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Breaking Down Bundled Payments: Cancer Treatment

You don’t need us to tell you: Cancer costs keep rising. In 2017, more than $147 billion was spent on cancer care in the United States, according to the National Cancer Institute. Businesses and their employees are paying a large portion of that cost.

“Nowhere in health care are employers facing a greater challenge to provide quality care at a reasonable cost than in cancer treatment and support,” Michael Thompson, president and CEO of the National Alliance of Healthcare Purchaser Coalitions, said in a press release earlier this year.

Bundled payments represent one value-based approach to taking on that challenge. Here’s what you need to know about the promise they’re showing.

What Are Bundled Payments?

With bundled payments, insurers pay a lump sum for the entire episode of care instead of each individual service. Providers can share in any savings, but if costs exceed the budget, there may be a financial penalty. Providers may also face penalties for failing to meet quality goals.

Episode-based payments are most commonly used for joint replacements, urinary tract infections and other conditions that have clearly defined guidelines or clinical pathways.

So far, so good. But cancer? Cancer isn’t like a hip replacement.

Indeed, cancer treatment is quite different in several respects. For one, “cancer” isn’t one thing. It requires, so to speak, specific terms of engagement depending on the varying “specific genetics and molecular pathways of different types of cancer,” according to the Journal of Clinical Pathways.

What constitutes an “episode”? It could be the duration of chemotherapy or a set amount of time — or something else. Because providers are incentivized to work with other providers across the continuum of care, the model supports care coordination, something particularly crucial for cancer patients.

A Case Study: Medicare’s Oncology Care Model

Various programs — many of which are still pilots — are underway to find the most efficient way to make bundled payments work in oncology.

In fact, the Centers for Medicare and Medicaid Services (CMS) is in the midst of its five-year Oncology Care Model, a pilot that that includes 76 practices and 10 payers. Participating practices receive monthly care management fees and are eligible for bonus payments if they lower overall Medicare spending and meet certain quality goals. It is focused on an episode of care, namely chemotherapy and related care during a six-month period.

Physicians receive a monthly payment of $160 and are evaluated every six months against a benchmark for bonus payments. It includes some flexibility; for instance, benchmarks can be adjusted when patients need newer, more expensive medications.

The goal, which the pilot appears to be on track for meeting, provides incentives for physician offices to improve care coordination and reduce the total cost of care episodes for chemotherapy.

The Patient Journey

But much of the time, cancer care isn’t just about the latest chemotherapy; it’s about keeping the patient healthy during a long life. Bundled payments include a more integrated approach to care.

One pilot that demonstrated the feasibility of the approach involved head and neck cancers. A major private insurer paid MD Anderson Cancer Center an annual lump sum for all the care provided during the course of the year: surgery, radiation, chemo, palliative care and so on. The patients received only one bill — which is, if you think about it, remarkable.

The Oncology Care Model also focuses on that journey. It requires participating practices to focus on, according to CMS:

  • “Improving care coordination, symptom management, palliative care, and end of life care.
  • “Recognizing depression and distress in cancer patients.
  • “Addressing financial toxicity.
  • “Improving communication with patients and other providers.”

Bundled payments can help integrate care, from the medical therapy itself to psychosocial support and palliative care, as well as any other related specialty care. In some cases, it could even include benefits coordination and ongoing management, which means healthier, less stressed patients and a faster return to their lives and their work.