Where Quality Meets Cost: Payers’ Perspective on Pathways

August 2016 Vol 9, Special Issue: Payers' Perspectives in Oncology

Evidence-based treatment protocols and clinical pathways for delivering quality cancer care have been developed for virtually all tumor types and stages, but questions remain regarding patient access, care quality, and transparency in their development and implementation.

At a session on pathways at ASCO 2016, Andrew Allan Hertler, MD, FACP, Chief Medical Officer, New Century Health, offered 4 major goals that payers hope to achieve through pathways.

1. Standardization

Payers take risk, and taking risk in cancer care requires predictability over a population. Oncology management is the “perfect storm of challenges,” he said: a low-volume disease that’s very high in cost and variability.

In many ways, it’s more important for payers to know what their liability is likely to be so they can incorporate that into their premiums, according to Dr Hertler. Not being able to calculate risk signals trouble in an industry that does not have a huge margin.

“While the prevalence of cancer is actually quite predictable, the variability in treatment is definitely not,” he said. “What payers hope to bring to the table with pathways is a degree of standardization of care to allow them to predict their risk.”

2. Quality

Because payers are held accountable by measures such as HEDIS (Healthcare Effectiveness Data and Information Set) and Medicare’s Star Rating system, quality is very important to payers, said Dr Hertler.

But quality is also important because payers are marketing their plans. In Medicare Advantage and Marketplace Advantage plans, payers are marketing directly to the consumers who are purchasing health plans. In the case of commercial plans, payers are marketing to businesses and employers.

“Payers want their product to be a quality product, both to meet regulatory requirements and to sell their product,” said Dr Hertler.

3. Creating Value

One survey of managed care organizations (MCOs) showed that 70% believe that pathways affect the cost of treatment. In addition, 50% of MCOs said that they are working with providers to measure the cost impact of treatment pathways, as well as the clinical impact.

“The medical literature suggests that clinical pathways help control costs with the maintenance of the same outcomes or perhaps even improved outcomes,” said Dr Hertler, emphasizing the need to mitigate the rapid rise in the cost of cancer care.

4. Market Differentiation

Finally, payers believe that pathways can be used to distinguish themselves in the marketplace. Although there are pathways in different oncology areas, including radiation oncology, surgical oncology, and genomic pathways, the bulk of current pathways involve drug treatment, said Dr Hertler. Payers distinguish themselves by their formularies, in part by using them to create value.

“Some patients may prefer a plan that has a more limited formulary or a higher copay, whereas other patients may want a much broader formulary and are willing to pay more for access to a greater variety of therapies. These differing formularies allow the payers to distinguish themselves in the marketplace and differentially price their products,” he noted.

Dr Hertler believes that as long as there are multiple payers with different formularies, providers will continue to use different pathways.

“If we get to the day where we have a single payer, I can imagine a single pathway, but I don’t think this is going to happen in the near future,” he said.

Successful Pathways

Ultimately, said Dr Hertler, for long-term success, pathways must incorporate 3 elements:

  1. Consistent and rapid updates of the most recent clinical evidence
  2. The development of pathways must be transparent for physicians and for patients
  3. There needs to be alignment of incentives, in which the provider is rewarded for following care protocols, delivering high-quality care, and improving clinical outcomes.

“When all 3 of these elements come together, payers believe that there’s a sweet spot, where better quality can be provided at a lower cost,” said Dr Hertler.

Last modified: August 30, 2021
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