UnitedHealth: New doctor payment plan cut cancer care costs

Tue Jul 8, 2014 4:25pm EDT

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(Reuters) - An experiment changing how U.S. cancer doctors are compensated cut healthcare costs by a third, with no discernible decline in patient health, according to a three-year study by insurer UnitedHealth Group Inc and five medical oncology groups.

Cancer treatment is one of the most expensive and fastest growing categories of care in the United States. Oncologists and insurers have been devising new incentives for doctors to improve patient care while lowering costs.

In the latest experiment, UnitedHealth, the largest U.S. health insurer, gave participating doctors an upfront payment to cover a patient's full course of treatment, rather than reimburse them for each individual medical service such as chemotherapy. Findings from the study, which ran from 2009 to 2012, were published online on Tuesday in the Journal of Oncology Practice.

At the five oncology groups in the study, medical costs for 810 patients with lung, breast and colon cancer were $65 million, versus $98 million for similar patients whose doctors received standard payments. That represented a decline of three times what the study had targeted.

"All the physician's work of caring for a patient in the hospital was also bundled into the 'episode of care' fee. When you bundle something, you tend to get less of it," said Dr. Bruce Gould, medical director of the Northwest Georgia Oncology Centers in Marietta, Georgia and a study author.

In standard practice, medical groups are paid on a fee-for-service basis for doctor visits, hospital stays, and imaging. They also receive reimbursement for the cost of chemotherapy drugs, plus a percentage of that cost.

In the UnitedHealth study, doctors instead received an upfront payment per case, and no extra payments based on chemotherapy use. A fee-for-service payment to doctors associated with hospital stays was also eliminated.

The lower costs were the result of fewer radiation treatments and imaging as well as fewer hospital stays, which are often due to illness from the effects of chemotherapy, the authors said.

At the same time, the costs of chemotherapy spiked unexpectedly by 179 percent to $21 million, compared to $7.5 million for the standard payment group. The program had hoped for the opposite effect, expecting that by ending payments for each chemotherapy treatment doctors would have less incentive to overuse it. Those payments are larger if the drugs used are more expensive.

It was not clear if the chemotherapy costs rose because drug prices rose or because doctors administered more treatments.

The oncology groups also standardized some of the ways they delivered care after semi-annual, in-person discussions on best practices, the authors said.

For example, one group lowered its hospital stay rate for cancer patients by scheduling follow-up appointments within 48 hours for patients suffering chemo side effects such as nausea and diarrhea. That cut hospital stays by delivering treatment before the conditions became critical.

(Reporting by Caroline Humer; Editing by Michele Gershberg, Bernard Orr)

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