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Oncology Turns Down the Volume, Cranks up the Value

Jessica Cherian, PharmD
MediMedia Managed Markets

Alternatives to the traditional fee-fee-service are becoming increasingly, but perhaps nowhere is the shift from volume to value gaining more traction that in oncology. No doubt the expense of cancer care has something to do with that. A study that linked Medicare records with survival and incidence data from the Survival, Epidemiology, and End Results (SEER) database estimated that the medical costs of cancer care in the U.S. are expected to  reach nearly $173 billion by 2020, which is almost 40% more than what the country spent on cancer in 2020.

Little wonder that both payers and providers see a pressing need for changing the way oncology is paid for. As the predominant payer in medical oncology, CMS  has a big stake in this change—and considerable influence over how to bring it about.

On July 1, 2016, CMS rolled out its Oncology Care Model. The model pays participating practices $160 per beneficiary per month (PBPM) for care management payment and sets episodes-of-care spending targets for six months of chemotherapy based on historical costs.  It’s a shared savings program: Providers that control spending so it comes in under the set price have the opportunity to share in savings. Nearly 200 physician groups and 17 payers are participating, according to CMS.

Some have concerns with the CMS program. Hospitals, for example, fear that the improved coordination may eventually lead to less inpatient care. In addition, there is concern that target prices are overly dependent on diagnosis rather than the stage of cancer and accompanying genetic mutations that might affect treatment selection.

Private insurers are also moving to episode-based oncology payment. Just this month, Anthem Blue Cross of California announced a partnership with an oncology provider, Valley Radiotherapy Associates Medical Group, to offer an episode-of-care payment option for patients with breast cancer. The payments are limited, though, to radiation therapy services for patients with stage I, II, or III breast cancer.

But skeptics of episode-based payment in oncology, should take note that UnitedHealthcare’s cancer pilot produced some impressive results. The program covered over 800 patients at five medical oncology groups. Medical costs were reduced by 34% and yielded a savings of $33.6 million.

In an area of heath where many believe that buy-and-bill payment has created an incentive to pick expensive treatments, these early efforts at episode-based payment are encouraging. They show that the heath care community—providers and payers—are willing to embrace new approaches that reward cost-effective care and flip the switch from volume to value, if not overnight, then sooner rather than later. 

Jessica Cherian, PharmD, is a Senior Clinical Services Manager at MediMedia Managed Markets and a part-time community pharmacist.