Do Oncology Bundled Payments Promote Low-Value Drug Use?

July 25, 2017 - Oncology bundled payments are not the answer to lowering prescription drug costs for cancer care delivery, the American Society of Clinical Oncology recently contended.

In a position statement on addressing the affordability of cancer drugs, the oncology group argued that bundled payments incentivize healthcare providers to use low-value medications in order to realize greater savings under the alternative payment model.

“Further, bundled payment programs create circumstances that could force providers to make suboptimal or lower value choices,” the oncology group wrote. “While appealing in the abstract to many in the health policy world, such bundles will likely never be sensitive enough in a world of increasing precision-based therapy and heterogeneous patient populations to account for appropriate variation in drug prescribing.”

“ASCO is firm in its belief that no provider should experience financial penalty for providing the right drug to the right patient at the right time,” the organization added.

Oncology bundled payments also do not address the root cause behind rising prescription drug rates, the organization stated. Grouping all costs of cancer care into a single episode-based payment does not impact the price of medications, which is the primary driver behind increased spending.

READ MORE: How Alternative Payment Models Decrease Cancer Care Costs

Healthcare bundled payments have become a popular alternative payment model because of its ability to lower healthcare costs while improving or maintaining care quality. The model also limits financial risk to a care episode rather than a performance year.

Their use in oncology has also recently increased. An Evidence-Based Oncology study from May 2017 found that the most popular oncology alternative payment models were financial incentives for clinical pathway adherence and bundled payments.

Data from the interviews of 18 individuals from provider groups, clinical pathway developers, and health plans also showed that the common element across the alternative payment models was a prescription drug spending reduction goal.

Healthcare bundled payments targeting oncology helped provider organizations to combat rising prescription drug spending, the study found. The alternative payment model stabilized drug costs after a historic increase between 15 and 18 percent per year.

The episode-based model also decreased emergency department visits by 30 percent and inpatient days by 17 percent.

READ MORE: Bundled Payments Rely on Robust Networks, Healthcare Markets

Additionally, CMS currently offers the Oncology Care Model, a bundled payment model designed to reduce healthcare costs for a six-month episode of chemotherapy administration. The oncology-specific Medicare bundled payment model boasts over 190 practices and 16 payers.

The federal agency also included the Oncology Care Model’s two-sided financial risk track as an Advanced Alternative Payment under MACRA. Eligible clinicians who sufficiently participate in the model in 2017 will automatically earn a 5 percent incentive payment in 2019.

Despite bundled payment popularity, ASCO opposed its use in oncology as a method for reducing prescription drug spending. Instead, the oncology group favored other value-based reimbursement arrangements.

An appropriate value-based pricing strategy is value-based pathways, the organization stated. The pathway model would better align prescription drug rates and utilization with the value they bring to cancer patients.

A value-based pathway model should use appropriate drug utilization as a quality measure rather than a resource use measure. The model should also divide drug therapies into hierarchical pathways based on their comparative value and evaluate providers based on appropriate use of pathways.

READ MORE: Bundled Payment Models Here to Stay Despite CMS Program Delays

“Practices that fall below a certain threshold would receive a negative adjustment in payment,” ASCO elaborated. “This has the advantage of incentivizing both provider use of higher value treatments and development of therapies by the pharmaceutical industry that achieve high value through a combination of maximizing efficacy and minimizing toxicity and costs.”

Another value-based reimbursement approach to oncology is indication-specific pricing. With this method, drug reimbursement would differ depending on its effectiveness in varying approved indications.

ASCO also supported outcomes-based pricing for prescription drug rates and reimbursement. Under the approach, claims reimbursement would depend on the impact of the drug on particular patients.

For example, if a patient exceeds the median survival reported in the clinical trial population, claims reimbursement would be greater than a set benchmark. In contrast, reimbursement would be lower if the drug therapy results in a lower median survival time.

The oncology group noted that the value-based reimbursement options may require a value framework for cancer care drugs. Industry stakeholders should agree on how value is measured for cancer care drugs.

“The medical community should be judicious in using new and costly products until there is clearly established value and clear understanding of how that value relates to treatment goals, available options, and the unique needs, preferences, and goals of individual patients,” stated ASCO. “Doctors should also make sure their patients are aware of the cost, benefit, and personal financial impact of their treatment options and choices.”