The rising cost of cancer treatment competes with the availability of effective therapy as a limiting factor in our war on cancer. Specific programs are being developed that have the potential to slow the growth in spending on oncology care. The Affordable Care Act includes provisions for containing healthcare costs, such as accountable care organizations and the Independent Payment Advisory Board. Within oncology, specific programs have emerged, including clinical pathways, episode-of-care based payment arrangements, and the oncology medical home. All models of cost containment have strengths and weaknesses. Outside of the United States, explicit rationing exists through national health technology assessment organizations. Excessive demands on physicians to limit spending at the bedside could potentially create conflicts with their professional responsibility to patients. While spending for cancer care in the US is high, its “worth” is ultimately a societal decision. Recent economic modeling suggests that we may be achieving value for the money we spend.
Oncology is reaping the benefits of accelerating scientific progress. Accumulating insights into the fundamental drivers of carcinogenesis at the cellular level are leading to the development of much more effective, less-toxic therapies. The timing of this phase of advance coincides with rising economic constraints within our field—and in all of medicine. Indeed, this new era of more-effective cancer therapeutics may be inherently more expensive as patients live longer on active treatment. The cost of treatment now competes with the availability of effective therapy as a limiting factor in our war on cancer.
In Part I of this article on the cost of cancer care, I examined what appear to be the fundamental drivers of the oncology cost-curve and the impact that cost is having on patients. In Part II, I focus on ideas and specific programs that may slow the growth of spending while, it is hoped, minimizing the impact on what we all want: sustainable access to high-quality therapy and continued innovation. Finally, I will consider another fundamental question: Is current spending worth it?
What Can We Do to Lower Costs?
A possible cultural shift may be emerging in medicine. From the American College of Physicians' proposal of parsimonious care to the American Board of Internal Medicine's Choosing Wisely Campaign, an explicit endorsement of limiting spending while providing care is being proffered.[1,2] It may be hoped that by creating an ethic of waste avoidance, we can delay or minimize more difficult decisions such as outright rationing of care. Given limited resources, nonbeneficial spending on any given patient detracts from resources that could be used more effectively for another. (See Table for potential cost-saving measures.)
What efforts to limit spending are either in place or on the way?
Private payers often achieve cost control through “blunt instruments” that sometimes poorly serve their beneficiaries. “Tools of the trade” include prior authorization, compendia listing and guideline requirements, quantity limits for oral drugs, patient cost-sharing, and mandated third-party disease management. Without question, employers are urging insurers to reduce costs. In my experience, patients perceive that they have less recourse with their employee benefit managers when they are being poorly served by their insurance plan.
The Affordable Care Act includes flawed elements designed to slow the growth in health spending. The Independent Payment Advisory Board empowers a panel to limit payments to providers. Since reducing benefits to Medicare beneficiaries by the panel is proscribed, this process may result in lowering reimbursement for services below the cost of actually providing the services themselves. The Components of Care Survey, conducted by the Community Oncology Alliance and Avalere Health, concluded that payments for infusion services by Medicare covered only 57% of the cost to provide the care in 2008. Accountable care organizations encourage cost control through gain-sharing arrangements in which providers and Medicare share in savings accrued relative to a benchmark. However, no quality measures exist within this model to ensure that cancer patients under active treatment are not denied appropriate care. The only two quality measures related to oncology address mammography and colorectal cancer screening.
Cancer patients under active treatment comprise 1% of a payer’s patients but as much as 10% of costs. This leads to two questions: What novel cost-control initiatives in oncology have either been proposed or are being actively piloted? What are the strengths and limitations of these initiatives?
Clinical pathways are specific, evidence-based tools designed to determine specific regimen use for a given stage of disease. While the level of detail within pathways can vary, they are more prescriptive than guidelines. Savings can be achieved by choosing less-expensive but equally efficacious treatment protocols. An appropriate target for compliance, such as 70% to 85%, must be determined. Payers generally desire a mechanism for internal validation of pathway compliance.
Pathways are being implemented in diverse geographic regions and practice models. A statewide initiative in Michigan, for example, includes Blue Cross Blue Shield, physicians, and an oncology benefit management company. Care pathways were first developed for breast, colon, and lung cancer, and later expanded to additional diseases. The pathway program included enhanced reimbursement: an upfront participation payment, increased payment for generics, and increased payment for evaluation and management codes.
The US Oncology Network has incorporated pathways into their electronic medical record system. US Oncology has compared cost-of-treatment and outcomes for non–small-cell lung cancer patients treated both on and off pathway. Outpatient costs were 35% lower for patients treated on pathway, and no difference in survival was noted. Savings appeared to be achieved by the use of less-expensive drugs and decreased use of therapy overall. 
Care for oncology patients, particularly in the adjuvant setting, is often given over predictable time frames. Instead of paying for each element of care separately, episode-of-care payments either can either pay a flat fee per unit of time or a flat fee for a defined care plan. The availability of accepted guidelines in oncology facilitates this payment approach.
Bach et al proposed such a model for metastatic lung cancer. In this model, oncologists would receive a monthly payment derived from the average cost of caring for all patients with metastatic lung cancer. This payment would bundle the costs of chemotherapy, supportive care medications, and administration. Medicare payments would then be adjusted over time based on claims submitted during prior episodes. Physicians would have to demonstrate that treatment conformed to an accepted standard of care. The intent of the program would be to achieve savings by making physicians discretionary purchasers based on price. The downstream effect would also pressure pharmaceutical manufacturers to adjust drug prices downward in order to be economical within the structure of the payment model.
Even in theory, this model has several flaws. It is likely that many more flaws would be apparent with more widespread application of this model to other disease types. The proposed model was based only on the use of platinum doublets. Bevacizumab (Avastin), an expensive agent with demonstrated survival benefit and an option within current guidelines, was not included in the analysis. Compendia-listed therapies cannot simply be left out of the equation. Since the publication of this proposal, the use of targeted oral therapies based on tumor mutational status, and the broader selection of chemotherapy based on tumor histology, have continued to evolve. It would appear unlikely that the savings achieved through temporal payment adjustments can keep pace with the introduction of new applications of scientific advances. Finally, the model places additional financial risk with providers in order to indirectly pressure pharmaceutical pricing downwards. Oncology clinics are already closing at alarming rates and are poorly positioned to act as an indirect price-control mechanism for drug cost.
United Healthcare is currently piloting a distinct version of episode-of-care payments in partnership with community practices. The pilot involves the treatment of breast, lung, and colon cancers in both the adjuvant and metastatic setting.
In the adjuvant setting, episode-of-care payments are separated according to disease, stage, and relevant biologic markers, such hormone receptor status and HER2/neu (human epidermal growth factor receptor 2) for breast cancer. Practices then selected one treatment regimen for each adjuvant group and were required to use this regimen at least 85% of the time. When important therapies emerge as new standards of care, changes are made through consensus between the practices and United Healthcare. The operating margin for chemotherapy, supportive care drugs, and ancillary supplies is converted into an episode-of-care payment. In the adjuvant setting, this payment also included independent fees for chemotherapy management and hospitalization services. Drugs are reimbursed at average sales price figures. Separate payments are made for evaluation and management services and chemotherapy administration. Hospital service fees are included in the episode-of-care payment. Since no additional physician payments occur for hospitalized patients, physicians are incentivized to manage patients on an outpatient basis when medically appropriate.
In the metastatic setting, the episode-of-care payment is based on the national average of chemotherapy drug margin combined with payment for chemotherapy treatment planning and management of hospitalizations. The episode-of-care payment is made every 4 months, independent of whether the patient is under active treatment or enrolled in hospice services. Physician work for the palliative and hospice care is covered under this arrangement.
The results? Thus far, practices seem satisfied with this model despite increased administrative work. Involving physicians in the creation of both the program and the selection of regimens for treatment of their patients appears to be a key driver of success. Payments are better structured to cover the cognitive services of medical oncologists. These cognitive services form a key pillar of the value that oncologists deliver to patients. United Healthcare achieves improved predictability of costs and better alignment of incentives.
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