Saving a SpeciesSaving a SpeciesOncology Reimbursement Oncology Reimbursement

and the Community and the Community OncologistOncologist

Jeffery Ward, M.D.Swedish Cancer InstituteChair, ASCO Clinical Practice CommitteeApril 26, 2013

Is private practice oncology alone under threat?

Many hospitals are feeling the squeeze, as well

Who is the Community Oncologist?

• Our current payment systems actually fracture and often divide us.

• When we look at our changing practice environment, we may all be community oncologists.

• The solutions we seek must be applicable to private practice, hospital practice, academics.

It’s Unsustainable

Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350-en (Accessed on 14 February 2011).Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. Numbers are PPP adjusted.

National Health Expenditures per Capita, 1960-2010

Notes: According to CMS, population is the U.S. Bureau of the Census resident-based population, less armed forces overseas and population of outlying areas, plus the net undercount.

Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2010; file nhegdp10.zip).

5.2% 7.2% 9.2% 12.5% 13.8% 14.5% 15.4% 15.9% 16.0% 16.1% 16.2% 16.4% 16.8% 17.9% 17.9%

NHE as a Share of GDP

Total National Health Expenditure, Select Calendar Years

EVERYONE’S HEALTHCARE COSTS ARE RISING

Average Annual Worker and Employer Contributions to Premiums and Total Premiums for Family Coverage, 1999-2011

* Estimate is statistically different from estimate for the previous year shown (p<.05).

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2011.

$5,791

$6,438*$7,061*

$8,003*

$9,068*

$9,950*

$10,880*

$11,480*

$12,106*$12,680*

$13,375*$13,770*

$15,073*

Total Personal Health Care Expenditures, Percent of Current GDP

National Health Expenditures, Business vs. Government

National Health Expenditures, Percent of Total, Business vs. Government

Medicare Program Payments, 1967-2009, Parts A & B

Percent Distribution of Medicare Program Payments, by Type of Service: CY 1967 & 2009

If Everything’s so Expensive, Why Pick on Oncology?

CMS Benefit Payments by Major Program Service Categories, FY 2010

*Covered clinic services are included under Outpatient

Cancer Drugs

Cancer Medical

GDP

Healthcare

Cost of Cancer Care

But it’s not just the drugs…

• CMS identified several of our chemotherapy administration codes as a “high value, high volume” service to be reviewed at the RUC

• RAC audits of Level 5 E&M visits

  2001-2002 2008-2009 Nominal % Difference

  Total Payments* % Total Payments* % % 2008-2009 - % 2001-2002

Chemo Administration $ 723,624,824 1% $ 1,376,917,867 2% 1%

Chemotherapy Drugs $ 8,871,087,462 17% $ 10,894,902,437 18% 1%

Radiation Oncology $ 5,011,238,470 10% $ 7,183,436,238 12% 3%

Evaluation & Management $ 1,590,332,030 3% $ 1,688,870,974 3% 0%

Hospice $ 3,207,874,987 6% $ 4,017,638,865 7% 1%

Laboratory Tests $ 1,392,626,234 3% $ 1,846,244,238 3% 0%

Other (Physician, ASC, OP SAFs) $ 6,376,707,921 12% $ 7,025,659,535 12% 0%

Other IP (IP stays without surgical procedure codes) $ 2,276,925,461 4% $ 1,776,314,709 3% -1%

Imaging Services $ 2,275,491,172 4% $ 3,755,857,585 6% 2%

Surgery (includes IP and Physician claims) $ 20,550,467,188 39% $ 19,624,538,995 33% -6%

Total $ 52,276,375,747   $ 59,190,381,444    

Total Payments for Oncology Services, 2001-2002, 2008-2009 (standardized to 2010 dollars)Data Source: 2001-2002, 2008-2009 Medicare 5% Standard Analytic Files      

September 2011                   

CMS Chief Eyes Oncology Payment System…

Comments from Jonathan Blum, CMS Medicare DirectorDecember 10, 2012 •CMS is considering new pay systems for oncology services, including the way that expensive cancer drugs are reimbursed under Part B. •Expensive injectable cancer drugs are one of the most difficult issues in addressing Medicare spending in Part B….about 10 drugs account for a disproportionately large portion of Part B spending.•But the payment system needs to be changed for all oncology services, not just drugs, and the replacement likely will be "global" in nature. •There is a growing sense in the agency, particularly in the innovation center, that our oncology payment system needs to be reformed.

Goal of Payment Reform

By 2020, CMS will have in place a matrix of payment systems that recognize and respond to the diverse needs of practice settings and the patients they serve; these new payment systems will put health care resources to their highest and best use, emphasizing high quality patient care, care coordination, evidence-based medicine, and patient centeredness.

Guiding Principles of Payment Reform

• Assure every cancer patient has access to high quality, high value, evidence based care.

• Protect patient needs and wishes through shared decision-making with their physicians.

• Further develop and uphold the practice standards of the medical profession.

• Support system-wide reforms and improvements that keep pace with the evolution of the health care system.

The SGR Rollercoaster

• Dec 19, 2009: Congress freezes rates for two months.

• March 2, 2010: CMS holds claims.

• April 15, 2010: CMS advises physicians to hold claims

• June 25, 2010: Congress delays cut until November 30

• Nov 30, 2010: Congress freezes rates for one month

• Dec 15, 2010: President signs bill for one-year delay to 25 percent cut.

• Feb 17, 2011: Congress delays cut with 10-month patch

• Feb 22, 2012: Congress delays until Jan of 2013

• Jan 1, 2013: Congress delays for one year

Components of Comprehensive Medical Oncology Payment Reform

• The Quality Oncology Practice Initiative (QOPI)

• A Chemotherapy Management Fee that gets Oncology out of the Drug Concession

• Value Based Pathways

• Episodes of Care/Bundle Payments

• Care Coordination/Patient-Centered Medical Oncology Home

Table 1

Element

Phased Approach

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

QOPI No negative adjustmentPositive adjustment for participation

No negative adjustmentPositive adjustment for participation

Must meet performance benchmarks for positive adjustment; no negative adjustment

Must meet higher performance benchmarks for positive adjustment; no negative adjustment

Positive and negative adjustments based on performance benchmarks; increased positive adjustment based on QOPI certification

Management Fee (Chemotherapy)

Practices choose to opt-in (must also participate in QOPI); those who do not opt-in remain in current ASP+6 environment

Management fee grows at MEI (or other suitable index)

Management fee grows at MEI (or other suitable index)

Management fee grows at MEI (or other suitable index)

Management fee grows at Medicare Economic Index (MEI) (or other suitable index)

Pathways Positive adjustment for participation

Positive adjustment for participation

Must meet 70% concordance for positive adjustment

Must meet 80% concordance for positive adjustment

Must meet 80% concordance for positive adjustment; negative adjustment for those below

Episodes/Bundling

Practices choose to opt-in to colon cancer bundle for one year

Practices choose to continue bundle or opt out / Data analysis from first round of colon cancer bundle

Second round of colon bundle offering; breast cancer bundle opened

Practices choose to continue bundle(s) or opt out/ Data analysis from first round of breast bundle, second round of colon bundle

CMS determines, based on results, continued offering of bundle(s)

Care Coordination Fee Patient-Centered Medical Oncology Home (based on NCQA “specialty” home criteria)

Practice receives “care coordination” fee and begins to put in place the basic elements of a PCMH

Practice receives “care coordination” fee and finalizes basic elements of a PCMH

Practice must achieve Level I Recognition from NCQA

Practice must achieve Level II Recognition from NCQA

Practice must achieve Level III Recognition from NCQA (fully-functioning medical home); higher adjustments for higher performers (whether through NCQA criteria or actual performance on ER visits, hospitalizations)

Energy &Commerce and Ways & Means Proposal

BRINGING MEDICARE REIMBURSEMENTS INTO THE 21ST CENTURY

• This proposal, modeled after reimbursement systems that are employed widely in the private sector, improves upon Medicare’s outdated system by:

• Fully repealing the SGR and eliminating the estimated 25 percent across-the-board rate cut in 2014 and any future rate cuts called for under the SGR;

• Establishing a period of predictable, statutorily-defined payment rates, enabling physicians to prepare for and participate in payment reform;

• Empowering physicians to determine the quality and efficiency measures that are clinically meaningful for Medicare beneficiaries;

• Rewarding physicians who deliver high-quality and efficient care rather than continuing the current system that encourages volume and unnecessary spending;

• Requiring the Centers for Medicare & Medicaid Services (CMS) to provide timely feedback and data to physicians, enabling physicians to make adjustments to improve patient care and their assessed performance;

• Providing reimbursement options – instead of the current one-size fits all approach – that enable physicians to select the Medicare payment system that best fits their practice; and

• Engaging the physician community in efforts to improve, reform, and update Medicare’s outdated physician reimbursement system.

QOPI Needs to Serve as the Underpinning of any Reimbursement System

QOPI - Strengths

• “Buy in” from Community• Oncologist-Developed• Meaningful & Actionable Measures• Nimble, Quickly Updated• Tiered Participation• Adaptable• American Taxpayer Relief Act of 2012 paves

the way to use QOPI to satisfy PQRS requirement

QOPI: It Works

QOPI - Weaknesses

• Paper-based• Manual abstraction• Resource intensive• Lacking value based measures• Lacking outcome measures

ASP+6: The Good

• Manufacturers are aware that purchasers of single-source drugs paid under ASP+6 can only tolerate small increases in price, otherwise drug is underwater

• Competition amongst multi-source (generic) drugs drives prices down

+43%

Select Branded Part B IV Drugs, Price Increase 2005-2013

+28%

+49%

When Drugs Become Multi-Source (Generic Entry)

Source: CMS ASP Pricing Files, January 2005-2013

ASP+6: The Bad

• Because after-market price increases for single-source drugs are limited, market introduction prices grow progressively more insane.

• The last 10 oncology drugs introduced to market cost ~$10,000/month or $100,000/year.

• The inability to respond to market forces without a drug going underwater, may be a contributing factor to the many drug shortages in the generic drug market.

• It is a favorite target of politicians every time cutting costs in Medicare is discussed.

ASP + 6: More Bad

It can be summarized in one word: risk. Under BnB, the docs take 100% of the risk and the supplier takes zero. Think of the transaction; they sell you a drug and you pay for it. In fact, the sooner you pay, the better deal you get. After that, they are done and the drug is 100% your problem. The patients doesn’t show up: your problem. They show up but are medically unsuitable for treatment: your problem. The drug is infused and the patient cannot make their co-pay: your problem. The insurance company denies the claim: your problem. ASP changes and you are underwater: your problem. The distributors and Pharma have a perfect model: they get paid and are out of the transaction on day 1, leaving the doc to take on all- 100%- of the transaction risk. It’s one of the most uneven business transactions on the planet. Yet many docs fight to keep this model going. Amazing.

Anonymous ASCO CEO

ASP+6: The UglyPractices are incentivized to use more expensive drugs

Studies show changes in prescriber behavior in response to changes in drug reimbursement

We are in desperate times. Desperate men and women do desperate things.

CMS Chief Eyes Oncology Payment System…

Comments from Jonathan Blum, CMS Medicare DirectorDecember 10, 2012

Does the incentive structure that was created in 2003 best serve these competing goals of beneficiary access and value…Some have suggested that the ASP plus 6 percent drives physician behaviors in ways that might not serve these two goals…I'm not sure what the future holds and I'm not sure what the answer is, but it's one that we're watching carefully. It's one that we're mindful of and it's striking how much we're spending for a handful of drugs that continue to grow.

One Alternative: The Chemotherapy Management Fee

• Uncouples reimbursement from drug prices, drugs are a pass through, paid at acquisition price.

• Instead of a margin on drugs, pays a flat episodic fee for pharmacy management during active chemotherapy.

• Keeps practices “whole”; in aggregate, reimbursement very similar to ASP+6.

• Paid outside of Part B cap on physician services just as ASP+6 is today.

• Saves money by tying increases in reimbursement to performance, quality, and inflation (MEI) not to increasing drug prices.

Chemotherapy Management Fee

• Can be calculated from CMS Actuarial Data• Must be modeled and piloted in real practices that

are disparate in size, geography, and settings• It should be applied to both IV and Oral

chemotherapy regimens• There will be winners and losers, it is anticipated that

smaller and rural practices, most disadvantaged by the current system will be winners.

• Practices should be allowed to opt in or stay with ASP based reimbursement.

• A semblance of the current drug distribution infrastructure, must be maintained.

• Downward pressure on drug prices must be maintained or enhanced.

Value Based Pathways

• Guidelines are not Pathways.• Pathways can reduce variability.• Good Pathways will, in the aggregate, reduce costs.• ASCO will not develop pathways, there are already

7 commercial pathways in the market and NCCN/USON have announced a partnership to develop a new and comprehensive set of pathways.

• ASCO can consider developing criteria by which pathways can become Medicare certified.

• Physicians should only have to use one set of certified pathways.

• Optimal pathway adherence is not yet established, but it is not 100%.

Episodes of Care/Bundled Payments

• Already exist: DRG, APC, Dialysis• UHC demo in Oncology – still waiting…• In 2009, ASCO proposed a colon cancer

bundle demo to CMS and CMMI. In 2011 it was updated and resubmitted.

• Bundled permutations can include: drug or no drug, aggregated monthly payments, disease and stage specific payments, supportive care, hospital utilization, imaging,…

Episode Based Payment (an example)

• Episode-based payment: specified condition, defined period of time, single payment

• Bundles drugs and administration• Payment based on average cost of caring for all patients with that

condition• Theorized savings:

– Physician as discretionary purchaser, choosing between effective alternatives based in part on cost; introduces an incentive for providers to select lower-price regimens (assuming equal efficacy)

– Suppliers ultimately reduce prices through competition• Expensive new innovator drugs granted “pass through” status

initially• Existence of treatment guidelines make monitoring appropriate

treatment/quality feasible

The Patient Centered Medical (Oncology) Home

• Complete coordination of care, including survivorship and hand-off back to PCP

• Use of pathways• Aggressive pre-emptive symptom management• Extensive use of proactive telephone contact• Continuous flow of information back to PCP via

EHR• Savings from decreased utilization of expensive

services, i.e. ER visits and hospitalizations• Model and resultant savings highly HIT

dependent

NCQA’s PCMH “Standards” (Primary Care)

NCQA: Won’t You Be My Neighbor? the “PCMH-light”

Reimbursement in a PCMH (or neighborhood)

• Fee-for-service doesn’t work• Options:

– Gain sharing– Shared savings– Bundled payments/episodes of care– Additional payment for care

coordination, and eventually, health outcomes?

We Need to Engage…as Providers, AS Leaders

• If Oncology Care Payment Reform is to be successful, it must be provider driven and led.

• Payment Reform must follow values and principles that keep us true to our mission and oath as cancer care providers.

• We will not be pleased if we wait for Congress, CMS, Insurers, Pharma, and Primary Care to design it for us.

• ASCO, COA, ACCC: They cannot do it alone.• Engagement means: Engage with your representatives

in D.C. and in Olympia. Engage with National and State Societies. Engage with your hospitals and clinics. Engage with your colleagues in Primary Care and other specialties. Engage with your patients.