Alternative Payment Models in Oncology

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1 Alternative Payment Models in Oncology Prepared for Pharmaceutical Research and Manufacturers of America by Covance Market Access Services Inc. April

2 Agenda Introduction to Alternative Healthcare Payment Methods Accountable Care Organizations (ACOs) Overview of ACOs Commercial ACOs Specialty ACOs Case Study: Florida Blue/Baptist South Florida Health Oncology ACO Bundled Payment Initiatives Overview of Bundled Payment Initiatives Commercial Bundled Payment Initiatives Case Study: UnitedHealthcare Oncology Bundled Payment Initiative Treatment Pathways Overview of Treatment Pathways Case Study: Aetna/Texas Oncology Treatment Pathway Pilot Program Patient-Centered Medical Homes (PCMHs) Overview of PCMHs Case Study: Consultants in Medical Oncology and Hematology Key Takeaways 2

3 Introduction to Alternative Healthcare Payment Models 3

4 Objective By attending this presentation, participants will gain an enhanced understanding of alternative healthcare payment models and their implications for oncology stakeholders. 4

5 The Evolution of Integrated Healthcare Delivery There has been a growing shift in healthcare towards service delivery models emphasizing cost containment, integrated care, and quality of care improvement. Some Bundled Services Payment Affected by Quality Fee-For-Service Model Integrated Model Care Coordination Focus on Outcomes 5

6 Accountable Care Organizations (ACOs) Overview of ACOs Commercial ACOs Specialty ACOs Case Study: Florida Blue/Baptist South Florida Health Oncology ACO 6

7 What is an Accountable Care Organization? An ACO is defined as a group of doctors, hospitals, and other healthcare providers that join together with the common goals of coordinating care, cutting costs, and improving quality of care for patients. 7

8 Types of ACOs Medicare Shared Savings Program (MSSP) Coordinated care for FFS beneficiaries 343 ACO participants Savings Only, or Shared Savings and Losses Evaluated on 33 Quality Performance Measures Advance Payment model Commercial ACOs Integrated care arrangements between commercial payers and provider networks Over 150 commercial ACOs Less comprehensive policies and payment mechanisms as compared to Medicare ACOs Pioneer ACOs (Medicare) Organizations experienced in coordinating care 23 ACO participants Evaluated on same performance measures as MSSP Higher levels of risk/reward as compared to MSSP Specialty ACOs Provider-payer accountable care groups with a specific disease or patient demographic focus Include oncology ACOs, pediatric ACOs, and ESRD ACOs Most oncology-specific ACOs are commercial/specialty ACOs. 8

9 Accountable Care Organizations (ACOs) Overview of ACOs Commercial ACOs Specialty ACOs Case Study: Florida Blue/Baptist South Florida Health Oncology ACO 9

10 Commercial ACOs A commercial ACO is a partnership between a commercial insurer and a provider network that provides an integrated delivery system through a shared savings model. Two of the initial commercial ACOs date back to 2009, with the Alternative Quality Contract and Brookings-Dartmouth ACO Pilot program. Currently, there are over 150 commercial ACOs. Performance is measured by efforts to improve quality, cost efficiency, patient experience, and ensuring that care is delivered in the right setting. 10

11 The Growth of Commercial ACOs There is a continued rise in the growth of commercial ACOs. Many of the top private insurers are participating in this growing trend. Anthem Blue Cross Collaborates with Sharp s Medical Groups on New Program for San Diego PPO Plan Members 11

12 ACO Distribution by State Most ACOs are concentrated in urban, metropolitan areas. WA VT ME CA OR NV ID AZ UT MT WY NM CO ND SD NE KS OK MN IA MO AR WI IL MS MI OH IN KY TN AL WV GA PA VA NC SC NY NH MA RI CT NJ DE MD DC AK HI TX LA 20+ ACOs ACOs 6-9 ACOs 0-5 ACOs Source: Map data retrieved from HealthQuest Publishers. ACO Directory Current as of February 2013 and includes both public and commercial ACOs. 12 FL

13 Commercial ACO Payment Mechanisms Many private payer ACOs utilize a shared savings approach, in that the ACO is eligible to receive a share of the cost savings it produces. One distinguishing factor between commercial ACOs and Medicare ACOs is that commercial ACOs have greater flexibility in designing accountable care contracts. Commercial ACO models usually include the following components: Continuous care through an integrated delivery system, Substantial performance measurement, Provider-payer contract incorporating budget planning/shared savings distribution, and Navigation of legal and contractual arrangements among all entities. Contract designs can include a wide spectrum of arrangements ranging from full capitation to pay-for-performance: Full/partial capitation Bundled payments Retainer agreements Payer subsidies Pay-forperformance 13

14 Accountable Care Organizations (ACOs) Overview of ACOs Commercial ACOs Specialty ACOs Case Study: Florida Blue/Baptist South Florida Health Oncology ACO 14

15 Specialty ACOs Specialty ACOs are provider-payer accountable care groups with a specific disease or patient demographic focus. Specialty ACOs may include commercial or public payer partnerships; currently, Medicare does not have an oncology ACO. Specialty ACOs focus on high cost, chronic illnesses, such as oncology, chronic kidney disease, and endstage renal disease (ESRD). One of the key differentiators of specialty ACOs is the significant focus on evidence-based care; this is especially true with an oncology ACO. 15

16 Accountable Care Organizations (ACOs) Overview of ACOs Commercial ACOs Specialty ACOs Case Study: Florida Blue/Baptist South Florida Health Oncology ACO 16

17 Case Study: Florida Blue/Baptist South Florida Health Oncology ACO In May 2012, Florida Blue (which includes Blue Cross and Blue Shield of Florida) announced an agreement with Baptist Health South Florida and Advanced Medical Specialties, which provides oncology services in Miami, to form an oncology ACO. Approximately 220 patients were initially attributed to the ACO, with a total cost of care in the baseline year of $23 million, or about $102,300 per member. Florida Blue has declined to provide specifics about how it will reimburse the oncology ACO or reward providers for cost and quality improvement. After analyzing the spending breakdown, the ACO prioritized the following goals to reduce costs: Improving patient education; Achieving adherence to pathways for chemotherapy and supportive care drugs; Decreasing emergency room visits; and Improving end-of-life planning. In addition, an important component of the ACO s strategy was hiring an advanced practice provider who manages all chemotherapy education efforts and inpatient-to-outpatient transitions. 17

18 Case Study: Florida Blue/Baptist South Florida Health Oncology ACO (cont d) As of November 2013, the ACO had successfully achieved savings of more than 2 percent, meaning that AMS and Baptist Health shared in over $250,000 in savings. Drugs and biologicals were one area where the ACO saw a decrease in total spending compared to other expenditures; the ACO reduced the percentage of total spending on injectables from 27 to 22 percent. When asked to provide details on the savings, representatives from the ACO were unable to specifically identify where the savings came from. Baseline (Percent of total spend) First Contract Year (Percent of total spend) Injectables 27% 22% Inpatient 26% 29% Surgery & Anesthesia 15% 19% Radiation Therapy 9% 10% Diagnostics 8% 6% Other 7% 2% Retail Pharmacy 3% 4% E&M 3% 3% Lab/Pathology 1% 2% ED 1% 3% 18

19 Bundled Payment Initiatives Overview of Bundled Payment Initiatives Commercial Bundled Payment Initiatives Case Study: UnitedHealthcare Oncology Bundled Payment Initiative 19

20 What is a Bundled Payment? A bundled payment is a fixed dollar amount that covers a set of services (sometimes across multiple providers), defined as an episode of care, for a defined time period. 20

21 Types of Bundled Payment Initiatives Medicare BPCI Initiative CMS will pay participating providers for a collection of services they deliver to a patient as part of a single episode of care Launched in August 2011, when the CMS Innovation Center released a request for applications Applies only to specific high-cost disease areas (not including oncology) Commercial Bundled Payment Initiatives Approximately 40 commercial payerand employer-based bundled payment initiatives are underway nationally Became more common beginning in 2006, and can be driven by payers, employers, or health systems. Most initiatives apply to orthopedic surgeries and cardiac surgery, but have expanded into other areas as well, including oncology. As Medicare has not launched a bundled payment initiative specific to oncology, the only oncology-specific bundled payment programs currently are run by commercial entities. 21

22 Bundled Payment Initiatives Overview of Bundled Payment Initiatives Commercial Bundled Payment Initiatives Case Study: UnitedHealthcare Oncology Bundled Payment Initiative 22

23 Characteristics of Commercial Bundled Payment Initiatives Commercial payer and employer-based bundling arrangements revolve around an episode of care or specific disease type. Other defining characteristics include: length of bundle period (e.g., 30 days post-surgery, 30 days pre- and 90 days postsurgery, etc.) included services and settings of care, and risk or case-mix adjustment. Although bundled payment episode definitions vary by arrangement, they typically include pre- and post-treatment windows during which providers are responsible for all healthcare costs. Algorithms developed by third parties are often used to help define episodes. Providers are able to manage individual cases however they see fit and often reevaluate treatment pathways or care coordination practices in order to optimize clinical and financial performance. 23

24 What Organizations Participate in Commercial Bundled Payment Initiatives? Payers UnitedHealthcare Aetna Wellpoint Humana Employers Pepsico Walmart Lowe s Boeing Health Systems Cleveland Clinic Geisinger Health System Hoag Orthopedic Institute Johns Hopkins Mayo Clinic All four payers have launched oncologyspecific bundled payment initiatives in the last four years 24

25 Bundled Payment Initiatives Overview of Bundled Payment Initiatives Commercial Bundled Payment Initiatives Case Study: UnitedHealthcare Oncology Bundled Payment Initiative 25

26 Case Study: UnitedHealthcare Bundled Payment Case Study In 2010, UnitedHealthcare (UHC) partnered with five oncology groups to provide a single bundled payment for cancer care under a pilot program. The pilot was aimed at reducing overall cost while determining the best treatment practices and improving health outcomes. Treatments for 19 clinical episodes across three types of cancer breast, colon, and lung were evaluated based on medical resource use, including the number of emergency room visits, complications, and side effects. UHC chose these cancer types based on their high prevalence and treatment cost. Each participating group defined the treatment regimen for each clinical episode and was required to adhere to that regimen at least 85 percent of the time. To determine the payment amount for a treatment regimen, UHC assessed (prospectively) the payment the group would have received for the regimen under the FFS methodology and added a case management fee, up to $200. The single payment was made prospectively to the oncology groups. Patient visits were reimbursed at the typical rate, and chemotherapy drugs were reimbursed at the manufacturer s cost. In August 2013, UHC released preliminary findings from the program. 26

27 Case Study: UnitedHealthcare Bundled Payment Case Study (cont d) Early results from the initiative have been mixed, and highlight the challenges associated with bundled payments in oncology. In breast cancer patients for whom the HER2 gene was not over-expressed (top graph), UHC observed cost savings with each bundled episode. However, for patients with over-expressed HER2 (bottom graph), costs for each bundled episode were greater than the national average. The results also showed wide variation in drug costs (blue bar) even with the same regimen, demonstrating that providers lacked tight operational controls over treatment protocols. UHC s electronic medical records were needed to distinguish the patient groups in these two examples, as a typical claims database does not contain sufficiently detailed information about the patient s condition (in this example, HER2 gene expression). UHC has not reported findings on the health outcomes of patients in these pilot programs. 27

28 Treatment Pathways Overview of Treatment Pathways Case Study: Aetna/Texas Oncology Treatment Pathway Pilot Program 28

29 What is a Treatment Pathway? Treatment pathways are evidence-based treatment protocols that are used by payers and clinicians, which emphasize the most costeffective treatment options that have the greatest efficacy and minimize toxicities. 29

30 Objectives of Treatment Pathway Programs In recent years, payers increasingly have relied on the development of treatment pathways in which a standard of care is established for a particular condition or disease state. By establishing a common treatment pathway for all patients, payers are able to reduce the number of approved treatment regimens. Pathways are intended to reduce treatment variation, complications, and the unnecessary use of high-cost drugs. To date, most treatment pathway initiatives have been focused in oncology, with several programs already underway. However, utilization controls have historically served a similar purpose in other therapeutic areas, notably diabetes. Twenty-eight percent of health plans responding to a 2013 survey indicated that they currently utilize oncology clinical pathways; another 50 percent indicated that they would do so within 3 years. According to McKesson, up to 1,500 oncologists are using its oncology pathways. 30

31 Who Develops Treatment Pathways Used By Providers? Providers UnitedHealthcare s oncology bundled payment program allowed provider groups to establish their own treatment pathways. Providers are able to deviate from the treatment pathway if deemed necessary for a particular patient; however, some payer-provider contracts stipulate that providers must achieve a minimum level of adherence (for example, 80%) to the treatment pathway. Payers Payers often base their treatment pathways on treatment guidelines (from clinical groups like the NCCN or ASCO). Third-Party Organizations Pathways developed by P4 Healthcare, Innovent Oncology, and Via Oncology are among the most commonly used. The pathways are developed using a broad set of clinical data and extensive literature citations. All the pathways are fundamentally based on several common treatment elements, namely efficacy, toxicity, and cost. 31

32 Clinical Guidelines vs. Treatment Pathways Personalized Treatment, Customized to Fit the Needs of the Patient TREATMENT OPTION 1 TREATMENT OPTION 2 TREATMENT OPTION 3 TREATMENT OPTION 4 TREATMENT OPTION 5 TREATMENT OPTION 6 Clinical guidelines, such as the NCCN Clinical Practice Guidelines in Oncology, are a map of integrated interventions over time; most guidelines focus on a specific clinical issue, often with an extensive analysis of the available literature. 32

33 Clinical Guidelines vs. Treatment Pathways (cont d) Treatment Pathways Limit Patient Treatment Options TREATMENT OPTION 1 TREATMENT OPTION 2 Pathways are evidence-based treatment protocols, which take cost into account, in addition to efficacy and toxicity. Some providers feel that having to adhere to treatment pathways is limiting. 33

34 Treatment Pathways Overview of Treatment Pathways Case Study: Aetna/Texas Oncology Treatment Pathway Pilot Program 34

35 Case Study: Aetna and Texas Oncology Treatment Pathway Pilot Program Program Parameters In 2010, Aetna and Texas Oncology announced the launch of a pilot study focused on reducing costs and improving outcomes through the use of treatment pathways. Approximately 184 patients, all newly diagnosed with breast, lung, and colon cancers, were treated by Texas Oncology as part of the pilot. Participation in the pilot represented a significant investment in resources by Texas Oncology; oncologists participating in the pilot agreed to: Comply with the treatment pathways developed by the U.S. Oncology Network; Employ nurses to provide clinical support to patients in between treatments and visits; and Counsel patients on end-of-life planning and support. Results Aetna and Texas Oncology did not report outcomes related to patient, caregiver, or stakeholder satisfaction with the program. The initial results of the pilot showed that in the first 12 months of treatment, patients had fewer emergency room visits, fewer inpatient admissions, and fewer inpatient days.* Physicians adhered to the treatment pathways approximately 65% to 72% of the time for patients participating in the pilot. The survival rate of patients in the treatment pathways was no better than patients being treated outside of the treatment pathways. Aetna s preliminary estimate was that the one-year cost for those patients was about 10 percent lower than it would have been for identical patients in the year before the pilot. *Compared with other newly diagnosed cancer patients in Texas. 35

36 Patient-Centered Medical Homes 36

37 The patient-centered medical home (PCMH), also known as a medical home, is another healthcare delivery model focused on improving coordination and quality. A medical home is an arrangement in which healthcare is coordinated by a team of healthcare providers. The goal of most medical home initiatives is to improve patient care and lower costs through centralized coordination of care. Physicians, nurses, and other professionals care for a patient and keep tabs on the patient s condition over time; the team makes sure patients are taking medicines properly and receiving timely preventive care, and that no unnecessary tests are performed. Medical homes use computerized record-keeping to track patients and to watch for trends that might signal the need for new treatments.

38 Case Study: Consultants in Medical Oncology and Hematology Consultants in Medical Oncology and Hematology (CMOH), which provides hematology and oncology care within three health systems in southeastern Pennsylvania, became the first oncology practice in the nation to earn recognition from the National Committee for Quality Assurance (NCQA) in April The model adopted by CMOH promotes partnerships between individual patients and their personal physicians, rather than episodic office visits for patient care. Following the patient s cancer diagnosis, CMOH assumes primary responsibility for the coordination of all related services for patients. Each patient is assigned to a physician-led care team. The physician-led care team is responsible for all stages of cancer treatment, including surgery, radiation therapy, and chemotherapy, as well as the survivorship phase of care. The practice does not assume the management of non-oncologic medical issues from the patient s primary care physician, necessitating the maintenance of communication between the practice and the primary care physician. 38

39 Case Study: Consultants in Medical Oncology and Hematology (cont d) Software and electronic medical records were important to the execution and delivery of CMOH s services. Software was developed to better suit physician, patient, and practice needs to format, standardize, and collect critical patient management and utilization data. In addition to utilizing technological resources and educational programs, CMOH also trained patient navigators to assist patients. Navigator responsibilities include include gathering clinical data, arranging appointments with specialists and primary care physicians, and scheduling all ordered testing. The CMOH patient navigators also connect patients to support services and community resources. 39

40 Case Study: Consultants in Medical Oncology and Hematology (cont d) The number of incoming clinical calls resulting in ER referrals decreased by approximately 50% over a 5-year period. As a result of expanding patient access to the CMOH clinical staff, the number of unscheduled office visits within 24 hours of a clinical call more than doubled during a 5- year period. ER referrals for patients actively on treatment have progressively decreased. The current practice average is less than one ER visit per patient per year. This number compares favorably with ER utilization rates of two per patient per year reported in a large commercially insured population. CMOH documented a 16% reduction in overall hospital admissions in fiscal year 2009, with an additional 9.7% reduction in fiscal year In November 2013, CMOH announced it was partnering with Aetna to expand its services to include additional patients. The model includes using evidence-based decision support, enhanced personalized services, and a realigned payment structure. CMOH will receive money for expanded services it will provide to commercial Aetna members, and Aetna coordinated CMOH's access to an evidence-based decision support tool to reduce variability in cancer care. 40

41 Key Takeaways 41

42 Key Takeaways Given that many alternative payment models in oncology are still in early stages (many are pilot programs with limited scope), it will be important to monitor these models as they continue to evolve. As various types of models are being considered, oncology stakeholders should take advantage of opportunities make their voice heard. Before implementing alternative payment models, payers and employers frequently provide opportunities for stakeholder input, particularly in oncology. As an example, CMS contracted with the MITRE Corporation to identify specialty payment model opportunities for potential pilot programs. MITRE convened several Technical Expert Panels to review and discuss its analysis of different alternative payment models including ACOs, bundled payment initiatives, PCMHs, and treatment pathways for possible oncology-specific pilot programs. CMS is currently reviewing MITRE s analysis and considering its options for an oncology alternative payment pilot. Stakeholders who wish to provide comments regarding the potential pilot programs should contact the Center for Medicare and Medicaid Innovation. 42

43 Questions / Discussion 43

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