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Payer Trends in Oncology: Challenges and Solutions

TOP - Special Issue May 2012, Vol 5, No 3 published on May 24, 2012 in Conference Correspondent

The need to optimize the treatment of patients with cancer while using healthcare resources wisely—in other words, providing “value-based cancer care”—is not a topic of debate, but how to achieve this pressing goal is far from clear. In a panel discussion during the Association for Value-Based Cancer Care’s Second Annual Conference, held in Houston, Texas, strategists from the payer side of the issue discussed the current trends and the challenges they are facing.

Burt Zweigenhaft, BS, President and Chief Executive Officer of OncoMed, Great Neck, New York, who led the discussion, noted that the rising cost of cancer care is clearly the trigger point for change. “The cost curve is unsustainable. Who will win and who will lose? Clearly, there are realignments.”

Ira M. Klein, MD, MBA, Chief of Staff to the Chief Medical Officer at Aetna Oncology Strategy, New York, added, “We get feedback from our different customers as to what they want, from the self-insured employers to the small businesses down to the individual in the market. And the unifying theme is that they cannot sustain any more cost.”

Employers Are Confused

Employers may be steadily downsizing their benefits, but this does not mean they do so without pain, participants noted. “Employers are more paternalistic than one would think. They are concerned about the care their employees are getting,” said Klein. “They want benefit designs that do not deny patients access to essential services, but they want these to be acquired at the most favorable unit price. Cost is a very big factor to them.”

Maria Lopes, MD, MS, Chief Medical Officer for AMC Health, Cresskill, New Jersey, agreed. “Employers are concerned about cost and about what is happening in the marketplace, and they are looking to payers for solutions.”

Employers clearly do not understand why costs are so high, added Winston Wong, PharmD, Associate Vice President of Pharmacy Management with CareFirst BlueCross BlueShield in Maryland. “The employers ask their consultants. The consultants come to us because they think pharmacy is the silver bullet. When you look at it from the employer and consultant standpoints, you see there is not much understanding about what is driving the numbers,” he said.

Drug Costs: The Big Bugaboo

The exorbitant cost of new treatments clearly contributes to the crisis in paying for cancer care, and payers’ hands are relatively tied to do much about this, the panelists said.

“We know drugs are the biggest part of the escalation,” observed Zweigenhaft, and John Fox, MD, MHA, Associate Vice President of Medical Affairs for Priority Health, Grand Rapids, Michigan, proposed 2 main reasons for this.

“Number one, we do not have the wherewithal or interest in the public domain to say that society will not pay for a cancer drug because it is too expensive,” Fox offered. “Number two, there are state mandates to cover expensive drugs, and the drug companies have the power to set the price of the drug. We cannot control these prices, yet that is where the greatest cost is.

"Fox contrasted the system in the United States with that of the United Kingdom, which does consider the cost of a drug when deciding its fate. “In the United Kingdom, they take the 2 independent variables, which are outcomes established through clinical trials and willingness to pay, and that defines the dependent variable, which is the cost of the drug,” he said. “In this country, the manufacturer sets the cost of the drug…. The conundrum is that the pharmaceutical industry has a responsibility to its investors and the innovators have to recoup their investments, yet the people who pay for that are increasingly unable to do so.”

Although discussions about reducing emergency department visits and hospitalizations as a cost-savings approach have merit, they stem merely from the fact that these are “things we can control,” Fox said. “The reality is that until we find a way to provide more rationality around our drug reimbursements, I do not know that there is a solution.”

Keeping Oncology Community-Based

Payers indicated and studies have shown that cancer care is more affordable when delivered in the community rather than the hospital setting; however, economic factors are steadily threatening the viability of this site of care, because community practices are being sold or absorbed by hospitals, or are merely closing.

This trend worries Jeffrey A. Scott, MD, Senior Vice President and General Manager for P4 Healthcare Cardinal Health Specialty Solutions. “What will it take for this to stop?” he questioned. “When will health plans incentivize doctors to stay out of the hospital? We know the lowest cost comes from treating patients in the community, but how do we drive this?”

Zweigenhaft noted that the “shift to a hospital base” is a universal concern in the payer community, because this essentially doubles the cost of delivering cancer care, with little or no improvement in outcomes. Panelists agreed that site of service is an important issue.

Part of the lure of hospital-based care, as Zweigenhaft put it, is the 340B Drug Pricing Program, which limits the cost of covered outpatient drugs to certain federal grantees, federally qualified health center look-alikes, and qualified hospitals. Participation in the program results in savings estimated to be 20% to 50% of the cost of pharmaceuticals, which naturally appeals to providers. According to Zweigenhaft, the pitch made by hospital representatives to physician groups is the opportunity to share in the substantial additional revenue afforded through 340B drug pricing.

Scott agreed that 340B pricing is “clearly a driver for getting new doctors into the hospital,” and part of the reason why struggling community practices view the hospital system as “the savior.”

What it will take to strengthen community oncology practices is not completely clear, but Mona M. Chitre, PharmD, CGP, Director of Clinical Services, Strategy and Policy for Excellus BlueCross Blue Shield, FLRx Pharmacy Management, Rochester, New York, said helping them maintain “cost neutrality” is important. Her company’s goals are to create innovative programs to pay for patient management, help patients avoid emergency department visits, and aid clinicians in reducing other unnecessary services.

Guiding Physicians to Best Practices

Value in cancer care, however, is not only about cost but also about quality, and the 2 components are necessary for optimizing value while maintaining good outcomes, the panel agreed. Lopes suggested that the concept of value must be aligned with an appropriate outcome, and this can be difficult to determine.

Scott added that better measures are needed to define quality outcomes, and that there is increasing recognition that it is “total cost of care” that matters most—which includes reductions in downstream costs and returning patients to work.

Klein agreed that benefits programs cannot be designed simply on the basis of cost. “We want quality first, then we deliver on cost,” he said. Scott added, “There is no question that good, quality care is already being provided, but it comes down to how to maintain that quality at a lower cost. That is the big discussion we have with providers.”

Standardization is an important part of this strategy, typically via guidelines and clinical pathways. “We found that by more or less standardizing treatments in the program we have with community oncologists, we take out variability and have a gross savings of about 13%,” Wong reported. “These savings will be shared with the community oncologists as an effort to maintain their margins and to be an incentive to sustain their community practices.”

Moving from branded to generic products has also been a big cost-saver, and reducing emergency department visits and hospitalization rates by 4% has produced additional savings. “We know the savings are there,” he said.

According to Klein, this works best when providers are in the driver’s seat. “We delegate decision-making to physician groups and allow them to choose their pathways. You get higher quality and lower costs because you give control and power to the providers to use what they are comfortable with,” he said. Scott suggested that pathways work best when they are “narrow,” which is what P4 attempts to do with providers. “We try to neutralize the name of the drugs so physicians are free to choose a regimen based on what is best for the patient and separate from the economics of it. We have demonstrated in 10 different markets that you can use consensus to drive a narrow set of pathways, and it works, although it may not be the long-term answer.”

Lopes added that there is a need to do more to aid physicians in decision-making. “We want to align incentives,” she said, emphasizing that healthy collaboration is critical to success. “We will not win without good partnerships with our treating providers.”

Need to Involve the Patient

Central to any conversation about cancer care should be the patient. They should also become more active participants in the quest for value, and there is room for improvement in this area, the panel pointed out.

“The ‘value proposition’ has to be considered at the patient level,” said Chitre. New York State now has chemotherapy parity. “Patients will not pay any differential for generic versus branded drugs, so the ‘value discussion’ with the patient is actually absent,” she noted. “If a drug is indicated or listed as 2A or 2B in the Compendia, it is covered and at a high level. There is very little patient out-of-pocket expense, and therefore very little driving our members to ask ‘value questions’ of their providers.”

She observed, however, that the trend toward high-deductible premiums is beginning to alter how patients talk about value to their providers.

Wong reported that CareFirst programs are beginning to integrate oncology with primary care through the patient-centered medical home model, and this is helping to steer care in the direction of value. “These 2 specialties are collaborating. Primary care is directing patients to oncology practices they perceive will provide the best quality and value,” he said (see an interview with Wong below).

Ultimately, what emerges as the picture of value-based cancer care must be patient-centered, the panel agreed. A “fully engaged” patient is one who understands the treatment scenario and determines what is most important to him or her, said Fox.

This is only done when physicians have time for it, added Klein. “If we could get physicians to spend more time talking to patients, all our costs would go down, because the patient would feel more empowered to do the right thing,” he maintained. “Comparatively speaking, physician labor time is cheap. The cost-over-quality balance must hierarchically satisfy all stakeholders as equitably as possible. We have to manage expectations. We cannot move cancer care forward until we change society’s perceptions.”

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Last modified: July 22, 2021