UnitedHealthcare pilots new cancer care payment model

Nov 15, 2010

UnitedHealthcare (UHC) is working with five medical oncology groups around the country to advance a new cancer-care payment model that reimburses participating medical oncologists upfront for an entire cancer treatment program.

UnitedHealthcare (UHC) is working with five medical oncology groups around the country to advance a new cancer-care payment model that reimburses participating medical oncologists upfront for an entire cancer treatment program. The pilot marks a shift away from the current "fee-for-service" approach, which UnitedHealthcare says rewards volume regardless of health outcomes.  This new "bundled payment," or "episode payment," will be based on the expected cost of a standard treatment regimen for the specific condition, as predetermined by the doctor.

The oncologist will be 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 will continue to be reimbursed, and chemotherapy drugs will be reimbursed at the manufacturer's cost.

“A tremendous amount of the revenue that flows through an oncology practice is related to the chemotherapy drugs themselves,” says Allen Lichter, MD and CEO of the American Society of Clinical Oncology. “That's nothing new, but now the number of drugs is increasing and the cost of the drugs is drastically increasing, creating distortions in the system. Payers feel the cost of oncology care is going up too fast so they may reduce reimbursements when, actually, the cost of drugs is going up too fast. The UHC program takes drugs out of equation.”

Over the course of the pilot, the various treatment regimens selected by the medical groups will be evaluated to identify which are the most effective for a range of clinical presentations. UnitedHealthcare will play no role in determining which treatment plan the oncologists choose, but the intent of the pilot is to identify and reduce unnecessary drug administration that does not improve the patient's health outcomes.

The five medical practices participating in the pilot have between 18 and 35 oncologists on staff and are based in Dayton, Ohio; Fort Worth, Texas; Kansas City, Mo.; Marietta, Ga.; and Memphis, Tenn. 

In the pilot, each medical group must choose a standard chemotherapy regimen for each of 19 clinical presentations and participate in performance reviews of their data with other participating oncology groups to help identify best practices. Patient health information is protected and blinded in compliance with HIPAA privacy regulations.  The medical groups' participation in the program means they are willing to compare their results with peers.

Treatment regimens will be evaluated based on the number of emergency-room visits, incidence of complications, side effects and health outcomes - determining which treatment regimens do the best job of helping to fight cancer.

UnitedHealthcare calculates the cancer care payment based on the amount of money the oncology group would make on drug profits using the difference between the group's current fee schedule and the drugs' costs.  A case-management fee is also added to reflect the time and resources that the oncologist's office spends in managing the patient relationship. This new fee is paid by UnitedHealthcare on the first day the patient receives care from the medical oncology group. 

“We'll see whether these physicians use more or less treatments, different drug regimens, or if there is a great deal of continuity of what has been done in the past,” Lichter says. “The safeguard for making sure patients are well managed is that the practices in the pilot will be meeting regularly to go over their experiences. If paying oncologists a fee whether they’re doing anything or not causes doctors to collect a fee and go to Hawaii - and I think concerns of that may be overstated - the proof will show in pilot.”

The medical group is free to change their drug regimens at any time, but the cancer care payment does not change.  As part of the pilot, office visits, chemotherapy administration and other ancillary services like laboratory tests are paid based on fee-for-service rates. 

The upfront fee will cover the standard treatment period, which is typically six to 12 months. In cases of cancer recurrence, the bundled payments will be renewed every four months during the course of the disease, allowing the doctor to continue overseeing his or her patient's care even if drug therapy is no longer effective.

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