Impact on Oncology Practices of Including Drug Costs in Bundled Payments.

INTRODUCTION: This analysis evaluates the impact of bundling drug costs into a hypothetic bundled payment. METHODS: An economic model was created for patient vignettes from: advanced-stage III colon cancer and metastatic non-small-cell lung cancer. First quarter 2016 Medicare reimbursement rates were used to calculate the average fee-for-service (FFS) reimbursement for these vignettes. The probabilistic risk faced by practices was captured by the type of patients seen in practices and randomly assigned in a Monte Carlo simulation on the basis of the given distribution of patient types within each cancer. Simulations were replicated 1,000 times. The impact of bundled payments that include drug costs for various practice sizes and cancer types was quantified as the probability of incurring a loss at four magnitudes: any loss, > 10%, > 20%, or > 30%. A loss was defined as receiving revenue from the bundle that was less than what the practice would have received under FFS; the probability of loss was calculated on the basis of the number of times a practice reported a loss among the 1,000 simulations. RESULTS: Practices that treat a substantial proportion of patients with complex disease compared with the average patient in the bundle would have revenue well below that expected from FFS. Practices that treat a disproportionate share of patients with less complex disease, as compared with the average patient in the bundle, would have revenue well above the revenue under FFS. Overall, bundled payments put practices at greater risk than FFS because their patient case mix could greatly skew financial performance. CONCLUSION: Including drug costs in a bundle is subject to the uncontrollable probabilistic risk of patient case mixes.

Community oncology in an era of payment reform.

Patients and payers (government and private) are frustrated with the fee-for-service system (FFS) of payment for outpatient health services. FFS rewards volume and highly valued services, including expensive diagnostics and therapeutics, over lesser valued cognitive services. Proposed payment schemes would incent collaboration and coordination of care among providers and reward quality. In oncology, new payment schemes must address the high costs of all services, particularly drugs, while preserving the robust distribution of sites of service available to patients in the United States. Information technology and personalized cancer care are changing the practice of oncology. Twenty-first century oncology will require increasing cognitive work and shared decision making, both of which are not well regarded in the FFS model. A high proportion of health care dollars are consumed in the final months of life. Effective delivery of palliative and end-of-life care must be addressed by practice and by new models of payment. Value-based reimbursement schemes will require oncology practices to change how they are structured. Lessons drawn from the principles of primary care's Patient Centered Medical Home (PCMH) will help oncology practice to prepare for new schemes. PCMH principles place a premium on proactively addressing toxicities of therapies, coordinating care with other providers, and engaging patients in shared decision making, supporting the ideal of value defined in the triple aim-to measurably improve patient experience and quality of care at less cost. Payment reform will be disruptive to all. Oncology must be engaged in policy discussions and guide rational shifts in priorities defined by new payment models.

Understanding and surviving the transition to value-based oncology.

This paper and the three presentations it supports are drawn from the theme of the 2012 Cancer Center Business Summit (CCBS): "Transitioning to Value-Based Oncology: Strategies to Survive and Thrive." The CCBS is a forum on oncology business innovation, and the principal question the organizers address each year is "What are the creative, innovative, and best business models and practices that are being conceived or piloted today that may provide a responsible and sustainable platform for the delivery of cancer care tomorrow?" At this moment in health care-when so much is in flux and new business models and solutions abound-the oncology sector has a solemn responsibility: to forge the business models and relationships that will help to define a new cancer care value proposition and a sustainable health care system of tomorrow for the benefit of the patients it serves to get it "right."