The Future of Oncology Reimbursement: Alternate Payment Initiatives ModeratorMarc Samuels, JD, MHA ADVIPanelistsMichael Kolodziej, MD Aetna Kavita Patel, MD Brookings InstitutionDenise Pierce, DK Pierce & AssociatesLarry Strieff, MD Hill Physicians Robin Zon, MD Michiana Hematology Oncology; ASCO Clinical Practice Committee

The Future of Oncology Reimbursement: Alternate Payment Initiatives

Moderator Marc Samuels, JD, MPHChief Executive Officer, ADVI

What Do We Mean By Alternate Payment? Something that replaces traditional fee-for-service (FFS) That is designed to compensate for delivering a new value

proposition: “value-based” rather than “volume-based” Descriptions such as: patient-centered, coordinated,

appropriate, efficient, accessible, consistent, high-quality, affordable

Monitoring, documenting and reporting on the value Are the financial incentives aligned? Is there an assumption

of financial risk? Nothing focuses everyone’s attention like assuming financial

risk together

Various Payment Reform Options – OncologyBundling/Aggregation Across Providers

Case based physician payment

Traditional FFS

Chemotherapy Fee Replacing Drug Mark-up

Oncology ACO

Medical Oncology

Home Care Management

fee

Episode/Bundle Payment for Physician

Services

Episode/Bundle Payment Physician

and Hospital Services

Population-Based, System-Wide

Capitation Payment

Pathways Complian

ce Fee

Adapted from: Model Progression by Case-Based Physician Payment and Bundling/Aggregation across Providers. Source: The Brookings Institution, 2013.

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Key Features of Three Major InitiativesCMMI-OCM CAP Consortium ASCO-CPOC

Aligned financial incentives to improve care coordination, outcomes, access, higher quality at lower cost (“triple aim”)

Re-align financial incentives to influence efficiencies, appropriate use (not under/not over use), quality consistency

Enable high-quality, patient centered care and more affordable cost; reduced administrative burden [on practice]

Patients undergoing chemotherapy, all cancers

Begin with high prevalence cancers (metastatic NSCLC, colon)

All cancers

Multi-payer Multi-payer Multi-payer

PBPM care management payment plus shared savings on total cost of care. Transition to 2-sided risk

Bundled payment for total cost of care (drug cost carved out)

5 types of bundled payments. Administrative efficiency: reduce from 58 CPTs to 11 service codes

“Practice Requirements” for monitoring, reporting

Standard set of quality measures – all payers

Value measures: pathways adherence, QOPI, ER frequency

The Future of Oncology Reimbursement: Alternate Payment Initiatives

Kavita Patel, M.D., MSManaging Director for Clinical Transformation & Delivery Engelberg Center for Health Care Reform Studies, Brookings Institution

© The Brookings Institution. All rights reserved. No part of this presentation may be reproduced or transmitted in any form or by any means without permission in writing from the Brookings Institution, 1775 Massachusetts Avenue, N.W., Washington, D.C. 20036 (Email: magnuson@brookings.edu).

Kavita K. Patel MD, MSFellow and Managing Director

Brookings Institution

The Future of Oncology Reimbursement: Alternate Payment Initiatives

Michael Kolodziej, M.D. National Medical Director Oncology Solutions, Aetna

• We give our members access to high-value, personalized cancer care models. We collaborate with oncology teams that deliver best-in-class care by using evidence-based medical guidelines, clinical decision support tools and services that improve the patient’s experience, increase effectiveness of care and lower costs. Our value-based approach, powered by data analytics and transparency of policy and payment, allows us to move from a fee-for-service platform to a value-driven system that rewards Oncology practices for quality care throughout the patient’s care journey.

Aetna Oncology Solutions – Mission Statement:

Aetna Values & Oncology Solutions Mission Statement

Six realities that will shape reimbursement reform for commercial payers

Employers pay the bills Profitability depends on private payers Transparency will become mandatory Innovation is expensive Hospitals (in their current iteration) are immune to reform

… and that must change Cancer costs involve more than just the drug

Buchmueller et al.Health Affairs 32: 1522-30

Aggregate Hospital Payment-to-cost Ratios

Distribution of Hospital Cost by Payer Type (% of Total Cost) - 1980 / 1990 / 2010

Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2010

Aetna’s Oncology Solutions

Aetna’s Oncology Solutions

• 172 clinics closed

• 323 practices struggling financially

• 44 practices sending ALL patients elsewhere for treatment

• 224 practices acquired by a hospital

• 102 practices merged/acquired

As community oncologists migrate to hospital systems, cost increases

Source: COA Practice Impact Tracking Database

16

Cancer is the most costly medical item and increasing at 2-3x the rate of other costs

1996 20100%

1000%$55 B

$123 B

Cumulative percentage increase

*2010 CY Claims; Commercial & Medicare; All Funding; Excludes AGB/SH/SRC

Cancer care is the leading

edge of medical cost

trend

Annual Increase

Cancer Drugs 20%Cancer Medical 12-18%Health Care 9%US GDP 3%

Medical Rx 30.8% $1.5B Inpatient 23.3% $1.1B Radiology 22.4% $1.1B Specialist Physician 9.4% $483M

Aetna's top cost drivers in cancer care

Historical payer responses: why we need a novel solution

• Pay less• Manage more (prior auth)• Shift responsibility to member (co-pay, value

based insurance, reference pricing)• Pay for performance (gain share)• Shift risk (ACO)

18

Oncology reimbursement reform

MUSTReduce costImprove qualityBoth

• Evidence based medicine

• Enhanced access• Shared decision

making• Coordination of care• Quality reporting• Payment reform

21

22

Quality reporting: clinical process measures

1. Adherence to evidence based treatment guidelines (including treatment exceeding lines of therapy and documentation of off-pathways reasons)

2. Cancer staging3. Performance status4. Pain assessment5. End of life metrics (ACP documentation, hospice

enrollment, hospice length of stay)6. Patient satisfaction

23

Quality reporting: financial measures

1. ER visits (and costs)2. Hospitalization rate (and costs)3. Chemotherapy costs

• NOTE: These measures form the basis for the shared savings calculation

24

ER and Hospital: Index PracticeER IP IP LOS

Breast (n=52) 29 24 3.7

Colon (n=14) 14 21 8

Lung (n=24) 18 31 5.4

Total 61 76 5.6

Chemotherapy costs

N ME CP

Breast 52 28325 25307

Colon 14 28819 38616

Lung 24 19576 17892

Fewer cancer related ER visits and in-patient

admissions

Fewer cancer-related in-patient hospital

days

Greater adherence to Pathways regimen

Opening the Black Box: The Impact of an Oncology Management Program Consisting of Level I Pathways and an Outbound Nurse Call System, 2014, American Society of Clinical Oncology

27

Reimbursement Models

1. Implementation fee2. Management fee3. Enhanced fee schedule4. S codes5. Shared savings6. Prior auth relief

• Treatment plan• End of treatment summary• Advanced care plan• Oral chemotherapy management fee

Aetna Oncology Medical Home payment for oncology care means growth instead of shortfall

Sustainable Future

Performance

*Ultimately, this becomes

a better “reset”

baseline for episodes

and/or bundles

Current Fee for Service Model Invest in

New processes

Shared Savings on

improvement from

baseline outcomes

Enhanced drug fee schedule

Changes in pre-cert

model alter FTE’s

S-codes for quality

processes that have meaningHIT Office

workflow efficiencies

Our goal is to create a sustainable business model designed around new sources of value that will be resilient through and post health care reform.

Growth

Future Base

Model(s) Without Medical

Home-like contracts

Revenue Gap(e.g., private payer and

CMS induced)

So how does this apply to MCR?

MCR is the dominant payer for virtually every oncology practice

Cancer is far more common in the MCR population Cancer is more expensive in the MCR population MCR cancer patients are different in many ways In general, MCR doesn’t pay very well MCR rewards volume not quality SO MCR needs to change

So what about the CMMI proposal ?

Rewards practices for enhanced clinical services and performance

Determining management fee is problematic Gain share methodology unclear Too directive Too many data elements to report Will be most successful if commercial payers participate BUT it is generally consistent with our view of

reimbursement reform (so we are exploring ways to partner with CMMI)

Oncology reimbursement reform is a step-wise process

Vendor based programs introduce Clinical Pathways and Measure Adherence along with Quality Measures

More sophisticated Practices move from vendor based Clinical Pathways programs to Oncology Medical Homes (OMH)

Smaller Practices work with Education Oncology programs such as NJ ION program

Create episode and bundling methodology test with OMH, as well as deployed in ACO

Provider engagement Index

Low Touch High Touch

Some Clinical Engagement

OMH deployed in 65% of markets and ACOs by 4Q15

More Clinical Engagement

High Clinical Engagement

The Future of Oncology Reimbursement: Alternate Payment Initiatives

Robin Zon, M.D., FACP, FASCOMichiana Hematology Oncology, Chair ASCO Clinical Practice Committee

Consolidated Payments for Oncology Care

Payment Reform to SupportPatient-Centered Care for Cancer

ASCO’s Clinical Practice Committee Payment Reform Work Group

(JOP Jul 1, 2014:254-258; published online on April 15, 2014)

Goals of CPOC Payment structure

Patient centered Better match to services we

provide/patients need

Simpler billing structure

More predictable revenue stream

Incentivize high quality, high-value care

Support coordinated, patient-centered care

Components of CPOC

• The Quality Oncology Practice Initiative

• A Chemotherapy Management Fee

• Value Based Pathways

• Monthly Episodes of Care/Bundled Payments

• Care coordination/ Patient – centered Medical Oncology Home

Monthly PaymentsBased on Phases of Care

New Patient Payment

Single payment

Includes patient evaluation, treatment planning, patient education

Diagnostic testing paid separately

Treatment Month PaymentSingle payment each month patient receives treatment (IV or oral therapy)

May receive both a treatment month payment and a new patient payment in the same month

Higher monthly payments for sicker patients and those receiving more toxic and complex regimens

Monitoring Month Payment

• For patients not receiving active anti-cancer therapy (e.g. treatment holiday or completion)

• 3 levels of payment₋ Higher for months immediately following end

of treatment₋ Lower for patients on long-term monitoring

Transition of Treatment Payment

Patient beginning new line of therapy or ending treatment with no further treatment planned

Reflects time involved in treatment planning and patient education

Continued FFS Payments

Laboratory tests

Bone marrow biopsies

Portable pumps

Blood transfusions

(list not all inclusive)

Additional Payment Adjustments

Quality measures phased in over time

Pathways, two stages: Adherence Use of certified pathways

Resource utilization OMH ER and hospital admissions

Clinical Trials Higher Treatment Month and

Non-Treatment Month payments for enrolled patients

Multi-Year Transition Design

Net revenue to practice > existing system

Total spending by payer < existing system

Payer and practice negotiate acceptable risk corridors during transition Practices protected against losses in initial years Payers and practices share in savings achieved Practices take on greater accountability as care

processes redesigned

ASCO’s Efforts to Lower Costs, Increase Value

Promoting Adherence to Evidence-Based Medicine: ASCO Guidelines

Participating in & Promoting “Choosing Wisely”

Commitment to Quality Improvement: QOPI

Working with Payers: Integration of Quality Measures into Reimbursement Decision-Making

Cultivating a Learning Healthcare System: CancerLinQ

Establishing Clinically Meaningful Outcomes in Cancer Research

Payment Reform

The Value in Cancer Care Task Force

CMMI vs. CPOC: Some Observations

CMMI: OCM

Fee for service—current narrow categories

Reimbursement still driven by physician encounter

Add on payment only for new services

Accountability for ALL healthcare services

Arbitrary 6-month episodes

Payment differentiated only by type of cancer

ASCO: CPOC

Flexible payments can reimburse currently unfunded services

Patient centered reimbursement, agnostic to type of provider

Monthly payment replaces current fees

Focuses accountability on services controlled by oncologists

Monthly payment based on phase of treatment and care

Payment differentiated by patient complexity and treatment toxicity

DISCUSSION

The Future of Oncology Reimbursement: Alternate Payment Initiatives

Larry Strieff, M.D.Specialty Medical DirectorHematology Oncology Division ChiefHill Physicians Medical Group

Oncology Case Rate (OCR)Payment Reform Example

Larry Strieff, MD, Specialty Medical Director, Hematology Oncology Division Chief

Clinical Support, Hill Physicians Medical Group

Hill Physicians Medical GroupIndependent Physician Association founded in 1984Provider network: 3,800 providers and consultants

980 Primary Care 2,260 Specialists (170 Oncologists)

Service the Northern California area 300,000 Members 5 Regions - 9 Counties

51

Methodologies Evaluated52

Mutually Sustainable

Mutually SustainableFFSFFS

FFS & Cap

FFS & Cap

Flat Cap Rate

Flat Cap Rate

Drop to MC RatesDrop to

MC Rates Aligned Incentives*Cost

*Quality*Patient Experience

Aligned Incentives*Cost

*Quality*Patient Experience

Cohort Case Rate

Cohort Case Rate

Chronological Cost Pattern for Breast Cancer

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35

Paid

per

Cas

e

Months Following Initial Diagnosis

Other Radiology

Radiation Oncology

Medical Oncology

53

Oncology Case Rate (OCR)Bundled Payment System

54

OCR Cancer Cohorts:Diagnosis Group by Cancer Type

55

Cohort

Cancer TypeTotal Unique

Patients, 2010-2014 YTD

1 Colon & Rectum 116

2 Lung 136

3 Breast (female) 287

4 Ovary and other Uterine Adnexa 23

5 Prostate 41

6 Malignant Neoplasm of Other/Unspecified Sites 50

7 Malignant Neoplasm of Lymp/Hema Tissue 169

8 Other Malignant Neoplasm 158

9 Diseases of Blood & Blood-Forming Origin 27

Total Unique Patients 1,007

56Trends in Oncology PMPM Network vs. Sacramento OCR

Quality Management Bonus ProgramProgram encompasses 3 domainsClinical measures are subject to audit and chart reviewsPerformance dashboards are shared with oncology groups

regularly

57

Clinical Quality of Care58

OCR PerformanceASCO = American Society of Clinical Oncology

59

Utilization Measure60

Inpatient Bed Days

Overall Survival Results61

OCR (N=128) vs. Control (N=146)p = 0.05

All 4 Cancer Cohorts (N=274){Esophageal, Pancreas, Lung, Stomach}

Survival Time (days)Day 0 = first day of chemotherapy

Su

rviv

al P

rob

ab

ilit

y

Summary OCR practices demonstrated year-over-year

improvements in performance on ASCO clinical quality measures.

OCR practices out-performed standard FFS model in satisfaction and utilization metrics year-over-year.

OCR practices’ overall survival is non-inferior to the overall survival under a standard FFS model.

OCR practices continue to bend the cost curve over 3.5 years of program experience.

62

The Future of Oncology Reimbursement: Alternate Payment Methodologies – Employer Perspectives

Denise K. PiercePresident/CEODK Pierce & Associates, Inc.www.dkpierce.net

An Employer’s View on Cancer Costs

64

Employees with cancer result in more than 33 million disability days per year.1

Employees with cancer result in more than 33 million disability days per year.1

Of the 12 million Americans with cancer today, an estimated 3 million are actively employed.2

Of the 12 million Americans with cancer today, an estimated 3 million are actively employed.2

Since employer’s cancer medical expenses are increasing faster than general medical costs, there is no waiting for payment reform – employers are increasingly taking direct action to manage cancer costs now

Sources:1.“Cancer Costs Billions Yearly in U.S.” US News and World Report. December 2012.2.Miller, S. “Employers Focus on Cancer Prevention and Care.” Society for Human Resource Management. November 20133.Herr, J. “Employers Becoming More Savvy About Specialty Pharmacy, but Need More Cost Controls.” Midwest Business Group on Health. February 2013.

Specialty oncology drugs currently account for approximately 17% of the average employer’s total pharmacy spend and are estimated to rise to 40% by 2020.3

Specialty oncology drugs currently account for approximately 17% of the average employer’s total pharmacy spend and are estimated to rise to 40% by 2020.3

Employer Approaches to Managing Cancer Costs

Employer Initiatives

There is a wide variation in approaches, based on company industry, size, and employee demographics

Claims data warehousing/analysis

Specialty pharmacy benefit

Nurse navigators

Value-based payment design

Oncology medical homes

Solid tumor mapping

• Overall cancer costs/targeting• “per employee” costs for benefit forecasting

• Case managing the “right treatment for the right patient”• Integrating adherence measures

• Care coordination beyond the practice doors• Drug/treatment adherence

• Oncology pathway integration• Natural narrower networks based on participation

• Learning from current primary care models

• Individualized treatment decision support

Source: DK Pierce & Associates, Inc. DKP Critical Insights®: Employer Cancer Management Evolution Analysis 2014.

Employer Example – Centers of Excellence

Shell Oil Cancer Center of Excellence (COE)

• Voluntary program contracted through MD Anderson• Applies to active employees and non-Medicare pension retirees• Registered employees and adult dependents would have prevention and

treatment with no deductibles, no coinsurance• Services directed to MD Anderson main campus

EmployeeEmployee

Voluntary Program Registration

MD Anderson Physician

Network Case Manager

MD Anderson Physician

Network Case Manager

• Prevention screening• Adult cancer treatment

Employees with pre-existing cancer conditions will be managed through the ASO United Healthcare network, with applicable deductible and cost share

Business Coalition Roles in Managing Cancer Costs

Business Coalition Initiatives

• Cancer benefit guidanceo National Business Group on Health (NBGH) Cancer Benefits Resource Guide program

resourceso National Business Coalition on Health (NBCH) Action Briefs

• Specialty pharmacy model contracts• Setting of care analysis• Claims data evaluation support

Once serving only as leverage for insurance purchasing, business coalitions now take on key roles to guide benefit design

Sources:DK Pierce & Associates, Inc. DKP Critical Insights®: Employer Cancer Management Evolution Analysis 2014. National Business Group on Health An Employer Guide to Cancer Treatment and Prevention. Tool 2- Plan Design and Assessment http://www.businessgrouphealth.org/pub/f3128ebd-2354-d714-5131-878172bcc648National Business Coalition on Health. http://www.nbch.org/

Business Coalition Roles in Managing Cancer Costs

Sources:National Business Coalition on Health. NBCH Action Brief. Breast Cancer – Take Action. http://www.nbch.org/nbch/files/ccLibraryFiles/Filename/000000003417/NBCH_BREAST%20CANCER_FNL.pdfNational Business Group on Health An Employer Guide to Cancer Treatment and Prevention. Cancer Continuum of Care. http://www.businessgrouphealth.org/cancer/index.cfmMidwest Business Group on Health. National Employer Initiative on Specialty Pharmacy. http://www.specialtyrxtoolkit.com/

Business Coalition Roles in Managing Cancer Costs

NBGH COE criteria are supplied in the Employer’s Guide to Cancer Treatment & Prevention

National Business Group on Health An Employer Guide to Cancer Treatment and Prevention. Centers of Excellence Network Programs. https://www.businessgrouphealth.org/pub/f3131588-2354-d714-5137-54d58bc3882d

Denise K PiercePresident/CEODK Pierce & Associates, Inc.dkpierce@dkpierce.net317.873.0303 ext. 205