The US Health Care System Should Prepare and Participate in Changing Payment Models

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Single bundle payments may be as effective for treatment, and much less expensive, than fee-for-service programs in health care.
Single bundle payments may be as effective for treatment, and much less expensive, than fee-for-service programs in health care.

The United States health care system must learn to deliver high quality health care at lower costs, or it risks driving up annual health care costs to the equivalent of the average US household income, according to Lee N. Newcomer, MD, senior vice president of oncology and genetics at UnitedHealth care.

“There are many industrial countries like Japan, Germany, or Canada, who are able to produce the same health outcomes that we are in the United States—and in fact most do better—for about half the cost,” Dr Newcomer said. “The United States has to figure out how to take a lot of money out of health care and still get great results.”

One of the methods being tested to reduce health care costs throughout the world is a system of “bundled payments,” which are single payments for an episode of care.

JAMA Oncology recently published the results of a study comparing a bundled pay-for-performance program for breast cancer with a fee-for-service program. Evaluating almost 18,000 women with breast cancer, the study showed that bundled payments significantly improve adherence to quality indicators compared with fee-for-service, and result in significantly improved survival outcomes.1

In an accompanying editorial, Dr Newcomer said that even though the study missed some important clinical data such as HER2, progesterone, and estrogen receptor status—and the costs associated with the differences in treatment for these types of cancers—that he had a great deal of admiration for the researchers testing this program.2

Establishing this type of alternative payment system may be possible in the US. The Centers for Medicare and Medicaid Services recently established a new payment and delivery model that aims to provide better care at a lower cost.3 Currently, 195 practices and 17 payers are participating in a 5-year Oncology Care Model that is aimed at improving care and lowering costs through episodic and performance-based payment that reward high-quality patient care.

Dr Newcomer was also recently involved in a study testing episodic care payments. He and colleagues published the results of a study in The Journal of Oncology Practice that tested the combination of an episodic payment with actionable use and quality data as incentives to improve quality and reduce costs.4 Five medical groups treating patients with breast, colon, and lung cancer were paid a single fee instead of any drug margin to treat their patients. Chemotherapy medications were reimbursed at the average sales price.

Compared with a large national registry of fee-for-service patients with cancer, the volunteer groups were able to reduce costs by about 30%, according to Dr Newcomer, from a predicted fee-for-service cost of $98,121,388 to an actual cost of $64,760,116, with no difference in quality measures.

Despite progress being made to test these new payment models, Dr Newcomer said that there are still many barriers that exist before a bundled payment system could be adopted on a widespread basis.

RELATED: The Challenges of Tracking and Interpreting Medical Industry Payments

“We have to make sure these systems work,” Dr Newcomer said. “We have to conduct studies and confirm results to make sure that we are not creating a financial incentive that will cause under-treatment.

“It is time for everyone to start preparing and paying attention.”

References

  1. Wang CJ, Cheng SH, Wu JY, et al. Association of a bundled-payment program with cost and outcomes in full-cycle breast cancer care. JAMA Oncol. 2016 Oct 20. doi: 10.1001/jamaoncol.2016.4549 [Epub ahead of print]
  2. Newcomer LN. Better outcomes for lower costs in breast cancer care: finding a way. JAMA Oncol.2016 Oct 20. doi: 10.1001/jamaoncol.2016.4544 [Epub ahead of print]
  3. Oncology care model. Centers for Medicare & Medicaid Services website. https://innovation.cms.gov/initiatives/oncology-care/. Updated October 11, 2016. Accessed October 2016.
  4. Newcomer LN, Gould B, Page RD, Donelan SA, Perkins M. Changing physician incentives for affordable, quality cancer care: results of an episode payment model. J Oncol Pract. 2014;10:322-326.

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