.Managed Healthcare Executive recently asked several healthcare decision makers to identify personal or professional mentors who have inspired them in their careers. Executives seem to agree that the best mentors are those who provide honest feedback, instill confidence, and persist in pursuing their goals.

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The mentors and lessons that have impacted your career.

How Mentors Inspire Health Execs

Today’s healthcare landscape presents challenges for the C-suite almost daily. Experts say executives must refine their skills to lead organizations through value-based evolutions, technology snags, and the grueling pace of change.

“You have to understand the ecology of the healthcare environment,” says Don Hall, MPH, a 

, a consulting firm in Littleton, Colorado. “Organizations always worked from a small piece of healthcare, but now it’s much broader. And that broader perspective is going to be key for executives.”

Expert recommendations on new leadership skills speak to both external market forces as well as internal fundamentals.

Hall says executives now need to develop competencies to address social determinants of health (SDOH)-the societal factors that influence wellness, such as food insecurity, poverty, or unemployment. In the value-based era, organizations are expected to deliver results with programs that solve such non-healthcare issues.

“Previously, health plans were dealing with the health of members directly,” Hall says. “But now they’re finding many variables that affect health are much cheaper to resolve by means other than the healthcare visit.”

He says it makes sense financially to add on services related to SDOH. If a member is treated in the emergency room but can’t be safely discharged because he’s homeless, for example, the result is a longer, more costly hospital stay. Particularly in risk-based contracts, payers and providers are better off solving the housing issue instead.

4 Ways Health Plans and Communities Can Address SDOH

There are pockets of innovation for SDOH within the new healthcare ecology. Many 

 are using 1115 waivers and grant programs to identify vulnerable patients and connect them with housing selection, rent subsidies and utility set-up, for example. Programs are often coupled with other services, such as job coaching or maternity care.

For the most part, SDOH are surfacing in the context of Medicaid populations, Hall says, which have grown through expansion under the ACA. However, senior populations are also using an increasing amount of non-medical services today.

The healthcare system is full of data, but lacks actionable information, Hall says. Only by parsing out data points can organizations identify opportunities for outcomes improvement and cost savings.

Therefore, executives must be attentive to IT advances or risk losing out to a host of innovators newly entering the healthcare space, experts say.

“Companies like Amazon could really be disruptive in healthcare because they already have their fingers in so many different things,” Hall says.

He notes that the disrupters are becoming increasingly attracted to data-enabled solutions to improve SDOH. Likewise, in March, former Aetna CEO Mark Bertolini echoed the suggestion in 

, saying Amazon is one to watch when it comes to providing less-costly home-based supports, such as nutrition or transportation, as proactive health interventions.

3.  Align your internal strategy with the external market environment

Today’s executives are so busy predicting-or reacting to-trends that they fail to see their deficiencies in the fundamentals of leadership, says Clinton Longenecker, researcher, professor and director of the Center for Leadership and Organizational Excellence at the University of Toledo in Ohio.

“The catch is if you’re not practicing the fundamentals, the new and hot things don’t matter,” says Longenecker.

He often directs executives back to the core mission, reminding them that every effort must be oriented around that expectation. For example, if case managers are empowered to use technology, the task shouldn’t be busywork. Rather, it should inform better decisions that drive the mission.

Longenecker also notes that market changes never negate the need for leadership to reinforce expectations and accountability throughout the organization. Too often, managers don’t provide constructive feedback to their teams, and new opportunities fail to produce results.

“A lot of healthcare organizations come up with highfalutin strategies based on the changing environment, but when it’s time to implement, if they don’t properly align their structure to support it, they’re coming up short,” he says.

Additionally, Hall says everyone from the C-suite to the call center needs to be sensitive to today’s external communication channels-from gotcha videos on YouTube to customer rants on Twitter.

“For good or bad, the face of the company is no longer the executive,” Hall says. “It is every single person who has a badge for that company.”

Longenecker is an advocate of what he calls the power of slowing down. In teaching, he uses an acronym to describe the concept:

-Sit still often, dedicating time to consider what needs to be accomplished.

-Think clearly about answers to strategic questions.

-Optimize resources, whether they’re people, budgets or hours in a day.

Similar unplugging techniques have become a nationwide business trend, with executives of all types squirreling away on sabbaticals while their digital devices remain back at the office. But the STOP tactic doesn’t have to amount to days or weeks of meditation. It can be as simple as a few minutes of thinking, two or three times a day, Longenecker says.

The point is that leaders should operate with intentionality. Operating out of habit will inevitably lead to wasted resources or even obsolescence in today’s increasingly competitive healthcare system, he says.

11 Soft Skills Healthcare Executives Need to Succeed

As a caution, he also warns that failure to stop and think leads an executive to become too “crazy busy” to communicate effectively. The lack of communication can manifest itself in poor execution. He believes busyness is the enemy of effectiveness, and thinking is a leader’s best weapon.

“You can make a list of the bad things that come with being too busy,” Longenecker says. “It’s a pathological lineup of horrible leadership skills that takes things in the opposite direction.”

Four Essential Skills of a Change Leader

	If health plans are to move forward in collaborative efforts under health reform, they might need to polish their reputations first. According to a provider survey conducted by ReviveHealth, a strategic communications firm, Cigna and independent Blue plans earn the highest rankings-with “highest” meaning just 49% of respondents viewing them as having a favorable reputation.

	WellPoint/Anthem showed just a 16% favorability rating, ranking worst among the plans reviewed for the second year in a row.

	“The number one thing this survey reveals even more significantly this year than in past years is that trust between managed care organizations and provider organizations has deteriorated to an all time low,” says ReviveHealth CEO Brandon Edwards.

	And reputation matters at the negotiating table. Distrust can result in provider resistance such as driving a harder bargain on rates or being less flexible with contract agreements.

	“The distrust has practical business implications,” he says. “So many of the business strategies that are being and will be implemented in the future around risk sharing and quality based payment all have some level of required trust.”

	Quality-based arrangements often involve multiyear contracts in order for the provider to gain the benefit of shared savings over time. Edwards says this year and for the past two years, more contracts were short-term because of skittishness about health reform. Managed care wanted the contracts to expire before 2014 so renegotiations could include reform provisions.

	In survey results, Aetna (22%) and Cigna (19%) were identified as having the best hospital payment rates, while independent Blue plans-even with their higher favorability-were rated as having the worst rates (-28%). The results are consistent with prior year surveys. Rate negotiations will become more creative as reform rolls out.

	Edwards says the trend of payers buying providers will likely continue, such as Highmark’s recent purchase of West Penn Allegheny Health System for $604 million. In many cases, unique deals and crossownership will lead to narrow-network products.

	“Narrow networks could be an indicator of selective trust,” Edwards says.

	For example, BlueCross BlueShield of Tennessee and Erlanger Health System announced in April they will create a partnership starting July 1 under a five-year narrow-network contract. Erlanger will remain in BlueCross' existing network through 2018 and will be the exclusive Chattanooga hospital in the plan’s network designed for the insurance exchange.

	“We know from media reaction in the market and reaction from other hospitals there was deepening distrust between the other providers and BlueCross because the first they heard about it was in the newspaper,” Edwards says.

	He believes the negotiations could be a strategy of scarcity. In other words, payers are offering only so many opportunities for new products and providers have to decide to be ultimately in or out.

	In the survey, 23% of providers say they are planning a narrow-network program with payers, and 29% have one in the works. Only 11% say they have no plan to begin a narrow-network arrangement.

	As far as new initiatives go, Blue plans rated high with 30% identifying them as being the best to work with, while UnitedHealthcare was rated as the worst to partner with by 23% of respondents.

	ReviveHealth also notes macro trends among payers:

plans build or buy provider organizations

 a single plan holds a large marketshare in several states

plans will compete with new product offerings

	More than 370 health system and hospital leaders completed the survey.

Trust is deteriorating, and that can work against payers attempting to enter alternative contracts

Author | Julie Miller

Articles

4 Ways to Adapt to New Oncology Value-Based Models

How Mentors Inspire Health Execs

Four Essential Skills of a Change Leader

Reputation matters in collaborative environment