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Evidence-Based Oncology April 2017

How to Create Successful Alternative Payment Models in Oncology

Harold D. Miller
By identifying ways to improve cancer care and then designing alternative payment models (APMs) to overcome current payment barriers, APMs can enable oncology practices to deliver better care to patients and save money for payers in a way that is financially sustainable for the practices.
How APMs Could Help Improve Cancer Care
Rather than choosing payment models and forcing physicians to deliver care that fits the payments, MACRA and the ACA clearly wanted the process to start with changes in care delivery and have payment models designed to support those changes. There are many opportunities to improve cancer care that are not being addressed due to barriers in FFS payment, and well-designed APMs could help change this. Three such opportunities are:

1. Reducing hospital visits due to complications of chemotherapy. The benefits of chemotherapy are often accompanied by side effects, such as nausea, diarrhea, and neutropenia, that can lead to serious complications, such as, dehydration and infection. Many patients receiving chemotherapy go to emergency departments (EDs) for treatment of these complications, and they are often admitted to the hospital because of the severity of the complications.

Chemotherapy-related ED visits and hospitalizations represent a significant portion of overall spending on cancer care.  A 2010 study estimated that commercial insurance plans spent more than $9000 per patient on chemotherapy-related ED visits and hospital admissions,6 and a 2012 study of Medicare beneficiaries receiving cancer treatment found that risk-adjusted per-patient spending on hospitalizations varied by more than $3000 across the country.7

Two projects supported by CMMI grant funding have shown that significant reductions in ED visits and admissions can be achieved by redesigning the way care is delivered to patients receiving chemotherapy:

•  The Patient Care Connect Program at the University of Alabama at Birmingham (UAB) Health System Cancer Community Network employed nonclinical patient navigators to screen for distress and encourage patients to seek early help from the oncology practice, rather than delay care or use the ED for non–life-threatening conditions.8 The project significantly reduced ED visits and hospitalizations and achieved savings 10 times as great as the cost of the navigators.9

•  In the Community Oncology Medical Home (COME HOME) project, an improved triage system and enhanced access to outpatient treatment enabled early, rapid, low-cost interventions, such as intravenous hydration when patients experienced chemotherapy-related complications. An independent evaluation showed significant reductions in ED visits, hospitalizations, and total cost of care for the patients.10

Most oncology practices can’t implement these successful approaches for a simple reason: they can’t afford to. Federal grants were needed to enable the UAB and COME HOME practices to implement these initiatives.

How could an APM enable these programs to continue after the grants end and allow other practices to replicate them? The simplest approach would be to make additional payments to cover the costs of the currently unbillable services in return for accountability by the oncology practice to achieve low rates of ED visits and hospitalizations for its patients. The 2 components of the APM would be:

Flexible monthly payments to support enhanced services. A flexible payment could be used to employ patient navigators or triage nurses or to cover financial losses from keeping treatment slots open on the practice schedule. Since the payments are intended to avoid complications as well as to enable early treatment when complications arise, it is more appropriate to base the payment on the patient, rather than base the payment on the delivery of a specific service to that patient. A growing number of APMs make “per member per month” payments to physician practices so revenues aren’t driven by the volume of services delivered.

Adjustments to the payments based on performance in achieving outcomes. Since the purpose of the additional payments is to help avoid ED visits and hospital admissions, the risk-adjusted rate of visits and admissions for a practice would be measured, and if those rate(s) are higher than rates other practices had achieved with similar resources, the amount of the per-patient payment would be reduced.

This 2-part structure is different and better than most “value-based payment” models being used today:

•  In MIPS and other pay-for-performance systems, the oncology practice receives no additional resources to deliver additional and better services, merely a small change in current FFS payments as an “incentive” to do something they can’t afford.

•  In shared savings models, the practice receives no up front resources to support different services. If it is already successful in controlling ED use, it won’t qualify for the shared savings payments it may need to sustain the services that achieve that result.

2. Improving end-of-life care. There is widespread concern about the number of cancer patients who receive treatments that will neither cure their disease nor prolong their lives, but will significantly diminish quality of life during their final months. These prolonged treatments can lead to poor end-of-life experiences for patients and families alike, as well as to very high expenses for payers.

Multiple studies have shown that palliative care services can significantly reduce ED visits, hospitalizations, and other avoidable services and the savings can more than offset the cost of the services.11 However, once again, oncology practices don’t offer palliative care services because they can’t afford to. Medicare and most health plans will only pay for multidisciplinary in-home palliative care under a hospice benefit, and many patients and physicians aren’t willing to completely terminate treatment and declare that the patient has only 6 months to live in order to qualify.

An APM could fill this gap. Once again, 1) a monthly payment could provide the resources an oncology practice or palliative care team need to provide good care and 2) a performance-based adjustment, based on rates of avoidable ED visits, hospitalizations, and procedures, would provide the accountability payers need to assure that overall spending will not increase. Instead of arbitrary eligibility criteria to limit spending, the monthly payment could be stratified based on patient needs, so the resources the oncology practice (or its palliative care team partner) receive are matched to the opportunities to improve care.

Most of the “episode” payment models being used today are triggered by delivery of a particular procedure, and they financially penalize a physician for not delivering that procedure when it is not needed. A better approach is a “condition-based payment” that bases payment on the patient’s needs, not on how many or what types of services were delivered.12

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