Clinical Pathways in Payment Reform Should Address Risk Adjustment

August 2016, Vol 6, No 8

It does not take a crystal ball, or even an economist, to foretell that disaster is imminent in the healthcare system if premiums and out-of-pocket costs continue to rise, along with the cost of cancer drugs. Although the government attempts to rectify the situation with Medicare payment reform, new payment and care delivery models, such as the Oncology Care Model (OCM) pilot, and laws, such as the 2015 Medicare Access and CHIP Reauthorization Act (MACRA), present financial challenges for oncologists.

Clinical pathways offer a potential solution to risk-adjustment issues through granular quality reporting, said Blase N. Polite, MD, MPP, Chief Quality Officer, Section of Hematology Oncology, University of Chicago Medicine, IL, at the 2016 American Society of Clinical Oncology (ASCO) annual meeting.

According to the Centers for Medicare & Medicaid Services, the OCM encourages physician practices to improve care and lower costs through an episode-based payment model that financially incentivizes high-quality, coordinated care.

In the OCM, the costs of care surrounding chemotherapy administration to patients with cancer are compared with the national benchmark prices. If oncologists outperform their target, their practice keeps some of the money; if they fail to reach their target, there will be financial accountability.

Risk Adjustment Needed

Risk adjustments are included in the OCM (such as in relation to cancer type), but other factors, such as disease stage or molecular factors, do not include risk adjustment.

“There is no distinguishing between a breast cancer patient with ER/PR-positive or HER2-negative cancer versus triple-negative breast cancer versus a patient with stage II breast cancer who is HER2-positive. The treatment you’re going to give to those patients is going to be very different, as are the costs, yet payers have no way to risk adjust, because they don’t have the data,” said Dr Polite.

“Anyone involved in bundled payments will tell you that you live or die based on risk adjustment. Without some way to risk adjust, oncologists will come out very low on resource use just because they happen to be treating a more complex cancer,” he added.

The financial stakes are high, but the data are incomplete. By 2021, 30% of a physician’s total MACRA score will be based on resource use performance measures. This is not optional, and it will affect every provider who sees Medicare beneficiaries.

According to Dr Polite, there needs to be a way to collect these data in a granular fashion so that risk adjustment can be done appropriately.

“Pathways offer a way to collect [cancer] stage, line of therapy, performance status, radiology use, molecular subtypes, and more, and feed these data into the payers’ models so that they can risk adjust appropriately. Without pathways, I think you’re going to have a really difficult time doing this,” he said.

Quality Metrics

Although drug costs and utilization are important, oncologists have limited control over pricing and volume.

“Oncologists should never be penalized financially for following the rules. If we give the right drug to the right patient at the right time, based on their molecular profile, there needs to be a way to account for that,” he said.

The solution is to regard drug use as a quality metric rather than resource utilization, which can be accomplished with clinical pathways, said Dr Polite.

“If you’re going to subject people to shared-savings and shared loss, then you have to have some way to ensure that people are not undertreating. You absolutely cannot have any of these advance payment models without quality metrics….By collecting this information, and serving as a quality metric, pathways can solve a lot of problems,” said Dr Polite.

Incorporating Value

Payers and policymakers may think otherwise, but clinical pathways are not guidelines. Rather, clinical pathways require oncologists to make challenging treatment decisions, while balancing efficacy, toxicity, and cost, Dr Polite said.

“If payers are going to get behind pathways, oncologists have to be willing to make difficult choices in how we select treatments. In order to do that, we have to come to some consensus on value,” he explained.

Ultimately, by incorporating value, such as ASCO’s value framework, clinical pathways can help bridge the transition to alternative payment models, helping payers and providers more accurately adjust risk, while changing drug use from a resource tool to a quality metric, Dr Polite concluded.

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