Roxanne Nelson, BSN, RN


June 24, 2015

Editor's Note:
The market shift toward value-based care presents opportunities and challenges for the US healthcare system, and these changes are being implemented in both the public and private sectors. A special session held during the annual meeting of the American Society of Clinical Oncology (ASCO), titled "Payment Reform in Oncology: The Way Forward,"[1] explored both the progress made and the barriers that stand in the way of payment reform.

The US healthcare system is now on the march to value-based payments, which in essence is the transition from traditional fee-for-service models to value-based reimbursement for providers. Instead of rewarding volume, new value-based payment models reward better results in terms of cost, quality, and outcome measures.

Although a full switch in payment models is going to take some time, the transition from "volume to value" is already happening, according to Blase N. Polite, MD, associate professor of medicine at the University of Chicago, chair of the ASCO Government Relations Committee, and presenter at the ASCO session on payment reform.

Dr Polite, who summarized the changes currently taking place in the oncology reimbursement landscape, noted that this was "not something that might happen or could happen, but that is already here." However, it is still in flux.

We need to be moving into a value-based world when it comes to reimbursement.

"The barn door is open and the horses are leaving; which direction they're going and what they're supposed to be doing is not 100% clear yet, but we may have some ability to shape their direction," he pointed out.

There is a definite move for increasing incentives for care quality, coordination, and efficiencies. "Right now, we are living in a volume-based world, and everyone is convinced that we need to be moving into a value-based world when it comes to reimbursement," Dr Polite said. "Essentially, we are looking to move toward payment that rewards quality and efficiency."

But the move from volume to value can get a little "sloppy and tricky."

CMS Model Rolls Out to Plenty of Questions

The largest and most important initiative to date was rolled out earlier this year by the Centers for Medicare & Medicaid Services (CMS) Innovation Center, which has been developing new payment and delivery models designed to improve the effectiveness and efficiency of specialty care. Among those specialty models is the Oncology Care Model,[2] a multipayer payment and care delivery model that CMS says will improve the coordination of cancer care. The impact of the CMS initiative may be substantial for both oncology practices and patients, because the majority of the more than 1.6 million people who are diagnosed with cancer each year in the United States are over 65 years old and are Medicare beneficiaries.[3]

Under the CMS model, practices would enter into a two-part payment arrangement that includes financial and performance accountability for 6-month episodes of care involving chemotherapy administration to cancer patients. Under this payment structure, CMS gives the practice a patient management fee of $160 monthly throughout the 6-month episode, as well as a performance-based payment. The performance-based payment is essentially a management fee that is paid for the entire 6 months of therapy and then can be renewed if treatment lasts longer.

The second part of the plan is a shared-savings payment opportunity that measures the cost incurred by all cancer patients who are treated with chemotherapy and then compares it with expected costs. Each practice receives a benchmark spending amount that is calculated on the basis of its historic trends and risk-adjusted for such factors as geographic variation and individual patient issues, including age and comorbidities. If the practice can reduce costs more than 4% below that of the benchmark or target price, CMS will pay the practice a sum that may be as high as the total savings above that 4%.

"The $160 payment that is made to you is not really payment, but an interest-free loan, because that essentially gets put back into your target price," said Dr Polite. "You have to make that money up as well before you get any shared savings."

There are essentially two ways of participating in the CMS plan. The first is a so-called one-sided risk model, where there are no penalties for exceeding expected spending. The second one is a two-sided risk model in which a practice would be penalized for going beyond the target expenditures. Practices that participate in the two-sided model have a reduced threshold for sharing savings from 4% to 2.75%.

Although ASCO has commended CMS for seeking new approaches to physician payment, the society expressed concerns about the limited scope of the model and has urged CMS to consider and test other strategies, especially those that move away from the traditional fee-for-service model.[4]

The goal of the CMS model is to incentivize participating practices to improve care for beneficiaries and lower the total cost of care over a 6-month period. The performance-based payment will be determined on the basis of the practice's achievement and improvement on quality measures. "But the rub is that if by 3 years you haven't achieved savings, they kick you out of the program," explained Dr Polite.

If providers are going to achieve any type of savings with this program, it will be in the area of chemotherapy and inpatient hospitalization. Within a 6-month period, it is estimated that about 35% of cost is spent on chemotherapy and another 30% on inpatient hospitalization. "Essentially, if a practice needs to achieve savings in order to meet the targets, it is going to have to come from chemotherapy and inpatient care, and that is very important to understand," Dr Polite said.

Oncologists can potentially be penalized for doing the right thing.

Another problem with this model is that oncologists can potentially be penalized for doing the right thing. For a practice that is already delivering very high quality at low cost, there isn't much room for finding additional cost savings while maintaining quality. The costs cannot go much lower, and the practice is already at a high-quality target, so "these folks are in trouble," Dr Polite explained. Similarly, those that are giving low quality at low cost are also poorly positioned to achieve a bonus.

"The ones that are best positioned to benefit are delivering high quality at a high cost," he pointed out. "They can take the low-hanging fruit and cut costs, and get the benefit without interfering with quality. So the folks who are already doing the right thing can get in trouble with this model."

Other initiatives on the public side include the so-called "doc fix," or Medicare Access and CHIP Reauthorization Act (MACRA). And in Medicaid, there has also been a push towards moving the program into managed care.

MACRA, which repealed the sustainable growth rate formula for physician compensation earlier this year, intends to decisively move Medicare compensation from fee-for-service to pay-for-performance, emphasizing alternative payment models. In Medicaid, 65%-75% of enrollees are currently in health maintenance organizations, and over 90% of Medicaid beneficiaries live in the 39 states that contract with managed-care organizations.

Win-Win-Win vs Win-Lose Payment Models

A problem with many of the strategies being proposed for payment reform is that not everyone comes out ahead. To be successful, it needs to be a win-win-win situation for everyone involved: the oncologist, the payer, and the patient.

"I think physicians are understandably skeptical about all the talk of payment reform and the different models being looked at," said Harold D. Miller, president and CEO of the Center for Healthcare Quality and Payment Reform and participant in the ASCO payment reform session. "The way it's usually done is that Medicare and health plans get in a room and decide how they're going to pay in a way that benefits them." Physicians may then be forced to change their care so that it aligns with that payment system, and physicians and patients do not always come out ahead.

Many of the solutions and strategies being offered are win/lose approaches, Mr Miller told attendees during the session. "Payers want to win, and patients and physicians end up on the short end of the stick. I think it really needs to begin with physicians designing care at lower cost, and then the payers remove the barriers."

What physicians are resistant to are payment reforms that do not address the fundamental barriers to change.

In an interview with Medscape, Mr Miller pointed out that "a lot of people believe that physicians are resistant and don't want to change, but that's not really true. What physicians are resistant to are payment reforms that do not address the fundamental barriers to change."

Currently, the biggest obstacle is a payment system that pays for certain services but not for others. "For example, if you want to set up a medical home program and expand care management for your patients, you are not going to get paid for it," he said. "Even though it's good for the patient, you will lose money. And that is the whole motivation for the payment reform effort. The other barrier is that if you don't use the services that are paid for, you lose money and can't cover costs," he said.

But the main obstacle, in terms of being able to move to different payment systems, is the challenge of obtaining data, particularly regarding hospital admissions and emergency department (ED) visits. "Physicians can't even estimate potential savings from avoided ED visits, hospitalizations, and tests if they can't access the data from payers on utilization and prices," Mr Miller said. "So it's hard to estimate how much money will be saved, and how many hospitalizations or ED visits will be avoided, if you don't have the baseline data to start with."

ASCO Reform vs CMS Reform

ASCO has proposed its own reform model for Medicare that would both raise physician payment and lower the cost of care using billing codes and bundled payments.[5] The ASCO model, referred to as the Patient-Centered Oncology Payment (PCOP), offers three payment approaches: basic, consolidated, and bundled.

The basic plan offers supplemental payments—in addition to what practices would normally be paid by Medicare—for treatment planning, care management, and clinical trials. Practices would have to meet specific quality requirements to qualify for the supplemental payments.

The consolidated option would replace CMS's existing evaluation and management payments, as well as payments for chemotherapy infusions given in the office or clinic, with three new sets of billing codes. These codes would provide oncology practices with more flexibility to determine exactly how to deliver effective services to patients.

The consolidated option also reduces the 58 CPT codes that oncology practices currently use to bill for services and replaces them with fewer than 12 new payment codes. The consolidated payments are provided monthly on the basis of resources that are needed throughout all stages of patient treatment.

The bundled payment option sets a target spending level for services from the oncology practice and hospital admissions, laboratory tests, imaging, and drugs. This bundled payment approach is designed to give practices greater flexibility to redesign the way in which they deliver care to patients without the restrictions imposed by the fee-for-service system.

So how does ASCO's PCOP plan compare with the CMS model? Mr Miller noted that Medicare will pay more during the treatment process, which is exactly where most of the money is already going. "There is nothing more offered for the treatment planning process or after-treatment care," he noted. "There is a shared payment, so if you reduce spending somehow, you will be able to get some of that back."

Are savings to come from withholding necessary but expensive care?

Dr Polite mentioned that some practices may find it difficult to reduce spending, and this conundrum leaves many questions unanswered: The savings can come from reducing avoidable and unnecessary spending, but what if such spending has already been eliminated? If a practice's patients are already avoiding hospital admissions and the practice is already following the guidelines, where is cost-cutting supposed to come from? Are savings to come from withholding necessary but expensive care?

"You can pile on quality measures, but that isn't going to go far enough in protecting patients from all the possibilities of cuts in spending," Dr Polite said.

Another issue is that the Medicare approach has set a 6-month regimen, and even if the treatment is only 2 or 3 months, payment is for 6 months. "If treatment is delayed, as sometimes happens in cancer care, and creeps into the seventh month, CMS begins a whole new episode with a 6-month payment," said Mr Miller.

In the CMS plan, savings are calculated on the basis of 6-month episodes, so shared savings are more likely to show up with spending in two episodes. "The practice that is able to treat healthier patients more effectively ends up losing in that model," he added.

Both Dr Polite and Mr Miller pointed out some other basic problems with the CMS model. On the upside, it gives $160 per month to the practice as a patient management fee. On the downside, the CMS model could encourage a delay in treatment or withholding of care to qualify the practice for additional monthly payments and shared savings. Under the CMS system, oncology practices are accountable for all spending on their patients, even for health problems unrelated to cancer. Finally, the methodology for adjusting spending targets to account for such factors as new drug and new evidence about effectiveness of treatments has not been defined.

The Table summarizes the key differences between the shared-savings and PCOP models.

Table. Key Differences Between the Shared-Savings and PCOP Models[a]

Shared-Savings Models PCOP Model
Oncology practices only receive higher payment for improved care management if they can reduce spending Oncology practices receive adequate payment to cover costs of high value patients services, regardless of total spending
Already-efficient practices receive little or no additional revenue and may be forced out of business Already-efficient practices are able to continue operating and showing what is possible from high performance
Practices that have been practicing inefficiently or inappropriately may receive more revenue than they need Practices that have been practicing inefficiently or inappropriately generate significant savings for payers
Practices could achieve savings by stinting on care as well as by reducing overuse Patients are protected because savings are generated by delivery of appropriate care
Practices are placed at risk for costs they cannot control and random variation in spending Practices are only accountable for services/costs they can control
PCOP = Patient-Centered Oncology Payment.
[a]Adapted from Ward JC, et al,[1] with permission.

The Oncology Medical Home: How Welcoming Is It?

In the private sector, some insurers are looking at oncology medical home models, or are offering initiatives similar to the Oncology Care Model developed by CMS. An innovative twist on the medical home model is the Community Oncology Medical Home (COME HOME) program, which was discussed by Barbara L. McAneny, MD, an oncologist and CEO and chief medical officer for Innovative Oncology Business Solutions, the company she launched to manage the COME HOME program.

In her presentation, Dr McAneny commented that there are two ways to initiate healthcare changes. One way is have the health plans and hospitals in charge, in which case the physicians are at a significant risk of becoming "worker bees." The other way is to put the physicians in charge, and that was the impetus behind development of the medical oncology home.

Oncologists will be unable to bend the cost curve until we have the data to prove that we are delivering high- quality, low-cost care.

The current system is forcing the low-cost providers out of business and is profitable for payers and health systems who own entities, but not those who do the work, she explained. "Oncologists will be unable to bend the cost curve until we have the data to prove that we are delivering high-quality, low-cost care," Dr McAneny said.

In 2012, Dr McAneny and Innovative Oncology Business Solutions were awarded a $19.76 million grant from the CMS Innovation Center to develop a community oncology medical home model and implement that model in seven practices across the country. COME HOME builds on the concept of a patient-centered medical home and includes eight important components:

  • Robust use of health IT systems;

  • Physician-directed team care;

  • Patient and family orientation, with patient education on how to best benefit from the new system;

  • Integrated/coordinated care with an automated real-time decision support system to provide aggressive symptom management;

  • Evidence-based medicine and performance measurement to assure quality and safety;

  • Enhanced access to care, including late hours and same-day appointments;

  • An ongoing relationship with a personal oncologist to provide first contact and continuous, comprehensive care; and

  • Payment to recognize the value-added aspect of a medical home.

A key part of the strategy is expanding patient access to care. To do so, the practices provide patients with 24/7 triage with phone responders and on-call providers. Triage pathways are at the core of the program. When patients call during off hours, they do not get a recording advising them to call 911 or report to the nearest hospital, Dr McAneny explained. Instead, they get a live nurse who uses a triage pathway to direct the next course of action. The triage pathways manage a total of 22 symptoms that include nausea, fatigue, rash, and headache, plus follow-up assessments.

But has it reduced costs? Medical homes can improve quality and lower spending, and they have been shown to reduce inpatient admissions (which can add significantly to cost of care) by 15%-50%.[1] COME HOME practices saw a 9.5% reduction in inpatient hospital admissions in the first year of the program, and having same-day appointments has saved about 20% of patients from going to the ED, of whom an estimated 62% would have been admitted.[1]

"Overall, we have saved Medicare $1.6 million a month across seven practices," Dr McAneny pointed out. "CMS invested about $17 million—we didn't spend all $20 million—and they got about a 38.4% return on their investment."


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