Reimbursement Reform in Oncology Must Reward for Quality of Care

Dana Butler

October 2014, Vol 5 , No 8 - Economics of Cancer Care


The current fee-for-service reimbursement model used in oncology has jeopardized value-based cancer care, according to Jeffery Ward, MD, a member of the American Society of Clinical Oncology (ASCO) Workgroup on Payment Reform. He discussed the group’s novel proposal for consolidated cancer care at the Community Oncology Town Hall during the 2014 annual meeting of ASCO.

“Working toward a better payment system for oncology care, instead of just complaining about the one that we have, has been liberating and exhilarating,” said Jeffery Ward, MD, the immediate past chair of ASCO’s Clinical Practice Committee and an oncologist at the Swedish Cancer Institute in Seattle, WA. The workgroup working on the payment reform at ASCO had as its premise the need to hear voices from across the clinical oncology spectrum, with the goal of reaching “a uniform re-formation of oncology care that can be applied to all cancer care settings.”

Fee-for-Service Medicine Has Failed
The focus is on transforming reimbursement in oncology away from the fee-for-service model of paying for each service. “Fee-for-service medicine is a barrier to personalized care. It’s an antiquated reimbursement system that only pays for care when it involves physician ‘touches’ and the infusion of drugs,” Dr Ward said.

Fee-for-service “only pays for some services, failing to reimburse at all for other essential services provided in oncology offices and clinics. It fails to reward decision-making that brings greater quality, efficacy, or value to the care equation, and conversely it incentivizes inefficiency and the overuse of the most expensive services to maximize reimbursed service,” he continued.

Furthermore, fee-for-service medicine takes the focus off the patient and centers on the physician, failing to achieve the personalized care that is the general aim in oncology today.

“It’s time to open the current model to scrutiny, recognize how incongruent it is to the future of cancer care, and replace it,” Dr Ward maintained.

Quality-Based Payment Model
The group explored different concepts for payment reform and ultimately came up with a consolidated payment, patient-centered model that will reward for quality of care.

“We asked our committee members, if you could throw out all you know and start over—and not just tweak a broken system—how would you like to be paid for what you do?” he said. “What we developed has at its core monthly bundled payments that are adjusted for (ie, rewarded for) quality, pathway utilization, resource utilization and clinical trial participation.”

The model does not ignore the importance of drug purchasing, but contains a vehicle for integrating the current ASP (average sales price) + 6% margin into the reimbursement mix, “which will remove the stigma of drug margins from our profession.”

At the model’s core are monthly payments that vary according to the treatment of the patient. These payments are developed by taking the gross revenue for typical clinical services and combining them into a lump sum. “It’s forgetting where the revenue came from, and rearranging it into these payments,” Dr Ward explained.

“We believe ASP + 6% could be folded into this bucket and added to ‘treatment month’ payments once an alternative to buy-and-bill is developed and sufficiently tested,” he said.

The new payments would not track directly with existing Current Procedural Terminology® (CPT®) codes; the new payment system is intended to cover services that are not compensated today. New aggregate revenue would be no less than the aggregate amount of current revenue for typical oncology practices.

The relative sizes of payments would reflect the relative amount of time and cost incurred for the activities in the payment period. These distinct periods include:

  • New patient payments
  • Treatment month payments
  • Active monitoring month payments
  • Transition-of-treatment payments.
These monthly payments would be phased in over time, and some components of fee for service would be continued, such as laboratory tests, imaging, bone marrow biopsy, and transplantation.

Innovation and Flexibility
The adoption of this model should give oncology practices flexibility to build innovative processes of care that will allow them to assume accountability for quality and value of the care they give. Ultimately, the model would also remove the current financial penalty for using lower-cost drugs or for treating with oral drugs. It would also simplify billing by replacing 63 CPT® codes with 9 codes.

The end result should be cost-savings through reductions in the use of the hospital and the emergency department, in testing and surveillance, and in the administration of oncolytics and supportive drugs. Oncologists should be rewarded for participating in care that facilitates these savings.

Dr Ward noted that ASCO is open to changes in this plan. But change in the current system, he reiterated, is needed.