Site of Service Influences Value

August 2014 Vol 7, Special Issue ASCO 2014 Payers' Perspectives in Oncology

The growing affiliation of community oncology practices with hospitals and other networks is an obstacle to achieving value in cancer care, according to Lee N. Newcomer, MD, UnitedHealthcare Senior Vice President of Oncology, Women’s Health and Genetics.

At ASCO 2014, Dr Newcomer referred to the wide difference between what payers spend for cancer care delivered in freestanding oncology offices and what they pay for the same services in the hospital setting.

UnitedHealthcare, he said, pays the Centers for Medicare & Medicaid Services (CMS) rate + 22% for chemotherapy delivered in the oncologist’s office. Should the same chemotherapy be delivered by the same oncologist practicing in a hospital-owned facility, the company pays CMS rate +146%. “This is 6.6 times more money for exactly the same service,” Dr Newcomer noted.

“Here’s a vivid example,” he continued. “A Midwest practice with a large volume with our insurance company was acquired by a hospital system. Overnight, we had a new fee schedule. The same treatments by the same doctors increased our cost by $5 million a year. This was a single acquisition by a single institution.”

Dr Newcomer predicted that employers will react to such changes by mandating substantially higher copays and establishing financial penalties for seeking care in institutions with higher fee schedules in the absence of additional value.

Under these circumstances, it is important to distinguish institutions that conduct research, and therefore need additional funding, from hospitals without a research mission “but that are simply charging more money and are making a profit from the cancer center to support other parts of the hospital,” Dr Newcomer said.

Patients and consumers may inhabit the same body but hold 2 different perspectives on their health insurance. “We have to pay attention to how the consumer thinks, because the consumer is our customer,” he said. “But while a consumer buys a health plan, a patient uses that health plan.”

Patterns of compliance suggest that even when patients derive great value from their plans, they still consider them expensive. “In our specialty pharmacy program for oral drugs, we have increased treatment compliance by 50% through our pharmacy teams. But with only a $50-a-month copay for a drug worth $5000 a month, compliance is still only 58%,” Dr Newcomer noted.

“Consumers are saying, ‘we are not sure healthcare is worth spending our money on,’ and that’s concerning to me,” he remarked.

A plan proposed by some opinion leaders is provocative. “The insurer would say to the patient, ‘You now have metastatic disease. We are about to spend $100,000 taking care of you,’” Dr Newcomer said. “‘Should we do that? Or should we just give you the check?’ This would certainly have patients looking at the concept of value more closely than they do today.”

Last modified: August 30, 2021
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