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Bundled Payments That Include Drug Costs Would Penalize Practices Based on Patient Mix


An analysis of a hypothetical bundled payment that included drug costs would unfairly penalize practices based on patient mix and could destabilize the cancer care delivery environment, according to research published in the Journal of Oncology Practice.

Including cancer drug costs in bundled payments in Medicare could destabilize the cancer care delivery environment, according to an analysis of a hypothetical bundled payment published in Journal of Oncology Practice (JOP) from the American Society of Clinical Oncology (ASCO).

Researchers created an economic model focused on 2 cancer types: advanced stage III colon cancer and metastatic non—small cell lung cancer. They used first quarter 2016 Medicare reimbursement rates to calculate the average fee-for-service (FFS) reimbursement and captured the probabilistic risk faced by the practices by the type of patients seen.

"For years, policy makers and the cancer community have been struggling to contain the rising cost of healthcare in the United States, and bundled payments that include the costs of physician-administered drugs are one option under consideration to address this problem,” lead author Jeffery C. Ward, MD, FASCO, said in a statement. “This new analysis suggests these payment models will create barriers to patients receiving the right drug at the right time."

The results showed that Medicare reimbursement in a bundled payment model that included drug costs would vary widely depending on the mix of patient conditions that practices treat and those practices that treated more complex patients would suffer more.

The analysis found that practices treating a substantial proportion of patients with complex disease would have revenue below that expected from FFS. Practices that treated patients with less complex disease would have revenue well above that expected from FFS.

The researchers concluded that the differences in reimbursement would be due to patient mix rather than the clinicians’ attention to care management. Ward added that payment models that penalize practices for their patient mix will impede delivery of high-quality care to patients with cancer.

According to the report, creating bundled payments that did not include drug costs would ensure continuity of care for patients with complex diseases. Meanwhile, a bundled payment that did not include drug costs would still incentivize practices to lower costs for things like diagnostics, imaging, emergency department services, and hospital use.

"We all agree that something needs to be done to control the rapidly escalating cost of cancer care," said Blase N. Polite, MD, MPP, and co-senior author of the JOP report. "But putting the care of more clinically and molecularly complex patients at risk is not the solution. Alternative payment models have been proposed by federal agencies, specialty societies such as ASCO, and other stakeholders.”


Ward JC, Lavit LA, Page RD, et al. Impact of oncology practices of including drug costs in bundled payments. [published online April 12, 2018]. J Oncol Pract. doi: 10.1200/JOP.17.00036.

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