Higher Quality, More Affordable
Care for Patients with Cancer

The Need for Payment Reform in Oncology

Payment reform for cancer care is badly needed. National spending on cancer care has doubled in the past decade and is projected to exceed $150 billion by 2020. There are many opportunities to reduce spending that do not require denying patients access to life-saving treatments. For example, many patients experience expensive hospitalizations for side effects of treatment that could have been prevented or addressed more quickly and at lower cost. Also, studies have shown that many patients receive expensive drugs and tests that are not necessary or not appropriate.

The current payment system for cancer care is a barrier to reducing these avoidable costs. Oncologists don't get paid for delivering the kinds of care management and rapid response services that could enable patients to avoid expensive hospitalizations during treatment. In addition, despite the cost and complexity of treating cancer, oncologists get paid very little for the extensive time needed to ensure an accurate diagnosis and to identify the right treatments, and oncology practices don't get paid at all to provide the wide range of education, counselling, and support services patients need when trying to cope with the burdens of cancer and when making tough decisions about what type of treatment to pursue.

From the perspective of purchasers and patients, there is no accountability for costs or quality in the current payment system for cancer care. Oncology practices that deliver low-quality care are paid exactly the same amount as practices that deliver high-quality care, oncology practices are paid for unnecessary services as well as necessary services, and purchasers and payers are expected to pay for expensive emergency room visits, hospitalizations, and other services that could have been avoided through better care.

A Better Way to Pay for Cancer Care

A Better Way to Pay for Cancer Care describes a new Alternative Payment Model for cancer care developed by the American Society of Clinical Oncology that is designed to fix many of the problems with the current payment system. Patient-Centered Oncology Payment (PCOP) would be a win-win-win for patients, payers, and oncology practices by providing significantly higher payments to oncology practices to support improved services for patients, while producing net savings in total cancer spending for payers by eliminating unnecessary or undesirable services for patients.

The PCOP payment system contains all of the four building blocks that are essential to successful payment reform:

• Flexibility in Care Delivery. Under Patient-Centered Oncology Payment, oncology practices will receive additional, bundled payments that provide the flexibility to pay for services whether they are delivered by physicians or non-physicians and whether they are delivered electronically, in the home, or in a physician's office.
• Appropriate Accountability for Spending. Under PCOP, oncology practices would take accountability for helping their patients avoid the need for emergency room visits or hospitalizations during cancer treatment, and they would also be accountable for following accepted guidelines for appropriate treatments and tests.
• Appropriate Accountability for Quality. Under PCOP, oncology practices would also be accountable for delivering high-quality care to their patients, as determined by a range of quality measures specific to the kind of care each patient needs.
• Adequacy of Payment. Under PCOP, oncology practices would receive significant increases in payment, both to fill the big gaps that exist today between payments and the costs of services oncology practices currently deliver and to allow the addition of new services designed to improve care for patients and avoid unnecessary spending. Under PCOP, payments to oncology practices would be higher at the times when patients need more services.

ASCO has estimated that even with higher payments to practices, total spending during chemotherapy treatment would decrease significantly if all oncology practices are paid using PCOP.

The Problems with Shared Savings

Would "shared savings" achieve similar results in a simpler way? For several years, policy-makers and payers have been led to believe that shared savings arrangements represent a quick and easy way to fix the payment system. But because the shared savings approach doesn't actually change the underlying payment system, it doesn't remove the barriers to better care that the current payment system creates. This is a major reason why the Medicare shared savings program has had such a limited impact. Moreover, shared savings adds new undesirable incentives on top of the undesirable incentives that already exist in fee-for-service payment. (See page 6 of A Better Way to Pay for Cancer Care for more details on the problems with shared savings in oncology.)

Medicare's Oncology Payment Model

In February 2015, the Center for Medicare and Medicaid Innovation (CMMI) announced a demonstration payment reform project called the Oncology Care Model (OCM). At first glance, OCM appears similar to PCOP because OCM also provides large, flexible new monthly payments to oncology practices. However, the other aspects of OCM are very different from PCOP and very problematic for patients, oncology practices, and purchasers. (See pages 6-7 of A Better Way to Pay for Cancer Care for more details on the problems with the Medicare Oncology Payment Model.)

Lessons for Other Payment Reforms

The approach ASCO used to develop Patient-Centered Oncology Payment can serve as a template for developing Alternative Payment Models for other types of health problems. In designing a new payment model for cancer care, ASCO asked three basic questions:

• How should high quality care be delivered to patients in the most affordable way?
• What are the barriers in the current payment system that prevent physician practices from implementing that approach to delivering care?
• How can the payment system be changed to remove those barriers, without creating new problems or unnecessarily increasing the administrative burdens on physician practices?

This same approach can be used for any health condition and patient population. Designing an Alternative Payment Model in this way is far more likely to ensure the payment system supports effective patient care than blindly using a generic alternative payment model that still doesn't adequately support the services patients need.