How Anthem is realigning the oncology reimbursement system

May 8, 2015 | By Dori Zweig

Cancer treatments costs drain consumers' pockets. Although 13 new cancer treatments have been introduced since 2012, only one extended patients' survival rate by six months. What's more, there's not a single Food and Drug Administration-approved cancer drug for 2015 that is less than $15,000.

The need to overhaul the entire oncology reimbursement system is apparent. That's why Anthem created its Cancer Quality Care Program.

"Our decision to establish our program stemmed from an Institute of Medicine 2013 report that highlighted how care isn't patient-centered enough," Jennifer Malin, staff vice president, clinical strategy, Anthem (pictured right), told FierceHealthPayer. "This report showed that one out of three patients don't receive the best chemotherapy treatment, and that oftentimes, drugs are too toxic. Ultimately, we saw a great need to realign the entire reimbursement system."

Anthem's program pays participating oncologists extra money for treatment planning and care coordination when they select a treatment regime that is "on pathway" or matches Anthem's treatment guidelines.

So far, the program has been implemented in 10 states, noted Malin. By June 1, it will be active in 13 of the 14 Anthem commercial affiliated health plans and is part of the benefit for commercial and Medicare Advantage members.

Out with the old, in with the new

Under the current "buy and bill" reimbursement system, oncologists buy directly from drug manufacturers and distributors. The oncologists are in turn reimbursed by the average sales price plus a margin; most oncologists generate revenue from the profit margin of the drug, which then goes toward operating expenses. However, this practice encourages oncologists to use pricey treatments even if less expensive therapies provide similar outcomes, according to Malin.

Anthem understood that, for many providers, it's difficult to transform a financial method that has been in place for so many years. "Given the context of what we know of the buy and bill method, we wanted to develop a program that provides additional revenue to practices that's cost-effective," Malin said. "We need to help oncologists as they switch to placing a greater emphasis on the value of care."

How the program works

Anthem's internal team of oncologists and pharmacists reviews guidelines and summaries of important clinical trial data and costs for each regimen. Based on this research, as well as feedback from an external committee, the program identifies which pathways to include. The idea is to provide oncologists with more information regarding which cancer treatment therapies are clinically effective and provide greater value, Malin said.

The program also lets oncologists receive enhanced reimbursement. However, while Anthem's program doesn't change how it pays oncologists for chemotherapy treatments, it rewards them for choosing approaches that are "on pathway" and pays participating oncologists a $350 per month care management fee.

How to get providers on board

Anthem's program is entirely voluntary--oncologists who do not wish to participate are reimbursed based on their contracts.

"A few things helped us to get oncologists involved," Malin noted. "We weren't imposing penalties and we weren't requiring providers to follow certain pathways. It was up to them to determine which pathway was appropropriate for which eligible patients. We provided the oncologists with the tools they needed to figure out which pathway to include."

Malin added: "We had extensive communication with our participating providers. A combination of all of these elements helped us develop a successful program."

What the future has in store

The program, which began July 1, 2014, first rolled out in Midwestern states and included the pathways for breast and colon cancers. As Anthem adds more states and pathways, the insurer has noticed an increase in provider participation.

While the program still is in the early stages, results have been positive, Malin Malin added. More importantly, because of this program, "We'll have better data and information that we can make available for Anthem members who need cancer treatment. Today, many health plans are focusing their efforts to increase transparency; we believe our program is one step on that path to achieving this ultimate goal."