Transforming Cancer Care And The Role Of Payment Reform
Transforming Cancer Careand the Role of Payment ReformLessons from the New Mexico Cancer CenterThe MERKIN SERIES onINNOVATIONin CARE DELIVERYAUGUST 2014
AUTHORSDarshak SanghaviKavita PatelKate SamuelsMeaghan GeorgeFrank McStayAndrea ThoumiRio HartMark McClellanThe authors would also like to acknowledge Alice M. Rivlin, Michelle Shaljian, Sara Bencic,Sara Bleiberg and Jeffrey Nadel for their contributions and review of this paper.We also thank Dr. Richard Merkin and The Merkin Family Foundation for their support ofthis publication, and for supporting the Engelberg Center’s leadership of innovations in caredelivery and payment reform through the Merkin Initiative on Payment Reform and ClinicalLeadership.The MERKIN SERIES on INNOVATION in CARE DELIVERY2
ACKNOWLEDGEMENTSThe authors thank the following individuals for participating ininterviews during the research process for this paper.Jose Avitia, MDMedical OncologistNew Mexico Cancer CenterJulie Nickerson, MBADirector of FinanceNew Mexico Cancer CenterVicki BoltonCancer PatientRay ParzikConsultant, Delivery BusinessDevelopmentFlorida BlueLauren Cates, MHA, MBADirector, Consumer Convenience &Market DevelopmentPresbyterian Healthcare ServicesEdward Cazzola, MDInternist, New Mexico Cancer CenterNina Chavez, MBA SPHRDirector of Operations and HRNew Mexico Cancer CenterTami GrahamDirector, Global Benefits StrategyIntel CorporationSusan Guo, MDRadiation OncologistNew Mexico Cancer CenterBarbara Haasis, RN CCRNSenior Clinical LeadAlternative Payment ProgramsFlorida BlueBarbara McAneny, MDCEO, New Mexico Cancer CenterSharon Richardson, BSNNursing ManagerNew Mexico Cancer CenterLaura StevensProgram Director and CIOInnovative Oncology Business SolutionsMatthew Fontana, MDVice President and Chief Medical OfficerHealth Care Service CorporationJohn FowlerDirector of ITNew Mexico Cancer CenterSteve Quesada, RPHPharmacy ManagerNew Mexico Cancer CenterPattie Torres, MTLaboratory and Patient Services ManagerNew Mexico Cancer CenterJill TownsSenior Training SpecialistInnovative Oncology Business SolutionsKaren Vigil, LPNResearch Clinical CoordinatorNew Mexico Cancer CenterTeresa Waters, PhDProfessor of Preventative MedicineUniversity of TennesseeLinda WedeenNMCC Foundation Executive DirectorNew Mexico Cancer CenterGlen Wilson, MDRadiologistNew Mexico Cancer CenterGovardhanan Nagaiah, MDMedical OncologistNew Mexico Cancer CenterThe MERKIN SERIES on INNOVATION in CARE DELIVERY3
TABLE OF CONTENTSLIVING WITH CANCER: VICKY’S STORYPART I: INTRODUCTION56CARE AND COST CHALLENGES77Suboptimal Care that Contributes to Avoidable Costs8DATA AND MEASUREMENTS10PART II: CARE REDESIGN AND THE CREATION OF THE COMMUNITY ONCOLOGYMEDICAL HOME12CATALYST FOR CHANGE1212Practice Environment and Local Health Care Market121315Target Population15Projected Savings161617Site of Care Reforms181920Collecting and using data21ENGAGEMENT AND EDUCATION FOR SUSTAINING HIGH-QUALITY CARE22Patient22Clinicians23Local Network of Providers23PART III: PAYMENT REFORM24OVERVIEW OF CURRENT CANCER CARE FUNDINGALTERNATIVE PAYMENT MODELS242525Patient-Centered Oncology Medical Home2628Bundled Payments29PART IV: RECOMMENDATIONS, LESSONS LEARNED AND POLICY IMPLICATIONS303132APPENDIX A: A MODEL FOR APPLYING REFORM TO YOUR OWN ORGANIZATIONThe MERKIN SERIES on INNOVATION in CARE DELIVERY344
LIVING WITH CANCER: VICKY’S STORYVicky Bolton is a 58 year-old medical legal coordinator who lives in Albuquerque, NewMexico. A widower of 20 years, Vicki has three children and nine grandchildren. She is alsoa Stage 4 adenocarcinoma lung cancer survivor who receives treatment at New MexicoCancer Center (NMCC) in Albuquerque. She was previously diagnosed with adultonset asthma 14 years ago, but her pain and breathing problems became progressivelyworse.DiagnosisThree years after her asthma diagnosis, Vicky returned to her primary care provider about the pain in her lungsand was immediately referred her to a pulmonologist for biopsy. The pulmonologist was unable to performthe biopsy because of concerns of fluid in the lungs and referred her to a vascular surgeon. The surgeonadmitted her to the hospital to perform the biopsy and found that half of the lung was blocked from fluidand cancer, which had metastasized. The surgeon referred Vicky to NMCC and an oncologist met her in thesurgery ward.After starting their relationship 11 years ago, Vicky has been consistently receiving treatment at NMCC. In2003 she started chemotherapy first with paclitaxel (Taxol) and then carboplatin, but was found to beallergic to both. Her oncologist switched her to gemcitabine (Gemzar), but complications with thatchemotherapy agent culminated with a hospitalization in 2006 following kidney failure. Since 2006 Vicky hasnot been hospitalized, and only had to go to the emergency department or urgent care a few times forbreathing problems. She has undergone additional chemotherapy, radiation therapy, and multiple rounds ofinjectable antibiotics, but all of these services were provided at NMCC’s facilities instead of in a hospital.Vicky’s ExperienceNMCC provides all of Vicky’s care at one location, from lab and x-ray testing to an internal medicine doctor forher recent stomach problems. The extended hours clinic has allowed her to get care outside of work hours,so that she can live with cancer rather than plan around it. In the past six months alone, NMCC prevented Vickyfrom being hospitalized on three occasions: In December 2013 she became acutely ill. Although she was out of work for more than a week, shewas able to receive all her treatment at NMCC and go home in the evenings and be with her family In February 2014 she was diagnosed with bi-lateral deep vein thrombosis, one of which wasinfected. On the same day NMCC infused her with daily antibiotics as an outpatient, allowing her toremain in the comfort of her home overnight. In April 2014 she become ill on a Saturday and called NMCC’s extended hours clinic. On the sameday, they performed lab work and radiology studies, and infused medications intravenously. NMCCcontinued to treat her in the evenings after work, allowing Vicky to attend her company’s annualmeeting that week. During this time, Vicky missed no work days.The MERKIN SERIES on INNOVATION in CARE DELIVERY5
PART I: INTRODUCTIONAccording to the National Cancer Institute there are more than 13 million people livingwith cancer in the United States; it is the second leading cause of death in the U.S.1 Itis expected that 41% of Americans will be diagnosed with cancer at some point duringtheir lives. More than 1.6 million new cases of cancer will be diagnosed in 2014; a nearly22% increase over the last decade.2Cancer care is also expensive. In 2010 it accounted for 125 billion in health care spending and is expected tocost at least 158 billion by 2020, due to population increase.3 In 2011 Medicare alone spent nearly 35 billionin fee-for-service (FFS) payments for cancer care, representing almost 9% of all Medicare FFS payments overall.4Broadly speaking, problems in complex clinical care fall into twocategories: deficits in knowledge (for example, lack of any effectivetreatment for certain brain tumors) and deficits in execution (for example,41%failure to treat breast cancer with a standard-of-care protocol).5 Deliveryof Americans will be diagnosed withreform seeks to find opportunity in the latter problem type. Consideringcancer at some point in their lives.cancer care through this lens, there are many opportunities to improveoutcomes and potentially lower costs, including better coordination of 125 BILLION:care, eliminating duplication of services and reducing fragmentationMedical cost of cancer in 2010of care.6,7,8 In addition, almost two-thirds of oncology revenue derives9from drug sales , and pricing for drugs (calculated by the average sale price plus 6% profit for providers) mayincentivize the use of the most expensive drugs rather than equally effective, lower-cost alternatives.13 MILLIONAmericans are living with cancerPromising approaches are being developed to deliver high quality care, improve the patient experience,and reduce costs for this condition and other chronic diseases. Care redesign strategies such as adoptingteam-based models, offering extended practice hours, providing triage to keep patients out of the emergencyroom, and implementing care pathways help providers address avoidable costs and maximize the value ofcare. Many of these strategies are not currently reimbursed in the FFS, volume-based payment system.Consequently, much policy attention is focusing on payment reform. On the heels of the Affordable Care Act(ACA), and numerous quality and payment focused initiatives in the private sector, health care organizations needto enhance the competitiveness and efficiency of their system in the marketplace. Alternative payment models(APMs) such as Accountable Care Organizations (ACOs), bundled payments, and patient-centered oncologymedical homes (PCOMH) are just a few of the initiatives supported by public and private payers to align careredesign and payment reform and encourage continuous improvement. This paper provides a comprehensiveoverview of the complex care associated with oncology and the alternate payment models which help supportoptimal care and encourage continuous improvement.To support effective i mplementation o f t hese s trategies i n p ractices t hroughout t he c ountry—including t heidentification of barriers and challenges—this c ase study examines t he redesign of the New Mexico C ancerCenter (NMCC) as one example of how a group of clinicians can implement change. This case study willfocus on the care redesign model and potential payment reform options to sustain improvements at NMCC.With the aim to support the education of a clinical audience regarding how care innovations can bealigned with alternative payment models, this case will answer the following questions: What challenges or problems encouraged the organization to redesign cancer care? How did NMCC redesign care to improve quality, enhance the patient experience, and reduce costs? How can an organization prove they are improving quality and contract with a payer to maintainsustainability? How can alternative payment models sustain a community oncology medical home?The MERKIN SERIES on INNOVATION in CARE DELIVERY6
CARE AND COST CHALLENGESThe U.S. spent 125 billion on cancer care in 2010.10 Patients with cancer receiving chemotherapyaveraged 111,000 per patient per year in total medical and pharmacy costs, with drugs accounting forabout 25% of costs.11 Compared with other conditions, patients with cancer receiving chemotherapyincur six times the annual cost of patients with diabetes and 26 times the cost of patients withoutcancer.12 For patients themselves, the cost of care is prohibitive, with potentially tens of thousandsof dollars in out of pocket expenses. A national survey found that 25% of patients consumed most orall of their savings in dealing with their cancer and its treatment.13 Another study found that patients withhigher co-payments were 70% more likely to discontinue their treatment, and 42% more likely to skipdoses.14 Combined with costs due to lost wages and unemployment, the costs of care can be prohibitivefor some patients to seek and adhere to treatment.A number of disparities exist across age, gender, type of cancer, race, socioeconomic status and geography. Forexample, African Americans are the more likely to be diagnosed with cancer in for four of the five most commonconditions. They also have a higher mortality rate: 27% higher among men and 11% higher among women.15,16These variations in in care and outcomes reflect opportunities where care can be standardized and improved.Improved Health Outcomes that Contribute to Unavoidable CostsThere are many factors that make cancer care expensive that cannot be changed without compromising thequality of care received by cancer patients.Aging PopulationCancer is most common among people aged 65-74 (25.4% of all new diagnoses in this age range), and thusincidence and expenditures will increase as the elderly population grows.17 The age 65 population is expectedto boom from 40 million in 2009 to over 70 million in 2030, causing an estimated 27% increase in cancer careexpenditures.18 As older patients tend to have more comorbidities and poorer health in general, they canalso have more complex cases.Increased Cancer ScreeningIncreased access to care and recent screening guidelines likely will contribute to significantly higher costs ofdiagnosis and treatments. While such strategies may contribute to reductions in cancer-specific mortality insome cases (for example, 1 in 1000 women and 1 in 1000 smokers may survive due to mammography and chestCT screening), increasing diagnosis may also lead to expensive testing and treatment in other cancers withoutbenefit. For example, thyroid cancer has seen large increases in diagnosis with no changes in mortality rate.Increased Survival RatesFive year survival rates have continued to increase over the past 40 years and show an increase from 49%in 1975 to 68% in 2010.19 This is due to several factors including improved diagnostic and treatment methods(though may also include a component of lead-time bias). While these are clearly favorable outcomes, theycontribute to cost increases as people live longer and have potential recurrences.FIGURE 1 Trends in 5-year survival across all cancersSource: National Cancer Institute, Surveillance, Epidemiology, and End Results Program20The MERKIN SERIES on INNOVATION in CARE DELIVERY7
Advances in TechnologyInnovative treatments that provide improved care are constantly being developed and advances in genomics andtargeted chemotherapy options have led to numerous new treatment options. The research and developmentcosts per new drugs can range anywhere from 15 million to 13.2 billion21 and treatment costs can also be veryhigh. For example Novartis’ Afinitor, a drug used to treat advanced kidney cancer costs approximately 10,000per month.22Suboptimal Care that Contributes to Avoidable CostsWhile some factors driving cancer costs are unavoidable or desirable, others are the result of poor carecoordination and lack of evidence based care. These avoidable cost drivers are opportunities where paymentreform can drive improved care delivery that can help reduce cancer care expenditures. These avoidable costdrivers are outlined in detail in Figure 2.FIGURE 2 Drivers of Avoidable Costs in Oncology CareCOST DRIVERDEFINITIONDATASite of careCosts (and payments) are higher for identicalcare provided in a hospital setting rather than inoutpatient or community settingsCost of receiving chemotherapy for withmetastatic colorectal cancer patients52.5% higher in hospital outpatient than aphysician's office23Unnecessary ER visits andhospitalizationsER visits and hospitalizations for largelypreventable illnesses, such as nausea followingchemotherapy administrationRetrospective review of 154 patients withGI cancer determined 19% ofhospitalizations were potentiallyavoidable24Inappropriate treatmentExpensive drugs and therapies used with nogreater evidence-base for effectiveness than lesscostly solutionsPatients treating according to pathwayshad outpatient costs 35% lower with nodifference in survival rates25Duplication of servicesOverutilization of costly imaging studies due tolack of care-coordinationOver 30% of patients (not oncologyspecific) transferred between twohealth systems received duplicate tests26Software system with clinical decisionsupport to assist providers deliver careacross disciplines reduced costs by 12%,(40% fewer ER visits, 17% fewer hospitaladmissions)27Fragmentation of careProviders across specialties and settings do notalways communicate or share accountability forthe outcome of the patientOverscreening and overdiagnosisTreatment of cancers that would never causesymptoms or deathRisk that PSA-detected cancer wouldnever cause symptoms estimated at 67%28Excessively high technology costsExpenses of therapies with marginal or nobenefits, or where less costly alternatives existMedicare reimburses Proton Radiotherapy1.4 to 2.5 times higher than IntensityModulated Radiotherapy with nodifference in toxicity29Preventable cancersPreventative strategies such as tobacco control,HPV and hepatitis B vaccination, and reductionof avoidable diagnostic radiation can lowercancer incidence30% of cancer deaths (82% of lungcancer deaths) can be attributed totobacco30End of life careCancer costs are especially high at the end oflife, which is generally considered to be a sign ofpoor quality cancer care.28 of 39 avoidable hospitalizations couldhave been avoided through appropriateuse of hospice31The MERKIN SERIES on INNOVATION in CARE DELIVERY8
Cancer DrugsA specific issue in oncology costs merits special consideration. One of the greatest cost drivers in oncologyis expensive cancer drugs. Federal policies regulating drug payment systems impact the financial solvency ofpractices and jeopardize the financial sustainability of care redesign.Under the “buy and bill” payment mechanism, providers purchase the drugs directly from pharmaceuticalcompanies and are reimbursed for them later (includes average sales price for the drugs plus 6% for Medicareand variables for commercial payers). For many oncology practices, up to 65% of practice revenues result fromthis system.32 This payment mechanism incentivizes oncologists to prescribe more costly drugs to increasenet revenues even when more cost-effective options are available. The undesirable added costs associatedwith more expensive cancer drugs are a controllable cost. Oncology practices like NMCC can implementcare redesign to move toward prescribing more cost-effective cancer drugs, and these savings can be used toincentivize stakeholder buy-in.Another mechanism that impacts drug pricing, and one that puts community-based, non-hospital practicesat a cost disadvantage, is the 340b program. This requires drug manufacturers to provide 25 - 50%discounts on cancer drugs to community health centers (FQHCs), and allows the organizations to use theadditional revenue made on more costly drugs to offset other costs. As a result organizations that cannotqualify for 340b status may be restrained in their relative ability to compete against other qualifying centers,which may limit investments in care redesign.Care Redesign FrameworkThis case study uses a framework to consider these drivers of suboptimal care and the specific care redesignelements undertaken by NMCC to improve patient-centered care (Figure 3).All types of care redesign can be described in terms of where the care is delivered; who the care is deliveredby; how the care decisions are made; and the data used to ensure effectiveness. To make any intendedtransformations ‘come alive’, extensive engagement is required across all stakeholders.33 Within a health caresetting this will included patients, clinicians, the local network of providers, and those paying for care.FIGURE 3 Care Redesign FrameworkThe MERKIN SERIES on INNOVATION in CARE DELIVERY9
DATA AND MEASUREMENTSIn general, payment is currently not tied to value in oncology care. To accomplish thistransition to value-based payment, however, good measures of value must exist. Manyorganizations are developing performance measures. For example, the American Societyof Clinical Oncology (ASCO), the Community Oncology Association (COA) and theNational Quality Forum (NQF) each have specific oncology performance measures thatpractices can use to quantify the quality of care they deliver and determine areas for improvement. ASCO hasalso created the Quality Oncology Practice Initiative (QOPI) a performance benchmarking program with over700 practices enrolled34 (35% of the estimated 2,000 oncology practices35). QOPI is also an approved registry forreporting the Physician Quali
Consequently, much policy attention is focusing on payment reform. On the heels of the Affordable Care Act (ACA), and numerous quality and payment focused initiatives in the private sector, health .
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