Framing the Issue:

An estimated 1.6 million new cancers were diagnosed in 2014.

Demand for cancer care is being driven by newly insured patients, an aging population and long-term care needs of people living with cancer.

In the last decade, the average monthly cost of cancer treatment has more than doubled to $10,000.

To control cost while preserving or enhancing quality, health insurers and providers are turning to clinical pathways, alternative payment models and quality monitoring.

Greater availability of metrics and tools to analyze clinical data are helping hospitals and their oncologists to improve cancer care quality.


The University of Tennessee Medical Center set a lofty goal when it created its cancer care center of excellence three years ago: to provide a comprehensive, coordinated, patient-centric and multidisciplinary approach using evidence-based medicine across the entire episode of care.

The institution is well on its way toward reaching that aim. Seventy percent of cancer patients receive inpatient care that follows pathways specifically designed around cancer type by multidisciplinary teams of clinicians. For several cancers, the center has been able to winnow down to five working days the time it takes from the first call by the patient to approval of a treatment plan.

The undertaking not only strives to improve patient care, but also to position the medical center to succeed under emerging payment models in Medicare and the private market that emphasize value and accountability.

“We really don’t know what the payment mechanism going forward long term is going to look like,” says President and CEO Joseph R. Landsman. “We’re trying to build a mechanism centered around the patient that provides predictable, reliable quality outcomes for the people we serve. The rest of it becomes irrelevant because no matter what the payment scheme is, what the contracts look like, you’re going to be performing very well under those structures.”

The pressure to provide high-quality care at a lower cost is driving many institutions to reshape their cancer care delivery models and spurring some hospitals to experiment with new payment models with private insurers.

At the medical center, nurse and lay navigators trained by type of cancer are instrumental in coordinating care. Their role begins with the patient’s first call. They gather patient information, request needed records, make sure the center doesn’t duplicate services already provided elsewhere and schedule appointments in advance of weekly cancer conferences.

New cases are presented at weekly cancer conferences, which are organized around type of cancer, and a multidisciplinary team develops patient treatment plans. Participants could include internal medicine physicians; medical, radiation and surgical oncologists; radiologists; pathologists; genetic counselors; physical therapists; pharmacists; social workers; and clinical trials nurses.

Standardized, but not inflexible

The treatment plans follow evidence-based medicine and, in most cases, disease-specific care pathways. The medical center’s initial goal was to have 80 percent of inpatient admissions covered under pathways by the end of 2014. It came up 10 percentage points shy. “The reason is [that] when you get to the last 10 percent, you’re talking about a lot of pathways because the volumes are so small,” Landsman says.

The cancer center uses Lean methodology to develop each pathway, and all clinicians who have a hand in care for that particular cancer provide input, Landsman says. “We try to eliminate all non-value-added steps from the patient’s perspective in the care process.”

Each pathway is standardized across all disciplines for patients with the same diagnosis. “You want to eliminate the variation in the outcomes,” Landsman explains. Services, including palliative care and hospice consults, are hardwired into the pathways.

Because cancer can be so different even within the same organ system, steps to address that variation are built into the care pathways, says John L. Bell, M.D., director of the medical center’s Cancer Institute and a surgical oncologist. “They’re dynamic entities that change according to new information, new technology and new standards.”

Standardization doesn’t mean clinicians can’t deviate from the care pathways. “It’s not rigorous to the point of no flexibility,” Bell says. “We can change, and when we do, we agree to change and we agree on why we’re changing.”

The medical center is expanding its pathway movement into physician practices and the post-acute care setting. It’s working with University Physicians’ Association Inc., a clinically integrated independent practice association, to develop disease-specific pathways. It also plans a request for proposals for various types of post-acute providers that will include requirements that they help build and comply with care pathways.

“We have embarked on a journey and at the end of the day, it will encompass the entire episode of care and everything that happens in that episode, so it will reach well outside the walls of the hospital,” Landsman says.

CASE STUDY | Baptist South Florida takes the ACO approach

Some hospitals have engaged with private payers in testing new cancer care payment models.

Four years ago, Baptist Health South Florida; Advanced Medical Specialties, a private oncology physician practice in Miami; and Florida Blue agreed to collaborate on an accountable care organization for cancer. The ACO covers the six most common cancer diagnoses, which account for about 90 percent of the system’s cancer patients. Active patients were attributed to the ACO, and payment is on a fee-for-service basis.

“The purpose is to learn how to manage a population with the idea that someday we would be able to take capitation for this cancer population,” says Leonard Kalman, M.D., deputy director of the Miami Cancer Institute, part of Baptist Health South Florida. “We’re expert physicians in cancer care, but we need to become expert shepherds of the costs because you have to make sure the care is sustainable.”

The three groups spent about a year comparing their data to determine where cancer care dollars were spent. They arrived at the member per year cost and established financial and quality targets. If the quality targets were met, any savings would be split among the organizations.

The ACO is using the spending analysis to focus its efforts. The two biggest areas, each at 25 to 30 percent of spending, are chemotherapy and its administration, and inpatient hospital days.

The oncology practice, now employed by Baptist, already was using nationally recognized chemotherapy guidelines and was focused on appropriate use of generics. So, efforts concentrated on physician compliance with the pathways, says Kalman, who was the longtime leader of Advanced Medical Specialties before it joined Baptist in December 2014.

The initiative to address inpatient costs is centered on avoidable admissions and lengths of stay, and still is unfolding. To prevent unnecessary emergency department visits, physicians and nurses with access to the electronic health record take patients’ after-hours calls and triage them to other settings if appropriate.

For patients who go to the ED, the organization is establishing a mechanism whereby the ED would call an oncology nurse practitioner who would then go to the ED with the patient’s medical record to help the emergency physician determine if an admission is needed.

The organization has begun working with a predictive modeling company to develop software to identify which cancer patients might be at risk of an admission. A nurse or nurse practitioner would call those patients on a regular basis and get them into the office, if needed, so they wouldn’t become sick enough to be rushed to the ED.

Patient education is an important part of preventing avoidable admissions, Kalman says. The cancer institute is recruiting a director of outpatient palliative care who will manage a team of advanced-practice palliative care professionals. The palliative care team would meet with patients early on to educate them about their diseases and prognoses. Meetings would continue over the course of treatment and address patients’ goals, how they want to live during treatment and, for terminal patients, what they want for end-of-life care.

“You need to educate the patient or surrogate toward the end of life that perhaps an extra line of therapy or radiation or a hospital admission is not necessarily appropriate,” Kalman says.

Baptist also is beginning a length-of-stay reduction plan. It has hired an advanced practice provider to coordinate among the hospitalist, oncologist and floor personnel. “We don’t want to shortchange anyone with care, but we want to see if we can make admissions more effective by having everyone understand what the goal of the admission is,” Kalman says.

The project recently finished its first three years and the system has re-upped for three more years. In the first year, the ACO was able to flatten Florida Blue’s cancer costs, which had been rising 10 percent annually, but it didn’t meet the threshold for shared savings, Kalman says. In the second and third years, the ACO reduced member per year costs and garnered shared savings. The ACO met its quality targets each year. 

CASE STUDY | MD Anderson tests bundled payment

In Houston, the University of Texas MD Anderson Cancer Center is dipping its toe into new reimbursement models with a bundled payment program launched with UnitedHealthcare in December 2014.

The project is limited to patients newly diagnosed with head and neck cancer. Among the reasons the two organizations settled on head and neck cancer were: The patient volume is low, so it poses less financial risk to the cancer center; and those services are offered in a single location by multidisciplinary teams that already were focused on care coordination, costs and patient outcomes, says Thomas W. Feeley, M.D., head of MD Anderson’s anesthesiology and critical care division and its Institute for Cancer Care Innovation.

Episodes under the bundle encompass all cancer care provided at MD Anderson for the patient in one year. Determining the amount of the bundled payment posed a major challenge. “We know how much it costs to run MD Anderson, but, interestingly, our cost-accounting systems don’t really tell us a whole lot about what it takes in terms of the actual expense to care for an individual patient with an individual condition.”

Officials initially thought bundled payments would be arranged by type and stage of head and neck cancer. A cost analysis found that those two factors are a poor indicator of cost. Instead, the best cost indicators were patient comorbidities and the type of care the patient needed; for example, cancer surgery alone vs. cancer surgery with plastic surgery reconstruction, followed by chemotherapy.

Those findings resulted in four treatment-based payment bundles and extra payment for patients with two or more comorbidities. The patient isn’t assigned to a bundle until a multidisciplinary team decides on the treatment plan. United also included a stop-loss provision for cases in which the patient has a catastrophic event that doesn’t relate to the quality of care.

Working with Harvard Business School, the center developed clinical outcome measures for head and neck cancer. The process involved asking physicians what they thought the most important outcomes were for patients, and then validating the results with patient groups.

MD Anderson had to change some information technology systems to collect the patient-reported and physician-reported outcomes. “We very much want to get those outcomes into the hands of the payers and set this up as a model for how we would hope other bundled pricing programs would develop in health care,” Feeley says.

Project leaders have no preconceived notions about how it will play out. “We’re not going to suddenly — in the next two years — transform all of the payments for MD Anderson to bundled payments,” Feeley says. “Now is the time to test these new reimbursement models. Any organization that is interested in looking at them should look at them with an eye toward getting some experience. This will not be a revolution. It will be an evolution.” — Geri Aston is a contributing writer to H&HN.

CASE STUDY | Pennsylvania hospital helps patients facing high costs

A cancer diagnosis for some people is not just a health crisis, but also a financial disaster for themselves and their families. Patients face co-pays for chemotherapy drugs and other out-of-pocket costs, and the illness might interfere with their ability to work.

Eight years ago, a patient’s struggle with very high chemotherapy co-pays spurred Bonny Holmes, supervisor of Mon-Vale Oncology Inc. in Monongahela, Pa., to research programs that offer financial assistance.

“We were able to have that patient placed in a program, and we have been helping our patients ever since,” Holmes says.

In the past three years, the Monongahela Valley Hospital Regional Cancer Center’s staff arranged for patients to receive $1.6 million in co-pay assistance and free chemotherapy prescriptions.

Rhea Regul, a medical secretary who works with Holmes at the cancer center, spends more than 50 percent of her time acting as a financial advocate to find co-pay assistance for patients. In addition to organizations that provide assistance with drugs, others offer resources to help people who need transportation to and from their treatments or other types of financial help.

“It’s amazing to see the amount of money [with which] they’ve been able to help people,” says Daniel F. Simmons, the hospital’s senior vice president and treasurer. “They’re doing it to help the patients and to feel that positive side of life.” 


Executive Corner

U.S. cancer care remains in a state of transition, according to an American Society of Clinical Oncology report. Here are some of the findings highlighted in “The State of Cancer Care in America: 2015.”

1 | Practice of oncology

The trend toward consolidation continues, with one-quarter of community-based practices signaling the likelihood of pursuing hospital affiliation in the next 12 months. Cost and payer pressures persisted as the most pressing practice concerns, especially among physician-owned and hospital-based practices. Drug prices also were a major concern among physician-owned practices.

2 | New payment models

Seventy-two percent of practices reported that they continued to work in a fee-for-service environment. However, practices are testing new payment models, such as capitation (8 percent), episodes of care/bundling (9 percent), and other alternative payment models (11 percent).

3 | NOVEL Care models

Of practices considering or implementing novel models, 36 percent reported that they had implemented or were considering a pathway-adherence program, and 30 percent were considering medical home programs emphasizing care coordination. Participation in ACOs varies by practice setting, with 31 percent of hospital-health system-owned practices, 27 percent of academic practices, and 21 percent of physician-owned practices having reported participation.


CMS oncology payment pilot

Medicare in February joined the field of payers testing new oncology payment models with a project focused on chemotherapy administration.

The Center for Medicare & Medicaid Innovation’s Oncology Care Model keeps fee-for-service reimbursement for intravenous chemotherapy administration, but adds a per beneficiary, per month care management payment and the potential for a performance-based payment for episodes of chemotherapy care. Medicare is encouraging other payers to participate to create broader incentives for care transformation in physician practices.

Participating practices would be eligible to receive payment for a maximum of two six-month episodes of care. The project requires practices to:

Provide patient navigation.

Document a care plan that contains the Institute of Medicine’s cancer care recommendations.

Provide 24/7 patient access to a clinician with real-time access to health records.

Treat patients with therapies consistent with nationally recognized clinical guidelines.

Utilize data to drive continuous quality improvement.

Use a certified electronic health record and attest to meaningful use Stage 2 by the end of Year 3.

The American Society of Clinical Oncology says the Medicare model has several flaws, but should be tested. Problems include the project’s reliance on fee-for-service payment and on the flawed reimbursement system for chemotherapy drugs, says Jeffery Ward, M.D., immediate past chair of ASCO’s clinical practice committee. Under today’s chemotherapy payment system, practices buy the drugs and bill them at a markup of 6 percent above the average sales price to make up for inadequate reimbursement for chemotherapy administration and for non-reimbursed services the practices provide.

ASCO has proposed a model for medical oncology payment that revolves around five types of flexible bundled payments each of which reflects a stage in patient care, from establishing a treatment plan for a new patient to transitions in treatment for disease recurrence.

“There should be multiple pilots, but CMMI has, for some reason, decided to put all of its eggs in one basket,” Ward says.