UnitedHealth tests bundled payment for cancer treatment

UnitedHealth (NYSE: UNH) is testing a new payment approach for breast, colon and lung cancers that reimburses participating oncologists upfront for an entire cancer treatment program. This new "bundled" payment, which is based on the expected cost of a standard treatment regimen for the specific condition, could extract cost savings and ensure terminally ill patients are not subjected to unnecessary, costly treatments, the New York Times reports.

Oncologists will be paid the same fee regardless of the drugs administered to the patient, effectively separating the oncologist's income from drug sales. The drugs can include anything from standard chemotherapy with generic drugs to costlier branded treatments, such as Herceptin or Avastin, the Wall Street Journal reports. Office visits, chemotherapy administration and services like laboratory tests will still be paid based on a more traditional "fee-for-service" model, according to the Dayton Daily News.

The new payment system, being tested at five clinics in Georgia, Missouri, Ohio, Tennessee and Texas, will erase an economic incentive for doctors to prescribe more costly drugs, as physicians now buy the medicines from drugmakers and charge as much as 30 percent more when submitting claims to insurers, Lee Newcomer, UnitedHealth’s senior vice president for oncology, told Bloomberg. "If they are using expensive drugs, that's OK--we're going to reimburse for the cost of that. But they're not going to make any more or less profit off of it, and we're not going to pay inflated prices for a drug," he said.

UnitedHealth will compare how well patients in the five practices do in terms of the number of emergency room visits they make, the side effects they experience and which treatment regimens are best at fighting their type of cancer, notes Kaiser Health News.

To learn more:
- read the New York Times article
- read the Dayton Daily News article
- see the Wall Street Journal story
- see Kaiser Health News story
- read the Bloomberg article
- check out UnitedHealth’s press statement