AUSTIN, Texas—As health insurers seek to manage rising oncology costs, UnitedHealth executive Lee Newcomer, M.D., has two blunt pieces of advice for them.
First, when it comes to the frustratingly high prices for cancer treatment drugs, accept that “you can’t do a thing about it,” Newcomer, who is UnitedHealth’s senior vice president of oncology and genetics, said during a session Friday at the 2017 AHIP Institute & Expo.
Forty-two states and every federal program have “a line in their law that says every if there is an FDA indication for cancer in this drug, you must pay for it,” he said. Thus, insurers have no leverage with drug manufacturers.
There’s slightly more wiggle room when it comes to site of service, as hospital-owned oncologists collect a much higher margin on cancer drugs than their independent counterparts. But solving that problem requires more competitive markets.
Given how little power they have over drug costs, insurers like UnitedHealth are turning to value-based payment systems in oncology care. That’s where Newcomer’s second piece of advice comes in: Don’t bother with bundled payments.
UnitedHealth has learned that while bundled payments are great for procedures like knee surgery, they’re “too much work, too little gain” in oncology, he said. In part, that is because such arrangements ask a lot of providers, as they must shoulder downside risk and conduct their own analytics.
Instead, Newcomer recommends value-based payment arrangements built around episodes of care, also known as gain-sharing.
UnitedHealth created its own episodes of care arrangement for breast, colon and lung cancers that involved five medical practices, he said, noting that three years in, the program saved $33 million.
Curiously, though, while medical costs fell, cancer drug costs went up relative to the providers’ fee-for-service counterparts. Looking back, “most of that was sloppiness,” Newcomer said, as some practices had physicians who didn’t follow their own regimens.
The factors that were the most responsible for the savings achieved, Newcomer added, were the biggest win.
“They upped their access; patients were able to get in early with symptoms; they had far fewer hospitalizations—and that’s a better quality experience for the cancer patient,” he said.