Health Policy

Perspective

Improving Outpatient Oncology Practice: Several Steps Into a Long Journey By Rena M. Conti, PhD, and Peter B. Bach, MD University of Chicago, Chicago, IL; and Memorial Sloan Kettering Cancer Center, New York, NY

Practice Selection, or What Are the Real Costs and Profit Centers of These Practices? By divorcing practice profits from administered drugs, implementing pathways, and rewarding physicians for keeping track of total spending, conventional wisdom suggests that the pilot should have led to lower spending on drugs. The opposite occurred. This finding is hard Copyright © 2014 by American Society of Clinical Oncology

to interpret if you presume that the pilot’s interventions occurred in isolation. There are alternative possibilities: perhaps United did not completely separate the profit incentive from the choice of drug under the pilot’s setup, or simply achieving neutrality for patients of one payer was not enough to shift behavior overall. United paid the average sales price of a given chemotherapy administration to prescribing oncologists, under the explicit assumption that this constituted the typical acquisition costs for these practices. In some cases this assumption may have been faulty, as when participating practices could acquire drugs below average acquisition costs (they could still profit), or when they were actually not participating directly in the buying and reselling of drugs (when they were immune to incentives in either direction). Across the practices participating in the United pilot, several were likely obtaining drugs below the average price, including a US Oncology site that purchases drugs exclusively through McKesson (Dayton Physicians) and another practice that dropped out of the pilot when it was acquired. These practices likely already pay some of the lowest acquisition prices for these drugs in the US market. In addition, many outpatient oncology practices, and at least one practice in this pilot (the West Clinic) are affiliated with 340B hospitals. For these practices, the hospital qualifying for 340B acts as the nexus of buy and bill, making the prescribing physicians already divorced from drug prescribing profits (and losses). Taken together, the intent of the pilot’s change in drug prescribing incentives may not match what happened for these organizations. Still pending for future analyses would be information on the infrastructure costs of conducting the pilot. The practices needed staffing and information systems in place to handle the pilot’s requirements for patient registration, data monitoring, and quality reporting. These activities require investment in capital (computers and software) and labor (nurses, accountants, etc). To some extent these should have been netted out of the apparent cost savings of the overall pilot if they were necessary investments to provide the care the pilot required. In other words, the significant savings reported might be a little less after a complete accounting of certain participation-related costs.

Payer Mix and the Strength of the United Pilot’s Incentives The chemotherapy and overall spending outcomes of the pilot are reported for United beneficiaries only. All of the participating practices are large. This has two implications for interpreting the results of the pilot and future reform efforts. First, participating practices likely take care of patients with cancer who are insured by many commercial and government payers, including but not limited to, United. Economic theory and empirical evi-

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The buy and bill system for physician-administered cancer drugs is not working. Purchasing chemotherapy and using it to treat patients remains the critical component of outpatient oncology practice costs and profits.1,2 Physicians in small practices are facing radical capital outlays and highly compressed profits, leading some to shutter their doors. Hospitals with access to 340B discounts on the acquisition of these drugs are turning large profits, allowing them to purchase community oncology practices and pass on higher reimbursement charges to private insurers.3 Evidence continues to accumulate to support the predictable hypothesis that more profitable drugs are prescribed more frequently, inflating patient and insurer spending.4,5 Underuse and overuse of chemotherapy coexist,6 and measures to track and reward the quality of cancer care delivered in the outpatient setting are still rare.7 Getting rid of the market distortions caused by buy and bill is a priority for oncology payment reform. The United pilot by Newcomer et al8 recently published in Journal of Oncology Practice is the first highly visible effort by a payer to eliminate the distortions of buy and bill from medical oncology care. The focus and approach are laudable, the findings educational. The pilot’s key innovation is the approach to eliminating profit and loss around prescribing drugs by switching to an approximation of cost based reimbursement. The pilot couples this to a separate “profit (or episode) payment,” the size of which is approximated by the average profit for the practice that results from the chemotherapy selection they make, with some rules for recalibrating. Participating practices also agreed to follow treatment pathways in the care of selected categories of patients,9 an approach that has the dual benefit of providing a quality check on care, and a framework for calculating the profit payment. The project has interesting findings, not the least of which was that it was actually executed by an insurer and five practices. It raises several important questions about the feasibility of pursuing payment reform across a number of domains. This is partly related to the fact that any group of five practices will not be representative of all outpatient oncology practices, and partly related to the reality that even as a sizable payer, United insures only a small share of the patients any of these practices treat. From United’s example, we can infer some lessons worth pondering for future reform efforts.

Conti and Bach

What Was the Impact on Care Quality? As the first report from the pilot, the quality component of the project received less treatment than the spending component. Yet the quality innovation that was incorporated into the pilot should not be ignored. Today, a variety of efforts are underway to define metrics for assessing cancer treatment quality delivered in the outpatient setting; likewise, a number of companies have moved into the space by anchoring payment arrangements to contracts over care pathways. In United’s pilot and these other efforts, quality monitoring begins with two innovations: categorizing patients into similar groups on the basis of their disease diagnosis, stage, line of therapy, comorbidities, and indicated treatment, and recording and reporting those groupings. This simple idea is necessary for the construction of the denominator of any quality measure. This simple idea should also be at the core of all oncology care, but is not currently. In 2006, the Centers for Medicare and Medicaid Services instituted codes under its demonstration authority that could categorize patients with cancer insured by Medicare, but that program ended.13 United efforts, as well as similar efforts by WellPoint, National Comprehensive Cancer Network, and others hint strongly at a need for a more universal and transparent coding system that oncologists could use in the care of their patients. Today there is no natural champion of such an approach, and the programs listed above are all separate and in some cases proprietary. The United project emphasizes

the need to take on this challenge in a coordinated fashion. Consequently, one promise of the United effort is the coordinated definition of patient classifications for use in future quality of care improvement efforts by professional societies and commercial and public payers.

Where to From Here? The issues we raise do not take away from the importance of what United and these brave practices accomplished. They simply emphasize the need to fully understand the organizational structures, existing assets, insurance mix, and other incentives of the participating practices for interpreting the pilot’s results and other future reform efforts. Our expectation is that in a multipayer environment, it will be difficult for a single, even dominant, payer to fundamentally alter cancer care because of their limited scope of influence. As a consequence, multiple payers will need to collaborate with many practices. The development and testing of rigorous quality metrics based on a widely accepted and used categorization framework for outpatient oncology care must go hand in hand with these other efforts. Acknowledgment Supported by National Cancer Institute Award K07-CA138906 (R.M.C.). Authors’ Disclosures of Potential Conflicts of Interest Disclosures provided by the authors are available with this article at jop.ascopubs.org.

Author Contributions Conception and design: All authors Administrative support: Peter B. Bach Collection and assembly of data: All authors Data analysis and interpretation: Peter B. Bach Manuscript writing: All authors Final approval of manuscript: All authors Corresponding author: Peter B. Bach, MD, Memorial Sloan Kettering Cancer Center, 1275 York Ave, New York, NY 10065; e-mail: bachp@ mskcc.org.

DOI: 10.1200/JOP.2014.000604; published online ahead of print at jop.ascopubs.org on October 14, 2014.

References 1. Towle EL, Barr TR, Senese JL: National oncology practice benchmark, 2012 report on 2011 data. J Oncol Pract 8:51s-70s, 2012 2. Towle EL, Barr TR, Senese JL: The national practice benchmark for oncology, 2013 Report on 2012 Data. J Oncol Pract 9:20s-38s, 2013 (suppl) 3. Conti RM, Bach PB: Cost consequences of the 340B drug discount program. JAMA. 309:1995-1996, 2013 4. Malin JL, Weeks JC, Potosky AL, et al: Medical oncologists’ perceptions of financial incentives in cancer care. J Clin Oncol 31:530-535, 2013 5. Jacobson M, Chang TY, Newhouse J, et al: Physician agency and competition: Evidence from a major change to medicare chemotherapy reimbursement policy. NBER Working Paper Series. The National Bureau of Economic Research, 2013. www.nber.org.proxy.uchicago.edu/papers/w19247 6. Institute of Medicine: Delivering High Quality Cancer Care: Charting a New Course for a System in Crisis. http://books.nap.edu/openbook.php?record_id⫽18359, last accessed August 8, 2014, 2013.

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7. Goldberg P, Conti RM: Problems with public reporting of cancer quality outcomes data. J Oncol Pract 10:215-218, 2014 8. Newcomer LN, Gould B, Page RD, et al: Changing physician incentives for affordable, quality cancer care: Results of an episode payment model. J Oncol Pract 10:322-326, 2014 9. Newcomer LN, Perkins MR, Donelan SA: Tying payment incentives to quality measurement. J Oncol Pract 9:119-121, 2013 10. McGuire TG, Pauly MV: Physician response to fee changes with multiple payers. J Health Econ 10:385-410, 1991 11. Tai-Seale M, Rice TH, Stearns SC: Volume responses to medicare payment reductions with multiple payers: A test of the McGuire-Pauly model. Health Econ 7:199-219, 1998 12. White C: Cutting Medicare hospital prices leads to a spillover reduction in hospital discharges for the nonelderly. Health Serv Res doi: 10.1111/1475-6773.12183 13. Bach PB: Commentary: Medicare’s 2006 Oncology Demonstration Project: Lost in translation? J Oncol Pract 6:59-60, 2010

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dence suggest that physician practice response to alterations in reimbursement incentives is highly dependent on payer mix.10 In other words, it is entirely possible that practices responded to the United pilot incentives differently depending on whether their annual patient cohort was heavily insured by United or not. Future efforts might also document whether the United experiment had positive or negative impacts on practice organization and treatment decisions across all patients cared for by the participating practices.11,12 So-called spillover effects can also work in the opposite direction: the oncologists participating in the United pilot might have also been subject to other patient monitoring and quality of care incentives through other insurers or their own general practice policies. In both cases, understanding the payer mix and other monitoring and incentive programs at the time of the pilot might help clarify some of the findings and help in planning future interventions.

Improving Outpatient Oncology Practice

AUTHORS’ DISCLOSURES OF POTENTIAL CONFLICTS OF INTEREST Improving Outpatient Oncology Practice: Several Steps Into a Long Journey The following represents disclosure information provided by authors of this manuscript. All relationships are considered compensated. Relationships are self-held unless noted. I ⫽ Immediate Family Member, Inst ⫽ My Institution. Relationships may not relate to the subject matter of this manuscript. For more information about ASCO’s conflict of interest policy, please refer to www.asco.org/rwc or jop.ascopubs.org/site/misc/ifc.xhtml. Rena M. Conti No relationship to disclose

Peter B. Bach Consulting or Advisory Role: Foundation Medicine Honoraria: Genetech Downloaded from jop.ascopubs.org on April 9, 2015. For personal use only. No other uses without permission. Copyright © 2014 American Society of Clinical Oncology. All rights reserved.

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Errata

Errata The November 2014 Perspective by Steliga and Dresler entitled, “Fifty Years of Tobacco Control: Is the Glass Half Full or Half Empty?” (J Oncol Pract 10:352-354, 2014), contained errors. The following author contributions were inadvertently omitted: Conception and design: All authors Collection and assembly of data: Matthew A. Steliga

Manuscript writing: All authors Final approval of manuscript: All authors The online version has been corrected in departure from the print.

The November 2014 Perspective by Conti and Bach entitled, “Improving Outpatient Oncology Practice: Several Steps Into a Long Journey” (J Oncol Pract 10:355-356, 2014), contained errors. The following author contributions were inadvertently omitted: Conception and design: All authors Administrative support: Peter B. Bach

Collection and assembly of data: All authors Data analysis and interpretation: Peter B. Bach Manuscript writing: All authors Final approval of manuscript: All authors The online version has been corrected in departure from the print.

The November 2014 Perspective by Polite et al entitled, “Payment for Oncolytics in the United States: A History of Buy and Bill and Proposals for Reform” (J Oncol Pract 10:357-362, 2014), contained errors. The following author contributions were inadvertently omitted: Conception and design: Blase Polite, Jeffery C. Ward, John V. Cox, Roscoe F. Morton, John Hennessy, Rena M. Conti Administrative support: John V. Cox

Collection and assembly of data: Jeffery C. Ward, John V. Cox, Roscoe F. Morton, John Hennessy, Rena M. Conti Data analysis and interpretation: Jeffery C. Ward, John V. Cox, Roscoe F. Morton, John Hennessy, Ray Page, Rena M. Conti Manuscript writing: All authors Final approval of manuscript: All authors The online version has been corrected in departure from the print.

The November 2014 article by Towle et al entitled, “The National Practice Benchmark for Oncology, 2014 Report on 2013 Data” (J Oncol Pract 10:385-406, 2014), contained errors. The following author contributions were inadvertently omitted: Conception and design: All authors Collection and assembly of data: All authors

Data analysis and interpretation: All authors Manuscript writing: All authors Final approval of manuscript: All authors The online version has been corrected in departure from the print.

The November 2014 Perspective by Barr and Towle entitled, “Oncology Practice Trends From the National Practice Benchmark” (J Oncol Pract 10:407-410, 2014), contained errors. The following author contributions were inadvertently omitted: Conception and design: All authors Collection and assembly of data: All authors

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DOI: 10.1200/JOP.2014.00.3160

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Data analysis and interpretation: All authors Manuscript writing: All authors Final approval of manuscript: All authors The online version has been corrected in departure from the print.

DOI: 10.1200/JOP.2014.00.3210

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Improving outpatient oncology practice: several steps into a long journey.

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