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Bundled payments cut cancer costs by 34% says UnitedHealthcare

By Jennifer Bresnick

- Up-front payments that cover an entire “episode of care” may be the key to reducing waste and containing the quickly expanding costs associated with cancer, says a new study by UnitedHealthcare published this week in the Journal of Oncology Practice.  By providing oncologists with a pre-determined payment for certain common cancers, the payer says it was able to reduce costs by more than one third while maintaining the same level of care and same patient outcomes.  The three-year study hopes to prove that novel payment strategies can produce real-life savings as providers and payers both search for ways to improve the broken reimbursement system.

The National Cancer Institute pegged cancer care costs at $124.6 billion in 2010, but that number is slated to explode to $207 billion by 2020.  Costs related to cancer care account for 11% of all UnitedHealthcare’s commercial health plan spend, giving the national payer a significant incentive to reduce spending quickly.

After enlisting the help of five oncology practices to develop a system of 60 quality measures by which to judge the effect of bundled payments, the pilot was deployed to 810 patients with breast, lung, and colon cancers.  The research team evaluated outcomes and quality based on metrics such as emergency room visits, side effects, complications, and ultimate health outcomes, finding no difference between the bundled payment group and a group of physicians who were traditionally paid.

“The study, evaluating how physicians might be rewarded for improving clinical outcomes and reducing treatment costs rather than paying them based on the number of drugs administered to treat cancer, demonstrated a significant reduction in total costs for medical care without affecting the quality of care,” said Lee Newcomer, MD, senior vice president of oncology at UnitedHealthcare, one of the article’s authors. “These new payment models benefit patients, doctors, payers and the entire health system, and are particularly important as the nation faces ever-increasing health care costs.”

One of the primary aims of the study was to examine how such up-front, standardized payments can reduce the pull of big pharma on the expense and selection of cancer drugs.  With a payment already in hand before the drugs were chosen or administered, physicians no longer had an incentive to use more of a certain company’s product, severing the link between controversial pharmaceutical company tactics and clinical decision making.  Unlike a similar experiment conducted by WellPoint, UnitedHealthcare played no role in deciding which treatment plans the oncologists followed, but did provide an additional chance for increased payments based on improved outcomes.

The data suggested to researchers that a reduction in the frequency of hospitalizations was primarily responsible for the decrease in costs, although the project was not designed to discover the specific methods of cost reduction.

“The episode payment project yielded significant savings for the treatment of cancer patients without any measurable effect on the health outcomes for patients,” said Dr. Bruce Gould, Medical Director of the Northwest Georgia Oncology Center, one of the five providers participating in the pilot. “The health care community needs to embrace new approaches to payment if we want to ensure the sustainability of our health care system for future generations.”

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