Advanced APMs and the Emerging Role of Immuno-Oncology Agents: Balancing Innovation and Value | Page 2

The shift to value-based care, concurrent with innovations in immune-based care, will create challenges in oncology. What should be the physician and manufacturer responsibility during these changing times?
Published Online: February 16, 2017
Michael V. Seiden, MD, PhD; Marcus Neubauer, MD; and Diana Verrilli
A practice can gain additional benefits and risks by entering an advanced APM such as the “2-sided risk” version of OCM, which includes some of the same quality metrics of MACRA and MIPS along with additional responsibilities in transforming the care delivered to the patient. Practices participating in the OCM are compared with their baseline performance prior to program initiation, along with a number of adjustments and trend factors. The trend factor, still poorly defined, is proposed to correct for inflation and take into account the realization that innovation will likely increase costs. Of note, the global baseline cancer spending calculated by CMS preceded the approval of all the PD-1 and PD-L1 checkpoint inhibitors.

Defining Value in Healthcare

In healthcare, value is often defined as quality divided by cost—increasing quality and/or decreasing costs offers the chance of increasing value. Indeed, in theory, one could still achieve an increase in value with higher costs if the quality of care improved dramatically. Economists often refer to value from the patient perspective. Measuring cost, the denominator of the value equation, is not as simple as it seems because it includes not just the direct cost of care, but also opportunity costs for the patient from lost time at work, or perhaps for the caregiver who left work to support the patient. Quality is an order of magnitude more challenging to convert into a number. From the patient’s perspective, quality could include several concerns:
  • Do I feel well? 
  • Can I live independently? 
  • Is my anxiety and/or pain relieved? 
  • Do I feel cared for? 
  • Can I return to work? 
Obviously, how an individual patient scores these issues, numerically, is a daunting proposition and likely is very individualized. One patient might emphasize that value centers predominantly around their ability to live independently, while another might ascribe value just to surviving to a key milestone such as a wedding or delivery of a grandchild. It should be apparent that these types of value determinations are qualitative and precise measurement is aspirational. As a poor substitute, organizations have proposed various statistical standards such as cost per quality-adjusted life-years that a certain therapy provides, or costs to prevent a single death.

Within the US Oncology Network—a national collection of 1400 cancer caregivers including over 800 medical and gynecologic oncologists—much of the decisions around drug use are guided by well-conducted and peer-reviewed clinical trials that are vetted by the National Comprehensive Cancer Network, and then further scrutinized by a Pathway Committee of the US Oncology Network. Selected drug regimens are defined by a combination of clinical efficacy and cost. Typically, costs are simply the drug costs since there is little data of costs of supportive care, in particular the likelihood that a specific regimen will require urgent care, emergency care, or hospitalization. Developing such databases personalized to an individual’s age, gender, comorbid disease, and performance status is an important goal for the future.

Ethical Issues of Society Versus the Individual and Models Around the Drug Value Proposition

The I-O agents, specifically, the PD-1 and PD-L1 inhibitors, pose a particular set of challenges. Although sweeping generalizations are hazardous, a high-level summary of the data around these agents is as follows:
  1. Compared with chemotherapy or other targeted agents, I-O agents are marginally more effective in many patients, and moderately to markedly more effective in a small minority of patients. 
  2. These agents are, in general, less toxic than most chemotherapy agents used in late- stage cancer. 
  3. I-O agents are moderately or markedly more expensive than standard chemotherapy.
  4. There is little guidance in the current literature on how long to continue these agents in patients with durable responses or how much emphasis to place on PD-L1 tumor expression. 
Thus the cost calculation of the value equation is high; however, since the toxicity is less (on average) than chemotherapy and the clinical outcome is improved, the quality (numerator) of the value equation is also higher. However, its impact on the overall value depends on how much an individual patient benefits, which of course is hard to predict a priori.

To make issues a bit more complicated, alternative payment models, in general, and the OCM in particular, doesn’t really reward value as described above. It does include quality metrics, but doesn’t include response, survival, or toxicity. The calculation of shared saving that would be delivered to the practice is equal to a quality score multiplied by cost saving score. Consider, as an example, a practice that doubled its quality score from 50 to 100 while its healthcare costs increased 10%. In this hypothetical case there was a marked improvement in quality and perhaps even survival, simultaneously with an increase in costs. While the improvement in quality would exceed the cost increase (and thus improved “value”), the cost-saving equation would yield no financial return for the practice (reward in the OCM = quality score x cost savings). In the event the practice made significant financial investment to transform clinical care through investment in information technology, staff, and processes, they could easily have overspent their monthly management fee. This highlights an important discordance with value and shared savings that dominates APMs.

In reality, while quality improvements are important, the dominant factor in the model is a reduction in costs. This puts the physician in a challenging position, especially in a society with direct-to-consumer marketing and the increasing awareness and hype around the potential of immunotherapy. For a patient with recurrent cancer of the lung, kidney, bladder, head and neck region, Merkel cell tumor, melanoma, or Hodgkin’s disease, there is a growing body of literature that supports considering I-O agents. There are currently hundreds of clinical trials evaluating PD-1 and PD-L1 agents alone or in combination with other I-O agents. It is almost certain that during the tenure of the OCM project, PD-1 and PD-L1 agents will gain approval in many additional malignancies, including in patients with locally advanced or newly diagnosed metastatic disease as was recently witnessed in melanoma, and a subset of non–small cell lung cancer patients.12 In an environment that is without fiscal restraints, patients were offered such therapies with risk falling to the payer (government, insurer, employer, and to a lesser extent the patient).

In the OCM world, such behavior adds risk to the participating practice. In addition, in the setting of higher patient co-payments, the patient now also bears more of the risk. Bearing risk in community oncology practices translates into risks to personal income and the practice’s vitality, challenging the physician to weigh personal interests against patient interests. While capitated contracts and risk-bearing contracts have existed in the past, particularly in healthcare systems and primary care practices, the scale of the OCM and the prices associated with these agents provide very broad risk corridors not typically seen in primary care or pediatrics practice. 

Challenges in Delivering I-O Therapy Rationally

It is a physician’s obligation to deliver therapy that will benefit the patient, and the current data supporting I-O therapy provides compelling evidence that it should be part of the therapeutic armamentarium in a variety of malignancies. Unfortunately, we are missing several important pieces of data that might help physicians deliver these therapies rationally. Table 2 lists questions that might help moderate the costs of I-O. 

While there is an unprecedented number of I-O trials actively enrolling patients, essentially all these trials are looking for expanded use of PD-1, PD-L1, or CTLA-4–binding agents or novel I-O agents, either alone or with the approved agents. These trials, if positive, will only accelerate the rise of I-O use and costs in cancer care.


Ideally, a society should support an environment of innovation that improves the lives of its citizens, and simultaneously permits the astute use of its limited resources. Improving the value of the care we deliver to cancer patients is important. The shift to value-based care, concurrent with the innovations in immunology and the rapidly growing indications for I-O agents, will create significant challenges for the physicians and healthcare systems in the near term. Community-based oncologists will need to be particularly savvy in meeting the operational and financial demands of clinical transformation prescribed by value-based care, while maintaining the financial viability of their practices. Finally, manufacturers of I-O agents should share the responsibility of supporting value-based pricing. The market is becoming more crowded with duplicate I-O agents, and competitive pricing will lower the tension that these treatments inflict on the value equation.

Michael V. Seiden, MD, PhD, is chief medical officer, McKesson Specialty Health and The US Oncology Network.
Marcus Neubauer, MD, is medical director, McKesson Specialty Health.
Diana Verrilli is vice president, Payer and Revenue Cycle Services, McKesson Specialty Health.


Michael V. Seiden, MD, PhD
10101 Woodloch Forest Dr.
The Woodlands, TX 77380

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