Quality Measures, Pricing, and Policy Challenges in the Oncology Landscape
Hollywood, FL—Seismic shifts in the oncology landscape have led to pricing and policy changes that affect the delivery of quality care in oncology, said Michael N. Dubroff, DO, FACOP, Senior Director, Payer Support for Genentech, who lent his perspective at the Third Annual Conference of the Association for Value-Based Cancer Care.
The oncology landscape is affected by the increasing influence of quality measures, the growing importance of clinical pathways (not yet standardized), comparative effectiveness research and real-world experience, emerging partner policy groups, increase in hospital claims from private payers, declining reimbursements, and sequestration.
Other factors include the emergence of biosimilars, shifting of the cost burden to patients (the driver of this change is yet to be determined), and trends in personalized medicine, which is an important but costly step toward quality. Of the $2.1 billion spent on cancer drug development, approximately $300 million goes toward personalized medicine.
Measuring and Reporting Quality
The measurement of quality has become vital in healthcare. The Institute of Medicine defines quality as the extent to which health services provided to individual patients and to patient populations improve health outcomes. Care should be based on the strongest clinical evidence and provided in a competent manner with good communication and shared decision-making.
As of 2012, the Centers for Medicare & Medicaid Services (CMS) Physician Quality Reporting System (PQRS) contains 225 quality indicators, 24 of which are applicable to oncology. As mandated in the Affordable Care Act, physicians who successfully report on quality measures are eligible for a 0.5% incentive payment. Currently, it is a volunteer pay-for-reporting system, but a financial disincentive for not participating will soon be added. In 2015, providers’ reimbursement will be docked 1.5% for failure to report on quality, rising to 2% by 2016.
This may be the reason why reporting rates have risen by 50% a year since the program’s inception. PQRS incentive payments grew from $236 million in 2009 to $391 million in 2010.
Has the 340B Program Overreached?
Some of the reasons for the rising costs in oncology are the shift in site of care from community practices to hospitals; the unintentionally broad scope of the 340B drugs program; higher prices for products and services, which is magnified within the hospital setting; and the increasing prevalence of cancer as the population ages.
The number of hospitals taking advantage of the 340B program is increasing, and there are questions as to whether the true purpose of the program is being fulfilled. A disproportionate-share hospital that qualifies for the reduced drug costs under the 340B program must have an 11.75% proportion of inpatient Medicare and Medicaid days. This qualifies the hospital for discounts that are fairly equivalent to Medicaid’s best price in the outpatient setting.
The Threat to Community Practices
The sustainability of community practices is related to economics and to changes in the oncology landscape. The costs of delivering cancer care are accelerating, remuneration is decreasing, and sequestration and changes in average sales price are having an effect.
The Zitter Group examined payer awareness regarding biologics and injectables in fall 2010 and made interesting observations regarding the ability to manage and track costs, cost efficacy, and site-of-care shift. “Most compelling was that 77% of payers perceive that it is not cost-effective to have patients treated in the hospital outpatient setting,” Dr Dubroff said. In addition, 49% of payers in that survey said that the outpatient department provides the poorest treatment efficacy, and 54% said it has the poorest ability to manage or track cost compared with physicians’ offices or home care.
New aspects of Medicare Advantage plans could be good news for community practices. Each year, CMS establishes mandatory and voluntary maximum out-of-pocket limits for these plans. The voluntary limit is lower than the mandatory, and plans may opt for that in return for greater flexibility in cost-sharing for specific services. For 2014, CMS indicates that the voluntary out-of-pocket limit will remain unchanged, and the mandatory limit will increase.
“The voluntary contribution stays the same, at a $3400 out-of-pocket cost, and this allows benefit managers and plans to be flexible with their benefit as long as they meet Medicare requirements for services,” Dr Dubroff said. “The mandatory limit is up to $6700, but it rigidly defines what you can do with patients and services.”
Regarding Medicare Part B cost- sharing requirements for chemotherapy drugs for 2014, CMS has proposed that it be capped at 20%, or $75. This means that any drug that costs more than $375 would be paid directly to the provider, he added.
“That would be remunerated at the sequestration rate, which is 4%, but people wouldn’t be chasing copays. Whether that comes to pass remains to be seen, but technically, it is in the law,” Dr Dubroff said.
Looking ahead, there will be shifts in structures and decision-making among providers, in the role of government and physician decision incentives within the payer community, and in the economics of cancer care for patients.
Dr Dubroff predicted that treatment guidelines, outcomes, and data will become very important to payers and to providers. Pathways will become narrower, protocols will become more refined, and variance will decrease. Government will set and enforce tighter treatment guidelines, and private payers will follow.
“Buy-and-bill” will disappear, Dr Dubroff says, and capitated treatment budgets will emerge for many diseases (although not so soon for oncology). Patients will become more involved in their treatment decisions and disease monitoring as copays increase, but their choices will be more limited. Hospitals and payer systems will gain more control. Industry salespeople will lose access to physicians. Some employers will refer their workers to consumer-directed health plans.
Dr Dubroff anticipated the oncology landscape will be characterized eventually by standardized treatment protocol or pathways for evidence-based decision-making, some type of fee-for-service arrangement, no reference pricing, patients actively involved in treatment selection, and most likely, only a small increase in copays.