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Evidence-Based Oncology
Author(s):
Oncology drug costs affect those entering into risk-based arrangements, and these groups must rethink their approach to evaluating risk.
https://doi.org/10.37765/ajmc.2020.88473
The ongoing evolution in targeted therapy has led to better outcomes—including overall survival—for patients with cancer and other rare conditions. Although only a small percentage of patients are candidates for targeted therapies, the costs of these treatments can be staggering. Self-insured employers and organizations entering into risk-based arrangements will be most impacted by these unpredictable costs, and they need to reevaluate their approach to protecting their risk to ensure that patients receive the treatment they need.
Daratumumab, for example, a targeted monoclonal antibody that helps slow or stop the progression of multiple myeloma, is used in 8% to 16% of multiple myeloma cases among participants of Medicare’s Oncology Care Model (OCM),1 an advanced alternative payment model that aims to produce higher-quality care at the same or lower cost to Medicare.2 Given breakthrough therapy designation for multiple myeloma in 2013,3 daratumumab was given expanded approval in 2018 for use in combination with chemotherapy for the treatment of newly diagnosed multiple myeloma in patients who are ineligible for an autologous stem cell transplant.4 Medicare spends more than $8000, on average, per administration of the drug for aligned OCM beneficiaries; for a 6-month episode of care, the cost of daratumumab is commonly more than $60,000, and at times it surpasses $100,000 per episode.1
Brentuximab vedotin, another targeted therapy, was approved by the FDA in March 2018 for use in the first-line treatment of stage III and IV Hodgkin lymphoma in combination with chemotherapy.5 It is used in 0% to 7% of lymphoma episodes among OCM participants and averages more than $22,000 per administration. Among OCM participants, Medicare spends nearly $90,000 for brentuximab vedotin, on average, during a 6-month episode of care in which the drug is used, with individual episodes of care topping $170,000 for the drug.1
Gene and cell therapies boost precision medicine costs to a new level. Chimeric antigen receptor (CAR) T-cell therapy, approved by the FDA to treat certain forms of non-Hodgkin lymphoma and leukemia, is a type of immunotherapy that harnesses a patient’s own modified white blood cells to attack cancer cells.6,7 Proposed by CMS to have a new Medicare severity–diagnosis-related group designation beginning in fiscal year 2021, the costs of CAR T-cell therapy would account for the highest-paid hospital admission ever, at approximately $250,000 for the Medicare Part A component alone, unadjusted for area wage and other payment policy factors.8 If finalized, this payment rate would be more than 4 times as costly as coronary bypass surgery and more than 19 times as costly as a lower extremity joint replacement.
For self-insured employers, innovation in precision medicine—and the accompanying hefty price tag—calls for a reexamination of downside risk-protection strategies to ensure that catastrophic losses are protected as efficiently and cost-effectively as possible. Before simply replicating the traditional approach of purchasing specific stop-loss coverage for protection from the high cost of rare treatments, self-funded employers should evaluate the following options:
Aggregate-Only Stop-Loss Insurance
An aggregate-only (agg-only) insurance policy is designed to limit overall losses to a certain amount, with high-cost claims counting toward an agg-only attachment point. Agg-only policies generally have lower premiums than specific policies and much lower (more protective) attachment points than aggregate policies purchased in conjunction with specific policies. Notably, agg-only policies provide coverage when an employer needs it most.
In fact, a Milliman report found that 7 of 10 times, self-funded employers of small, medium and large sizes had lower overall costs with an agg-only product compared with specific insurance.9 Agg-only products can provide flexibility in attachment point, premium, deducible, and coinsurance to best fit the self-funded employer’s needs. Agg-only products also provide more competitive rate increases than specific policies that are subject to leveraged trend, a rate often twice as high as regular medical and pharmacy inflation. Lasers do not need to be applied for known high-cost individuals because their expected costs are reflected in the agg-only attachment point.
Multiyear Products
Stop-loss policies in which rates are locked in for multiple years ensure greater predictability for selffunded employers. The NEWDIGS FoCUS consortium’s white paper discusses the benefit of a 5-year performance-based annuity to both spread payments over multiple years and mitigate risk of catastrophic cases.10 Published before the coronavirus disease 2019 became a global pandemic, the report also notes that multiyear products mitigate the actuarial risk of surges in patient backlog—a reality our health care system is currently facing as it returns to a “new normal.”
Advance Funding
A key benefit of specific stop-loss coverage is the role it plays in cash-flow management. Specific coverage can help smooth cash flows against catastrophic claims, but an employer should not purchase high-premium specific coverage for the sole purpose of cash-flow management when advance funding options can ensure that month-to-month expenses are predictable. Advance funding can take the form of coordinated reimbursement or a flat monthly payment in which the employer automatically pays up to a certain threshold every month and the insurer covers high-cost claims.
CMS recently announced a 1-year extension of the OCM program, to June 2022.11 Currently in its fourth year, the program is amassing important data on ways to drive higher-value care for patients undergoing cancer treatment. It is critical that these data be evaluated and leveraged to ensure that quality and value remain priorities alongside innovation in cancer treatment.
Author Information
Keely Macmillan, MSPH, is senior vice president of Policy & Solutions Management at Archway Health. She is a recognized expert in alternative payment models, with more than 12 years of health care experience in guiding specialty providers to success in accountable care organizations, bundled payments, value-based purchasing, and the Quality Payment Program under the 2015 Medicare Access and CHIP Reauthorization Act.
See Sidebar: CMS Seeks to Fix Medicaid Best-Price Barriers in Value-Based Contracting for High-Cost Therapies in Medicaid
References
1. Archway Health. Unpublished data, analysis of Medicare claims, 2020.
2. Oncology Care Model. CMS Innovation Center. Updated June 22, 2020. Accessed July 14, 2020. https://innovation.cms.gov/innovation-models/oncology-care
3. Daratumumab receives breakthrough therapy designation in double refractory multiple myeloma from U.S. Food and Drug Administration. News release. Johnson & Johnson; May 1, 2013. Accessed July 14, 2020. https://www.jnj.com/media-center/press-releases/daratumumab-receives-breakthrough-therapy-designation-in-double-refractory-multiple-myeloma-from-us-food-and-drug-administration
4. Janssen announces Darzalex (daratumumab) US FDA approval for newly diagnosed patients with multiple myeloma who are transplant ineligible. News release. Johnson & Johnson; May 7, 2018. Accessed July 14, 2020. https://www.jnj.com/media-center/press-releases/janssen-announcesdarzalex-daratumumab-us-fda-approval-for-newly-diagnosed-patientswith-multiple-myeloma-who-are-transplant-ineligible
5. Brentuximab vedotin. FDA. Updated March 20, 2018. Accessed July 14, 2020. https://www.fda.gov/drugs/resources-information-approveddrugs/brentuximab-vedotin
6. FDA approves tisangenlecleucel for B-cell ALL and tocilizumab for cytokine release syndrome. FDA. Updated September 7, 2017. Accessed July 14, 2020. https://www.fda.gov/drugs/resources-information-approved-drugs/fda-approves-tisagenlecleucel-b-cell-all-and-tocilizumab-cytokine-release-syndrome
7. Yescarta (axicabtagene-ciloleucel). FDA. Updated May 28, 2020. Accessed July 14, 2020. https://www.fda.gov/vaccines-blood-biologics/cellular-gene-therapy-products/yescarta-axicabtagene-ciloleucel
8. Fact sheet: fiscal year (FY) 2021 Medicare hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) proposed rule (CMS-1735-P). CMS Innovation Center. May 11, 2020. Accessed July 14, 2020. https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2021-medicare-hospital-inpatient-prospective-paymentsystem-ipps-and-long-term-acute
9. Bachler RD, Russell M. Aggregate-only stop loss: a potential alternative to traditional stop-loss. Milliman. August 18, 2017. Accessed July 14, 2020. https://www.milliman.com/en/insight/aggregate-only-stop-loss-a-potential-alternative-to-traditional-stop-loss
10. NEWDIGS FoCUS white paper: precision financing solutions for durable/potentially curative therapy. Massachusetts Institute of Technology. January 24, 2019. Accessed July 14, 2020. https://newdigs.mit.edu/sites/default/files/MIT%20FoCUS%20Precision%20Financing%202019F201v023.pdf
11. Verma S. New CMS payment model flexibilities for COVID-19. Health Affairs blog. June 3, 2020. Accessed July 14, 2020. https://www.healthaffairs.org/do/10.1377/hblog20200602.80889/full/
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