Hospitals, Insurers Devote More Attention to the Cost of Cancer Care

Across the country, hospitals are planning or opening oncology institutes and centers of excellence for cancer care. In New York City, one of the most prominent hubs for cancer research and treatment, hospitals are simultaneously investing hundreds of millions into new research facilities, labs and personalized medicine technology. Although it can feel uneasy to frame cancer in business linguistics, it can't go unsaid: Hospitals are making serious capital investments within their oncology service lines and they are expecting good returns.

More than 1.6 million people will receive a cancer diagnosis this year, according to the American Cancer Society. The startling diagnosis often leaves patients pursuing the most promising forms of treatment with less consideration for cost. A recent study led by researchers from Dana-Farber Cancer Institute in Boston and Duke Cancer Institute in Durham, N.C., found few patients ask about the costs of cancer treatments — many noted they want the best care regardless of its price tag, while others said they thought their physician should not have to worry about cost.  

While the clinical aspects of cancer have always been substantial, the financial aspects of the disease are increasingly coming to light. Medical expenditures for cancer are expected to reach at least $158 billion by 2020, according to estimates from the National Institutes of Health. Another recent study published in Health Affairs found cancer patients were 2.65 times more likely to go bankrupt than their peers without the disease.

Finally, a study published in the Journal of the National Cancer Institute in March found no clear association between the survival rate of patients with advanced cancer and the amount Medicare spent on their care. The study also found significant variation in Medicare spending on cancer care — a difference ranging from 32 to 41 percent, depending on the region.

Payors and providers are shining a brighter light on cancer costs
Traditionally, payors and providers have been more cautious to manage the costs of cancer care compared to other conditions and specialties. There are two components to this. One is the highly specialized and sophisticated nature of oncology. There are more than 200 types of cancer, not to mention the specialty's cutting-edge technology, newly approved drugs, continual study findings and groundbreaking treatment options.

The second factor is the sensitivity around the emotionally charged disease. When trying to reign in costs, health plans and providers have generally followed an old saying: Kids and cancer are off limits. Questioning the medical necessity of services in pediatrics and oncology was long treated as a last resort, as payors and providers thought it would be demonizing and stir negative publicity. In some instances, when payors did try this technique, lawmakers intervened, says Igor Belokrinitsky, principal with Booz & Company. "In some areas where health plans tried to say a treatment wasn't medically necessary, state legislatures would mandate that health plans cover a particular treatment, whether necessary or not."

But more recently, in the move from fee-for-service to pay-for-performance, payors and providers seem genuinely interested in meeting each other halfway when it comes to cancer care and costs. Whether through clinical protocols, provider-patient counseling sessions, genetic testing or oncology-specific accountable care organizations and bundled payments, oncology presents several collaborative opportunities for providers and payors to better align incentives.

Janene Culumber, senior vice president of finance and CFO for Moffitt Cancer Center in Tampa, Fla., says she's seen interest on both the provider side and the payor side for cancer care management.

"Because we treat patients from all over the state, a lot of insurers have been approaching us. But we've also reached out to our biggest payors and said we want to participate in this together. We need to be partners." Moffitt partnered with Florida Blue in late 2012 to form a cancer-specific accountable care organization, and Ms. Culumber says the center is currently in active discussions with three other payors and expects to close deals soon.

There is an agreed-upon scale by which payors and providers match their priorities. The first consideration is quality, or the effectiveness of the available treatments. Second is the patient experience and comfort of the treatment. Finally is cost. By aligning their concerns, care management arrangements can defy criticism of care rationing, as well. Ms. Culumber said care plans will never be altered in Moffitt's ACO for cost purposes; rather, the model is encouraging physicians to keep a closer eye on the prices of certain care processes. As Mr. Belokrinitsky says: "Cost being last is better than cost not being in the consideration at all."

Coming soon: Bundled payments, ACOs and quality reporting — specific to cancer  
Michael Kolodziej, MD, began his role as national medical director for Aetna's oncology strategies in February. Before then, he worked on the provider side as medical director for oncology services for US Oncology, which Aetna partnered with in 2010. In the past, Dr. Kolodziej says oncology was not so much a sacred cow to payors and providers as a black box with little transparency or dialogue. "I think the reason people were afraid to tinker with it was they simply didn't understand how things were done," he says. "That is changing."

Aetna and US Oncology launched a pilot program for Aetna members treated by physicians with Texas Oncology from June 2010 through April 2012. Under that pilot, providers used guidelines for evidence-based medicine. Patients were able to discuss and make end-of-life plans with clinicians, and nurse navigators were made available to help manage patients' symptoms and side effects.

By its end, the Aetna-US Oncology pilot reduced costs for lung, breast and colorectal cancers by 12 percent; decreased emergency room visits by 40 percent; and decreased hospital admissions by 16.5 percent among 184 enrolled members. Aetna found the results promising, and Dr. Kolodziej says he expects the insurer to begin offering bundled payments for subsets of oncology services within the next three years. Aetna also is looking at oncology-specific strategies for ACOs.

Dr. Kolodziej also expects more transparency around oncology quality metrics in the next few years, and for that information to drive more patient decision-making. "Oncology has had a problem because there have not been formally adopted quality metrics. I think we'll see a very rapid expansion of public reporting to quality measures, including patient satisfaction," he says. "It's something we're experiencing now in the Medicare world, but I think it will go far beyond that. It will be one of the metrics that determines appropriate reimbursement for practices, and patients will look it up."

On the provider side, Ms. Culumber says Moffitt has seen more scrutiny from payors for cancer care reimbursement, including more difficulty in obtaining authorizations. Insurers or benefits managers are asking many more questions that require a finer level of clinical detail. "Oftentimes, our nurses can't quite answer all the questions. We have to go to the physicians," she says, and payors sometimes request peer-to-peer review process between physicians.

Ms. Culumber said the main goal for its cancer-specific ACO with Florida Blue is to both improve the quality of care and reduce the cost of care. "We're also looking to ensure our physicians are not only following clinical pathways, but also have their eye toward costs. If there are three drug regimens and all are equally effective with low toxicity for the patient but one is less expensive, we're trying to drive behavioral change to pick the lower cost drug," says Ms. Culumber.

Noting that "once one of anything is created, looks to be successful and meets the needs of organizations," Ms. Culumber said she believes cancer-specific ACOs are likely to catch on, as well.

Emerging, and mutually beneficial, cost management strategies
Cancer care management programs can be structured in a way that is beneficial to everyone involved by eliminating processes that have no clinical benefits, says Mr. Belokrinitsky of Booz & Company. "By and large, when you talk to stakeholders, it's not so much that they want to cut costs but control how costs are spent and transition them toward more value-based reimbursements."

Here are a few other avenues payor sand providers are exploring to better control cancer care's costs.

Clinical protocols. Back in 2010, Aetna and US Oncology compared treatment costs among oncologists who treated certain lung cancer patients with clinical guidelines compared with those physicians who administered treatment independently. The findings? Treatment costs for a year-long period were 35 percent lower when physicians adhered to clinical standards, with no negative affect on patients.

Mr. Belokrinitsky says health plans are going to hospitals and oncology practices more often, asking providers to implement clinical protocols for cancer treatments to reduce variability. The protocols are developed by a third-party central authority and designed to be supple, allowing physicians to prescribe treatments on a case-by-case basis. Also, for these programs, payors typically reward physicians with bonus payments that are process-based, not outcomes-based. For instance, if an oncology practice implements a protocol and complies with it for 80 percent of cases — the designated threshold — those providers may receive bonus payments for simply implementing the guidelines in that portion of cases.

Clinical guidelines present a few challenges, though. One is simply their complexity and a lack of standardization. For instance, a hospital's cancer center might follow clinical protocols from their local Blue Cross Blue Shield. Months later, UnitedHealthCare may offer performance-based reimbursement for compliance with its protocol. "Soon you have five different protocols to use with different patients," said Mr. Belokrinitsky. "You might end up with competing or conflicting protocols, and that will drive physicians crazy. Whoever can bring harmony to the process would be the physician’s best friend"

Another challenge is hospitals' and oncologists' opposition to attempted standardization. A lot of time and research goes into clinical protocols. Payors typically develop clinical protocols with outside experts who continue to update the protocols regularly as new studies, technologies and treatment options become available. But if a payor calls one of the country's most prominent cancer centers asks those oncologists to use its clinical protocol — those physicians may not be too pleased, said Mr. Belokrinitsky. Cancer hubs with the top talent, research and cutting-edge technology may be more likely to resist payors' clinical protocols or care management tools.

Improved prescription management. A 2011 study published by the Journal of Oncology Practice and the American Journal of Managed Care found 10 percent of patients failed to fill new prescriptions for oral cancer drugs. Researchers found people with high cost-sharing in their insurance plans and those who were on multiple medications were more likely to abandon their prescriptions. Roughly 16 percent of patients had an out-of-pocket cost of greater than $500, according to the study.

One way to alleviate this problem is through split-fill prescriptions, where patients can pick up a portion of the pills — maybe 10 of their monthly 30 — for a fraction of the cost. This way, if the medication causes discomfort or negative side effects, the payor will not reimburse the full cost of a medication that goes unused, the physician will be notified of those side effects and can change the patient's prescription, and the patient will not have to purchase an expensive oral drug with high out-of-pocket costs that is ineffective.

End-of-life planning. There are also care management costs that are based largely on common sense and practicality, such as patients, physicians and family members having end-of-life discussions early on. "Once clinical measures have been exhausted, you can shift to less-invasive treatments that will make patients more comfortable and provide [them with] some dignity as they live out the rest of their lives. The earlier the physician has that conversation with a patient and their family, the less likely they are to choose invasive options," says Mr. Belokrinitsky. "If you don't gently but candidly discuss end-of-life planning, patients will likely ask for more care. More health plans will look to deploy these programs to transition patients to less-invasive care when they are ready."

Genetic testing. One care management tool that holds promise is personalized medicine, or genetic testing, which is applicable for subsets of cancer. These tests can be useful when certain types of cancer seem to run in patients' families, but they are not recommended for everyone. The blood tests can identify gene mutations and potentially determine what type of cancer a patient is most at risk of developing, and whether the patient will be responsive to a certain type of medicine. One caveat: There are no laws requiring insurance companies to cover genetic testing, and bills can range in cost, from $100 in out-of-pocket costs or running in the thousands.

Actress Angelina Jolie brought wider public understanding to genetic testing in May when she wrote a New York Times op-ed about her choice to undergo a double mastectomy after testing positive for a high-risk gene mutation, BRCA1. Physicians estimated she had an 87 percent risk of breast cancer and 50 percent risk of ovarian cancer, although those figures are prone to fluctuation in each woman's case. Ms. Jolie said the price for BRCA1 and BRCA2 testing can exceed $3,000 in the United States — a financial obstacle for many.

Shortly after Ms. Jolie's op-ed, Peter Meldrum, president and CEO of Salt Lake City-based Myriad Genetics & Laboratories, wrote a letter to the newspaper. He noted that the company's BRACAnalaysis is widely reimbursed by insurance companies, with more than 95 percent of at-risk women covered and with an average out-of-pocket cost of about $100. "And, thanks to preventive care provisions in the Affordable Care Act, many patients can receive BRACAnalysis testing with no out-of-pocket costs," Mr. Meldrum wrote.

Cancer is already a huge part of population health management, and is only project to be even more prominent in the next few years. Today, more than 60 percent of cancer diagnoses affect Medicare beneficiaries, and that number is projected to reach 70 percent by 2030. This growing need for cancer care; hospitals' growing investments in their oncology programs, technology and centers; and increased national attention on the financial costs of cancer all suggest ample opportunity for reform in oncology reimbursement. It seems this challenge can be addressed in ways that are mutually beneficial for providers and payors, allowing the two to genuinely meet one another halfway. Closer collaborations between healthcare providers and new programs like cancer-specific ACOs, bundled payments and clinical protocols have given both sides of the equation sharper tools to reduce variation in cancer care while improving outcomes.

More Articles on Hospitals and Oncology:

Study: More Cancer Specialist Nurses Equal Higher Patient Satisfaction
Study: Cancer Patients 2.65 Times as Likely to Go Bankrupt
Study: 'Decision Aids' Under, Ineffectively Used to Help Patients Choose Cancer Screening Options

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