Cancer: Cost and quality

How cancer reimbursement reform could boost or inhibit drug use

Early data from the first of several U.S. experiments with cancer payment reform offer the tantalizing possibility that drug companies could actually benefit from schemes designed to reward oncologists for outcomes as well as cost reductions. However, the first pilot - published in July by UnitedHealth Group Inc. - was too small to draw firm conclusions about drug utilization. And not all the other experiments that are under way or in the planning stages include both outcome and cost metrics in their calculations of reimbursement.

The experiments now in progress or on the drawing board take different routes to physician reimbursement reform, such as bundled payments covering drugs and services, or treatment pathways that require adherence to preferred regimens. Those differences aside, they all seek to reduce costs without sacrificing the quality of care.

All also seek to remove drug price from the choice of treatment, based on a long-standing concern that the current buy-and-bill reimbursement model encourages doctors to prescribe high-cost IV drugs. Under buy-and-bill, doctors are reimbursed for infused drugs at the average sales price (ASP) plus 6%.

UnitedHealth's United Healthcare unit was the first to report results. In a pilot that began in 2009, five oncology practices were reimbursed a flat fee covering both physician services and infused drugs for breast, colon and lung cancer.

Physicians who improved overall survival compared to a baseline threshold received a larger payment.

The insurer reported that total healthcare costs were reduced by $33 million (34%) compared with a control group. But drug spending increased by $13 million (179%) vs. the control.

UHC said the total reductions were likely driven by decreases in hospitalizations and therapeutic radiology. However, the payer was uncertain what drove the drug spending increase.

To understand the drivers, UHC plans to test the bundled model across a larger swath of physician practices and cancer indications in the coming year.

Meanwhile, CMS's

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