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Pay-for-Performance in Oncology: Episode-of-Care Initiatives James C. Robinson Leonard D. Schaeffer Professor of Health Economics Director, Berkeley Center for Health Technology University of California, Berkeley Overview Unsatisfactory outcomes in oncology For patients, physicians, payers Payment reform options Episode-of-care initiatives 2 Unsatisfactory Outcomes for Patients Many are not on evidence-based pathways Insufficient monitoring of disease, treatments Both over-use and under-use of drugs Adverse drug reactions, often leading to costly and avoidable visits to ED, hospital admission Lack of smooth transitions to palliative, hospice 3 Unsatisfactory Outcomes for Physicians Not paid to manage care, but to infuse drugs Insufficient staffing to monitor, educate patients Need medical home for oncology Buy-and-bill incentives to use costly drugs Not compensated for management of oral drugs Financial difficulties leading oncologists to sell practices to hospitals Hospital-based care is even more expensive, drug-intensive 4 Unsatisfactory Outcomes for Payers Oncology costs rising rapidly Wide performance variation across network Prior authorization is very contentious Disease and care management for oncology are especially difficult for insurers Artificial distinction between medical benefits (infused drugs) and pharmacy benefit (oral drugs) Hospital consolidation and pricing leverage 5 Payers’ Unsatisfactory Cost Control Initiatives Shift from AWP to ASP reimbursement, following Medicare, still encourages use of high-cost biologics over low-cost generic chemotherapy Insurer DM interferes with coordination of care at the practice level Specialty pharmacy distribution interferes with inventory, availability of drugs for practices High coinsurance for oral drugs is bad for patients 6 Payment Pathologies Drug mark-ups are being squeezed, without practice revenues being replaced in other ways No payment for performance: Care planning and management Non-physician caregivers to monitor and educate patients Adherence to evidence-based care Reduced ED visits and lower costs No reward for coordinating care: Hospitals, infusion centers, home health, Palliative care and hospice for end-of-life care No reward for better outcomes 7 4 Payment Reform Options 1. Better payment methods for drugs 2. Shared savings or capitation 3. Medical home payment models 4. Bundled episode-of-care payment 8 (1) Change Payment for Oncology Drugs Switch from AWP to ASP reduced overall drug costs but did not create incentive for pathway adherence, use of generic chemotherapy where appropriate, or management of oral drugs Any sensible payment reform must change incentives for drug use, but need to improve the entire course of care Drug payment change is necessary, not sufficient 9 (2) Shared Savings or Capitation Shared savings or capitation, based on total-costof-care (TCC) under ACO proposals, could create great difficulties on oncology How to divide payment with primary care, hospital? Practices placed at risk for introduction of new expensive drugs Would need to coordinate complex medical benefit (Part B) and pharmacy benefit (Part D) Risk adjustment is essential but difficult Incidence, severity, likelihood of patient selection and switching Easier to adjust for severity within an episode than to predict incidence The ACO debate needs to closely examine oncology and other forms of specialty care 10 (3) Medical Oncology Home Payment Pay doctors for practicing medicine, not for office visits and selling drugs New payment codes for care planning and management Continue buy-and-bill, but with limited mark-ups Visit fees must compensate practices for monitoring and adjusting oral drugs, so as not to encourage infusion Reward practices for reducing ED visits Expect practices to become medical homes 11 (4) Episode-of-Care (EOC) Payment EOC was pioneered for acute surgery (e.g., knee replacement) with clear begin/end of episode and only modest need for risk adjustment Most chronic conditions do not fit with EOC But cancer episode begins with diagnosis, ends after course of care (remission, progression to more severe stage, or death) and has lots of internal variation in costs and outcomes EOC advocated by prominent oncologists PB Bach et al. “Episode-Based Payment for Cancer Care: A Proposed Pilot for Medicare.” Health Affairs, March 2011. 12 Questions for EOC Payment in Oncology How to adjust for severity or stage of disease? Are expensive drugs carved in or out of episode? Carve-outs protect practices from risk: United Healthcare Carve-ins give incentive to manage drugs: Hill Physicians IPA How are oral oncology drugs reimbursed? How is radiation treatment reimbursed? How to motivate coordination with palliative and hospice care? 13 Bringing Pay-for-Performance to Oncology We need better metrics of performance Selection and adherence to evidence-based pathways Improved survival and patient-assessed quality of life Appropriate end-of-life care Measurement of costs for entire course of care We need better payment methods and incentives Payments for the drugs themselves Payment for planning, managing, monitoring care Payments for coordinating with hospitals, infusion, hospice, etc. Payments for improved outcomes 14
