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Bundled Payments for Oncology

Cora Nucci, for HealthLeaders Media, March 16, 2011
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Payment is made on the first day the patient receives care, and the oncologist is paid the same fee regardless of which drugs are administered to the patient. This way, the doctor’s income is decoupled from drug sale revenue. At the same time, he or she maintains a regular schedule of patient visits. The visits and chemotherapy drugs will continue to be reimbursed at the manufacturer’s cost for as long as necessary.

The average drug margin was 8%, a 30% decline from 2002, says pilot participant Robert Baird, CEO of Dayton Physicians, LLC, citing figures from an Oncology Metrics report. Those declining margins were one reason that the Ohio practice was attracted to the bundled payment pilot, he says. The desire to remain on the front edge of new therapies, treatments, and quality programs, were others, he says.

While the intent of the pilot is to both identify best practices for treating certain cancers and reduce drug administration that does not improve health outcomes, beyond reviewing standard treatment protocols in place at each practice, UHC has no role in determining treatment plans—those decisions are made solely by the oncologists in the program.

“By paying medical oncologists for a patient’s total cycle of treatment, rather than the number of visits and the amount of chemotherapy drugs given, this program promotes better, more patient-centric, evidence-based care with no loss of revenue for the physician,” said Lee N. Newcomer, MD, UnitedHealthcare’s senior vice president of oncology, in a statement.

In addition to Dayton Physicians, four medical practices in Texas, Missouri, Georgia, and Tennessee are participating in the pilot, which began in October 2010. Each practice has between 18 and 35 oncologists on staff, and each medical group must choose a standard chemotherapy regimen for each of 19 clinical presentations of the three cancers.

Pilot participant Bruce Gould, MD, medical director of Northwest Georgia Oncology Centers in Marietta, GA, explains that each practice develops its own treatment protocols within the standard of care. While UnitedHealthcare reviewed and approved each practice’s protocols for adjuvant care in advance, treatments for metastatic cancers are not standardized and doctors have some variability there.

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