Inclusion of Drug Costs in Bundled Payments Places Oncology Practices at Uncontrollable Risk


An article recently published in the Journal of Oncology Practice (online April 12, 2018; doi:10.1200/JOP.17.00036) poses the argument that including drug costs in a bundle subjects oncology practices to the uncontrollable probabilistic risk of patient case mixes. Ray D Page, DO, PhD, The Center for Cancer and Blood Disorders (Fort Worth, TX), co-author of the study, addressed some of the larger ramifications of this finding in an interview with Journal of Clinical Pathways.

What potential issues do including drug costs in bundled payments pose?

Dr Page: This study established a simulation using the available treatment options for metastatic lung cancer (highly variable) and stage III colorectal cancer (minimal variability). The study shows that if you include drug costs into a bundled payment arrangement, then for many molecularly complex cancers like lung cancer a practice is at high risk of financial distress depending on the molecular mix of patients.

Today, we increasingly have the opportunity to practice precision medicine with an ever-growing variety of targeted therapies. Yet depending on the molecular profile of the patient there can be an enormous drug cost difference. For example, a lung cancer with no molecular targets can be treated with the relatively inexpensive combination of carboplatin and paclitaxel. If the patient's tumor has an EGFR mutation, then they can be successfully treated with an oral EGFR inhibitor. In that comparison there can be up to a 100-time cost difference for a complete course of therapy. So if a practice has, year over year, a higher mix of EGFR positive lung cancer patients, then it only takes a few patients to send the practice underwater in a bundle including drug costs.

Furthermore, our study shows that rural and smaller practices shoulder the highest financial risk. Suppose there is a small practice that sees 100 new metastatic lung cancer cases in a year. Their bundle plan that includes drug costs is based on their prior year experience. However, in the hypothetical current year, their mix of patients changes to where there are only five more that have EGFR-positive disease. That influx of five patients results in higher drug costs not accounted for in their existing drug bundle, putting the practice at risk of a 10%-15% lose. The vice versa could occur, but the point is that the physician has no choice of the molecular mix of their patient population that walks in the door. Removing drugs from the bundle in essence removes the significant variation a small practice can experience, thereby taking away some of the financial risk.

How can the resulting risk of including these costs in bundled payments be mitigated?

Dr Page: We should all have the understanding by now that physicians cannot be accountable for drug costs. However, we can easily be responsible for being good custodians of our resources by giving the right drug to the right patient at the right time. I am a firm advocate that this can best be achieved by the utilization of value-based treatment pathways. These pathways should be practice facing  and should follow that standards that have been recommended in the American Society of Clinical Oncology (ASCO) high quality pathways publication in the Journal of Oncology Practice (March 2017;13[3]:207-210). Physicians can be held accountable for their compliance to evidence-based value pathways instead of putting drugs in a bundle. This has been successfully explored in selected private insurance contracts.

In light of this discussion of alternative payment models, how can we ensure patients still receive best and timely care and practices provide necessary services at lower costs?

Dr Page: Many health care economists and stakeholders are enamored with bundled payment arrangements in order to bend the cost curve and still maintain the quality services required for patient care. When practices are increasingly being held responsible for the global care of the cancer patient, such as in the Oncology Care Model, there can be a potential role for bundled payment arrangements. However, because of the huge variability in drug costs, the patient's molecular profile, and the practice's location and patient mix, this study strongly supports taking drugs out of any bundled payment arrangements. ASCO's Patient Centered Oncology Payment model, which includes treatment pathways for managing drug costs, represents a flexible and viable payment model that mitigates the risks of variations that naturally occur in all practice environments, thereby assuring the highest value of cancer care for everyone.