Five Trends Emerge in Payer Management of Oncology

May 7, 2013
Susan Weber

Volume 19, Issue SP3

Market Dynamics Change How Plans Manage Oral and Office-Administered Agents

If there’s a “reset” button for oncology drug management, payers are ready to press it. For years, management of these agents has been the exception, not the rule. Although payers have restricted the use of these drugs, they have rarely denied coverage or required heavy cost sharing by patients. But that is poised to change as market dynamics shift and oncology becomes more of a management priority for health plans.

According to research from Health Strategies Group’s Managed Care Complete service, oral oncolytics and officeadministered oncology agents are now among payers’ top 5 management priorities. The reasons for this refocusing include both market factors and new payer capabilities.

External, Internal Factors

The way health plans make decisions on oncology agents is changing in part because of their success containing costs in other complex drug categories comprising both self-injected and office-administered biologics, such as autoimmune and multiple sclerosis agents. Plans also have better information technology with expanded capabilities in data analysis, so they can identify inappropriate use and refine drug reimbursement. These improved capabilities—combined with the expanded choices afforded by new drug approvals and generic options, as well as a robust pipeline—are driving plans’ interest in using more management tactics.

Likely Short-Term Steps

With their focus squarely on oncology agents, payers will take several management actions in the short term. For instance, newly approved oral oncolytics will face high cost-sharing requirements. Many plans will change their benefit designs—by adding more tiers or raising copay levels, for example— to increase cost sharing. Half of plans already require members to pay additional fees for office-administered drugs, and more plans will follow suit.

Payers will also roll out clinical pathways that cover more tumor types and more oncologists in their networks. During this expansion, plans will rely on compendia guidelines from the National Comprehensive Cancer Network and other organizations to guide pathways. If successful, these pilots will help create the foundation for greater control of access. Health Strategies Group expects that after rolling out the additional pathways, plans will start narrowing pathway choice to specific first-line agents beginning in 2015.

Figure 1

While these strategies are suited for the short term, they do not address payers’ goals over the long haul. Our research suggests that shifting management priorities are likely to generate 5 trends during the next 5 years ().

Trend #1: Rigorous Approval Criteria

Figure 2

Plans say they will narrow prior authorization (PA) approval criteria to restrict use of oncology agents, particularly high-cost agents lacking substantial survival improvements. As they commonly do today, health plans will use PAs to ensure alignment with labeling and compendia (). In addition, 60% of plans expect to influence treatment order by requiring trials of specific first- and second-line agents. As new therapeutic choices emerge to treat certain tumor types, such as metastatic breast cancer and prostate cancer, we expect more plans to adopt a similar “lines of therapy” strategy. In addition, more plans will manage therapy duration by not only prospectively confirming treatment plans but also requiring reauthorization for extended use of a product.

Despite these efforts, plans recognize that PAs have a limited role and that pathways are a better long-term strategy to ensure appropriate use. As plans roll out clinical pathways, they will likely remove PA requirements.

To encourage provider adherence to the new pathways, plans will likely ask oncologists for their input and provide technology that helps integrate the pathways into their process. In addition, plans will likely provide financial incentives to oncologists to encourage adherence.

Trend #2: Management of Office- Administered Agents

Office-administered agents will face more access barriers. In the past 18 months, many plans rolled out changes to their infrastructure to improve management of these drugs. One of the newest changes is claims adjudication by National Drug Code (NDC) data. Widespread plan requirements to collect NDC data in claims submissions by 2014 will improve plans’ ability to enforce use of low-cost agents. With the data specificity provided by NDC codes, plans can set different reimbursement amounts for generic and branded options, reducing physicians’ incentive to use high-priced choices.

Oncologists should expect even greater communication with payers around alignment as more practices implement electronic medical records (EMRs). Automatic payer precertification through EMRs will save time and reduce financial risks for practices. Plans will also benefit from greater alignment as oncologists are able to view pathways and PA criteria in “real time.” This technology will provide plans with more opportunities to build tools that can help them manage office- administered agents.

Trend #3: Site-of-Care Management

Moving forward, plans will take steps to influence site of care and move administration of office-administered oncology agents away from hospitals. Their goal will be to drive patients to the most cost-effective setting, which may be a specialty pharmacy manager. However, plans are somewhat limited in how they can drive the local market dynamics that determine where patients receive these agents. Of late, these dynamics include more hospitals buying up oncology practices, a trend that has driven steady increases in hospital outpatient infusions in some markets. In addition, diminishing profit margins on drugs have prompted some oncology groups to refer patients to hospital outpatient departments for infusions. Accountable care organization growth may accelerate this trend.

Figure 3

For now, the best tool for plans is to ratchet down hospital reimbursement, which 46% of plans will try in 2014 (). In addition, many plans will pilot reimbursement models, including episodic payments that encourage providers to select low-cost administration locations. Integrated health plans with strong relations with oncology groups cover will likely lead this effort. Plans may also consider more fundamental network design changes, such as only offering “preferred” or “in-network” status to hospitals with reasonable infusion charges.

Trend #4: Oncologist Engagement

Recognizing that oncologists are key partners in their efforts to provide better value and higher quality care, plans will introduce new financial incentives to influence provider decisions. These will include oncologist-specific pay-for- performance (P4P) programs, which will reward oncologists for cost-of-care reductions, quality improvements, increased generic prescribing, reduced hospital infusions, and other goals. Plans are in a better position than ever before to implement P4P with oncologists—building on their experience designing P4P for primary care providers, plans can refine their approaches for the unique challenges of oncologists. These challenges include the availability of new generics as well as the wide variation in prescribing in oncology.

Plans have yet to develop an effective solution for managing the high costs of care at the end of life (EOL). Given the sensitive nature of this topic, plans aren’t likely to deny therapy to patients with advanced cancer. For their part, oncologists are often reluctant to have EOL discussions with their patients. One possible solution for plans would be to utilize case managers and social workers to initiate advance care planning, although they would need to be careful not to overstep their bounds. Another possibility is for plans to increase payments to oncologists for holding counseling sessions and include a counseling metric in their P4P programs, thereby paying oncologists for discussing the options with their patients.

Trend #5: Use of Low-Cost Agents

Figure 4

As part of their long-term management strategy, plans will take more aggressive steps to maximize oral generic use. Multisource availability of Gleevec (imatinib), likely in 2014, will provide a significant cost-saving opportunity. Almost two-thirds of plans intend to reimburse Gleevec on a higher copaying Sprycel (dasatinib) or Tasigna (nilotinib) (). These intended moves demonstrate payers’ increasing willingness to influence therapy order—fewer plans were interested in taking such actions as recently as 2010.

Plans will also take steps to increase use of generic alternatives for officeadministered agents in the next few years, primarily by embedding recommendations in clinical pathways or PA criteria. But encouraging use of these lower-cost infused agents is a little trickier for plans. Coding and current fee schedules need to be refined to neutralize profit incentives associated with brands and encourage generic use.

More Access Barriers Down the Road

Payer adoption of these emerging trends will vary greatly. In the short term, health plans will likely focus on improving patient and physician support, rather than implementing penalties and coverage denials. Over time payers will be more interested in advanced management strategies that require collaboration with providers to ensure appropriate use.

Acknowledgments

All figures and statistics in this article are based on the 2012 findings of Health Strategies Group’s Managed Care Complete research series, which reports on 10 categories, including oral oncolytics and office- administered oncology agents. Managed Care Complete provides future-oriented, strategic insights on the decisions that all relevant managed care customers and business lines make that affect brand access. Health Strategies Group offers syndicated research and client-private consulting, which focus on understanding the pharmaceutical and biotech industry’s key customers and influencers.

Author Affiliation: From Health Strategies Group, Redwood City, CA.

Funding Source: None.

Author Disclosure: The author reports no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design; acquisition of data; analysis and interpretation of data; drafting of the manuscript; critical revision of the manuscript for important intellectual content; administrative, technical, or logistic support; and supervision.

Author correspondence to: Susan Weber, Research Director, Health. Strategies Group, 303 Twin Dolphin Dr, Ste 600, Redwood City, CA 94065. E-mail: sweber@healthstrategies.com.