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Study: New Cancer Care Payment Model Reduced Health Care Costs, Maintained Outcomes

A new cancer care payment model that rewards physicians for focusing on best treatment practices and health outcomes rather than the number of drugs they prescribe resulted in significant cost savings without affecting the quality of care.

The three-year study, conducted by UnitedHealthcare and five medical oncology groups around the country, 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 demonstrated that the new cancer care payment model resulted in a 34 percent reduction in medical costs.

The details of the pilot were published today in the peer-reviewed publication Journal of Oncology Practice. The report, “Changing Physician Incentives for Affordable, Quality Cancer Care: Results of an Episode Payment Model,” demonstrates the potential effectiveness of new approaches to the current “fee-for-service” payment model for cancer therapy.

Costs for cancer therapy, which were estimated by the National Cancer Institute at $124.6 billion in 2010, are projected to reach as high as $207 billion in 2020, suggesting there is an urgent need to rein in costs while finding the most effective treatments. Cancer therapy accounts for 11 percent of UnitedHealthcare’s commercial health plan spend and is expected to increase in the coming years.

“The study, evaluating how physicians might be rewarded for improving clinical outcomes and reducing treatment costs rather than paying them based on the number of drugs administered to treat cancer, demonstrated a significant reduction in total costs for medical care without affecting the quality of care,” said Lee Newcomer, M.D., senior vice president of oncology at UnitedHealthcare and one of the article’s authors. “These new payment models benefit patients, doctors, payers and the entire health system, and are particularly important as the nation faces ever-increasing health care costs.”

The Journal of Oncology Practice article was co-authored by Dr. Newcomer; Bruce Gould, M.D., medical director, Northwest Georgia Oncology Centers; Ray D. Page, D.O., Ph.D., president of the Center for Blood and Cancer Disorders; and Sheila A. Donelan, M.S., and Monica Perkins, Ph.D., associate directors of research & methods, oncology line of service, UnitedHealthcare.

Smart, Sustainable Shift from “Fee-for-Service” Approach Under the pilot, participating medical oncologists were reimbursed upfront for an entire cancer treatment program, marking a shift away from the current “fee-for-service” approach, which may reward volume or high-cost procedures regardless of health outcomes. This new “bundled payment,” or “episode payment,” model was 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.

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