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Payer-Reform for Physicians — Moving from Volume-Based to Value-Based Reimbursement
Dr Edward J. Benz, CEO of Dana Farber Cancer Institute discusses physician payment reform and its practical implications.
Stakeholders throughout healthcare agree: The prevailing fee-for-service model that is used to reimburse physicians is one of the main factors to blame for runaway healthcare costs that have become the norm in recent years. To reverse this trend, a handful of competing payer-reform models have begun to take shape, and are in various stages of development and piloting.
What’s interesting to note, says Edward J. Benz, Jr., MD, President and CEO of Boston’s Dana Farber Cancer Institute, ahead of his presentation at Oncology & Market Access & Pricing, is that the cost for many services at hospitals have remained fairly stagnant in recent years, but greater utilization of services — and sometimes those that are not strictly clinically indicated — is rampant, and such activities are rewarded under the prevailing fee-for-service model.
“What we need to be doing throughout the healthcare arena, to put it bluntly, is to deliver care under a budget that is linked to clinical outcomes — not piecework effort,” he says.
Today, leading stakeholder groups, including the Centers for Medicare & Medicaid Services (CMS), through its Center for Medicare and Medicaid Innovation (CMMI), and the American Society of Clinical Oncology (ASCO), have proposed competing payment-reform methodologies.
While all of this sounds very promising in theory, it is much easier said than done".
While each approach takes a different form, they share a common goal of trying to move away from the traditional fee-for-service approach, where physicians are reimbursed for every individual service provided, to a more holistic, outcomes-based approach that rewards individual physicians or practices for their ability to meet a series of performance-based metrics or benchmarks (such as adherence to clinical pathways, decreased hospital and emergency room utilization, compensation for enrolling of patients in clinical trials and many more). The goal is to align financial incentives with greater use of data and greater accountability for patient outcomes, as a way to incentivize physician behavior in a sustainable way that reduces overall treatment costs.
“While all of this sounds very promising in theory, it is much easier said than done,” says Benz. One of the particular challenges associated with these newer reimbursement methodologies is that the chosen quality metrics must be relevant for the types of cancer and cancer-care setting, and must be practically attainable within the sphere of influence of the treating physicians.
Competing program designs
Today several competing methodologies are being investigated and debated for physician payment reform, primarily:
- The Accountable Care Organization (ACO) model. Under this rubric, discrete physician-led ACOs or hospital-led ACOs create a variety of contractual arrangements with different payers (to define specific financial and clinical deliverables), and agree to provide healthcare services to a defined population of patients according to some pre-defined quality benchmarks.
- The use of regular, bundled payments. Using this approach, the physician or practice would receive regular, bundled payments from insurers when they are able to meet defined quality metrics and benchmarks that are spelled out by the program. This approach not only provides a steady income stream and reduces the pressure to bill by the service, but also recognizes that many types of administrative and quality-improvement services that are already routinely performed (particularly in oncology), typically go uncompensated under the current fee-for-service approach (or are indirectly subsidized by profit margins for oncology drugs dispensed and administered through the practice’s buy-and-bill model). These include complex prior authorization requirements associated with many specialty drugs and patient-support services aimed at improving the patient’s adherence to therapy.
- A model based on “episodes of care.” This approach defines financial and performance accountability metrics for “six-month episodes of care” and aims to provide a holistic way to reimburse physicians for all of the care the patient receives during the course of treatment for a specific condition, medical event, or chronic illness (for instance, a pregnancy, a hip or knee replacement, a heart attack, specific types of cancer treatment and so on). Proponents argue that giving physicians a fixed payment over a defined time period (essentially fixing an episode payment budget) give them an incentive to become more efficient and more outcomes-oriented when making treatment decisions.
While it is unlikely that a single, consensus model will ever emerge, the existence of parallel payer-reform models will likely put added stress on providers, and it is very hard to sustain the goals of consistent, quality care with this type of disruption”, says Benz.
He believes that the competing requirements, incentives, and logistical, data-collection and reporting requirements vary enough from one program to the next that providers will end up in a perpetual state of cognitive dissonance,” where the next patient to walk through the door will incur a different set of clinical and financial considerations than the one in the room right now.”
“These competing payment-reform models also call for an enormous amount of infrastructure and overhead to collect and report the dizzying amount of metrics and benchmarking data that will be required — more than most individual practitioners and smaller practices can reasonably handle,” says Benz. “As a result, these changes will likely end up forcing many sole practitioners and small practices to become part of a larger, multi-specialty healthcare centers with more corporate structure. Is this what we really want?”
“The cost of compliance will be enormous and somewhere these costs must be reflected,” says Benz. “As a result, we may see short-term costs going up before they go down, or we may see practices fail, but people must take into account how costly it is to transition from one set of financial rules of engagement to another.”
Payment reform based on bundled payments and episodes of care is driving us more toward dataset-driven, evidence-based medicine that reflects research carried out on broad, heterogeneous patient populations, and this is creating an inherent disconnect".
In general, Benz feels an approach built on “episodes-of-care” payment methodology “seems like the best approach for the reimbursement of medical oncology services,” as long as relevant, evidence-based concepts and specific language can be developed to identify the appropriate standard of practice for different types of cancer (breast, colon, lung etc.), to define when to use second- or third-line therapy, to identify relevant surrogate markers for quality, and so on.
“One of the challenges is that science is driving us more and more toward personalized clinical and epidemiology-based cancer care,” says Benz, as biomarker-driven diagnosis and treatment protocols become more widely used.
“Payment reform based on bundled payments and episodes of care is driving us more toward dataset-driven, evidence-based medicine that reflects research carried out on broad, heterogeneous patient populations, and this is creating an inherent disconnect.” says Benz.
These new initiatives also shift a lot more risk to care providers and oncology practices. For instance, all have a strong focus on patient outcomes as a key quality metric, yet it is widely recognized that many health outcomes are closely dependent on patient behavior and choices (with regard to drug adherence and proper management of other co-morbidities), and these factors are often beyond the control of physicians.
Meanwhile, Benz notes that “while certain quality metrics in healthcare— such as time to first appointment, use of anti-emetics, management of infections, management of ER and hospital re-admissions — are easy to track, relevant quality metrics in oncology are often harder to identify,” says Benz.
I think overall survival will remain an accepted proxy in oncology, but it is fair only if looked at in a very nuanced and sophisticated way – which is not the way it’s done now".
For instance, “overall survival may not really be a realistic metric for all types of cancer or all types of oncology practices,” notes Benz. “Because we [Dana Farber] are a large, academic, cancer-care setting, we treat a disproportionate number of patients with complex hematologic malignancies (such as leukemia),and a lot of late-stage patients with complex, late-stage cancer types (such as glioblastoma, pancreatic cancer, lung cancer and others) for whom earlier treatment option have already failed, and these patients tend to have poor survival rates. By comparison, other practices may focus on, say, breast cancer, which tend to have greater success with earlier detection and greater survival rates.”
“I think overall survival will remain an accepted proxy in oncology, but it is fair only if looked at in a very nuanced and sophisticated way – which is not the way it’s done now,” says Benz.
Meanwhile, the area of better end-of-life planning and palliative care still has great untapped potential, in terms of being able to help move the needle in reducing healthcare costs, particularly in oncology. “There can be no meaningful reform without a strong focus on end-of-life planning and care, since this is where a disproportionate amount of healthcare resources are spent,” says Benz.
“We know that if you include a palliative care specialist in the oncology care team, outcomes will be better from the perspective of greater patient satisfaction, improved quality-of-life scores, lower overall cost of care, great reductions in futile or inappropriate end-of-life treatments, says Benz.“And it’s not uncommon for patient survival to be a little bit longer, because more judicious use of futile toxic therapies toward the end of life means these patients will not risk being harmed by toxic treatments that cannot help them.”
However, with regard to how much formal end-of-life protocols can be institutionalized, Benz says: “The politics of fear related to the so-called ‘death panels’ are dicey.”
“I’m skeptical that anyone will be willing to provide explicit, institutionalized incentives or disincentives around preparing people for death. Nonetheless, insurance companies may try to get there by just by saying, essentially, one metric of your success under this arrangement is how much are you spending on treatment during the last period of life (in terms of weeks or months), notes Benz. “Such a requirement would then drive many practitioners to go with a co-care model that includes a palliative care specialist to help manage the inevitable end-of-life issues.”
Dr. Benz will be a keynote speaker and panelist at eyeforpharma’s 6th Oncology Market Access & Pricing Summit, Boston, June 15–16, in the session on Stakeholders: What Managed Care "Cares" about. For more information, click here.
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