October 20, 2010 / 4:02 AM / 9 years ago

UnitedHealth seeks change to reimbursing for cancer drugs

* 5 oncology practices across U.S. participating

By Lewis Krauskopf

NEW YORK, Oct 20 (Reuters) - UnitedHealth Group Inc (UNH.N) is trying to change how it reimburses oncologists using a method the insurer says could improve treatment practices.

The U.S. health insurer has started a pilot program involving five physician practices across the country, focusing on breast, colon and lung cancers, the company announced on Wednesday.

Oncologists currently buy chemotherapies and other drugs directly at wholesale prices, and then are reimbursed at higher retail rates, UnitedHealth said.

Oncologists make about 60 percent of their income from selling drugs in this way, according to UnitedHealth, the largest health insurer by market value. They may make greater profit margins from higher-priced medicines, and therefore can be incentivized to prescribe newer drugs regardless if they have been proven more effective.

As opposed to this fee-for-service method, doctors in the pilot program will be paid one upfront fee based on the expected cost of a standard treatment regimen.

Lee Newcomer, UnitedHealthcare’s senior vice president for oncology said that by paying oncologists for a patient’s total cycle of treatment, rather than the number of visits and the amount of chemotherapy drugs given, the program promotes better, more patient centric care with no loss of revenue for the physician.

The program “completely changes the way we reimburse for cancer therapy today,” Newcomer said.

“We kind of draw a line in the sand and say this is the fee now for taking care of the patient and it doesn’t change depending on what drugs you select in the future,” Newcomer said.

Under the program, each medical practice has designed its own treatment regimen. The insurer calculates a payment to the practice based on the cost of the drugs and the resources the oncologist’s office spends in managing the patient.

The five medical practices in the program have between 18 and 35 oncologists on staff and are based in Dayton, Ohio; Fort Worth, Texas; Kansas City, Mo.; Marietta, Ga.; and Memphis, Tenn.

The regimens will be evaluated based on various health outcomes, as well as emergency room visits and complications.

“As oncologists share best practices from the program about which treatment regimens are most effective, we expect to see consistently improved patient outcomes.”

Newcomer said the program is expected to be revenue-neutral at first, but stands to save money over the longer term should oncologists prescribe older drugs that have worked in their regimens as opposed to newer, higher priced treatments.

A review of data from the program is planned for early next year. (Reporting by Lewis Krauskopf; editing by Carol Bishopric)

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