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

July 08, 2014
  • Journal of Oncology Practice publishes results of UnitedHealthcare pilot of new cancer care payment model that rewards quality, not quantity, achieving lower costs while maintaining excellent patient care

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.

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 were incented with the ability to earn an increased episode payment by improving their results. UnitedHealthcare did not play a role in determining which treatment plan the oncologists chose.

The study, conducted between October 2009 and December 2012, covered 810 cancer patients with breast, colon and lung cancer, and examined the difference in cost before and after the payment change. The total cost of medical care for patients in the study was $64.76 million, a 34 percent reduction in medical costs for a savings of $33.36 million. The cost of chemotherapy medications, however, was $13.46 million higher for the episode group than for the control group, but the tested pilot model still produced the 34 percent overall costs savings.  

The study used a quality improvement incentive to reduce the total cost of care and improve outcomes. While the goal of the study was to remove the link between drug selection and medical oncology outcomes by providing incentives for decreased chemotherapy costs, drug costs still were higher. This finding demonstrates that the bundled payment approach was able to reduce overall medical spend through other channels. The study was not designed to determine specifically how the cost savings were achieved, though analysis suggested the primary difference was hospitalizations.

“The episode payment project yielded significant savings for the treatment of cancer patients without any measurable effect on the health outcomes for patients,” said Dr. Gould, who participated in the pilot. “The health care community needs to embrace new approaches to payment if we want to ensure the sustainability of our health care system for future generations.”

About UnitedHealthcare
UnitedHealthcare is dedicated to helping people nationwide live healthier lives by simplifying the health care experience, meeting consumer health and wellness needs, and sustaining trusted relationships with care providers. The company offers the full spectrum of health benefit programs for individuals, employers and Medicare and Medicaid beneficiaries, and contracts directly with more than 800,000 physicians and care professionals, and 6,000 hospitals and other care facilities nationwide. Globally, UnitedHealthcare serves more than 45 million people in health benefits and is one of the businesses of UnitedHealth Group (NYSE: UNH), a diversified Fortune 50 health and well-being company.



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