How Does Oncology Fit in an ACO World?

Gail Thompson

February 2013, Vol 3, No 1 - Cancer Center Business Summit


Dallas, TX—On a regular basis, news headlines across the country announce the opening of another accountable care organization (ACO)—a phrase that was rarely, if ever, heard before the passage of the Affordable Care Act. This game-changing healthcare reform element created the mechanism for Medicare providers to establish ACOs. At the 2012 Cancer Care Business Summit (CCBS), Ronald Barkley, MS, JD, President of the Cancer Center Business Development Group, Bedford, NH, discussed the role of oncology in the development of ACOs.

Whether an oncology practice is independent or hospital-based, ACO activity is likely to have some degree of impact on the strategic plan, daily operations, and patient mix. How quickly that happens remains to be seen.

Mr Barkley opened with a general review of ACOs and why cancer management will be important to that system. The $128-billion annual cancer spending in the United States is second only to the amount spent for cardiovascular conditions. Cancer treatment costs represent about 10% of healthcare expenditures, but only about 1% of the patient population.

The average annual cost for 1 patient with cancer is $80,000 to $110,000 compared with an average $6800 cost per person for all patients. Through more effective clinical management, it has been shown that cancer-related spending potentially could be reduced by 7% to 13%. Mr Barkley noted that the bottom line is that potential savings in oncology may possibly yield more savings than the total potential savings for all primary care combined—a fact that is bound to draw the attention of anyone or any group being held accountable for achieving savings (ie, value) in healthcare.

ACOs and Medicare

The ACO is the vehicle through which the Centers for Medicare & Medicaid Services seeks to transition healthcare delivery from volume-based to value-based. The ACO structure is predominantly oriented toward primary care: Medicare beneficiaries are attributed to specific primary care providers associated with the ACO. These ACO providers will share cost-savings below the traditional fee-for-service expenditure benchmarks, so initiatives with strong potential for substantial savings will, by necessity, have high visibility for ACOs. Ultimately, ACOs will be responsible for the total costs of care in their defined market, including oncology costs.

As of October 2012, there were already 350 ACOs in the country, with more being added on a regular basis. Mr Barkley pointed out that although the ACO is a Medicare construct, a majority (200) of the current ACOs have been developed for the commercial market. However, there are already another 400 applications in process for Medicare ACOs hoping to be launched in 2013.

Commercial ACOs appear very similar to Medicare-focused ACOs, but more often involve a commercial health plan in addition to the physicians and/or hospital, whereas a Medicare ACO would typically involve only medical providers. Both ACO models involve customized contractual arrangements, but in the commercial ACO the contract often stipulates that the health plan pays something different (eg, a premium or new fee) to providers in return for the providers achieving both improved outcomes and reduced costs.

Industry Survey Findings

Mr Barkley presented the findings of the 2012 CCBS Industry Survey, an annual survey that brings to the CCBS key findings on the hot topics of the year. The 2012 survey included focused interviews conducted with 64 industry leaders across the country regarding ACO activity and, particularly, the role (or lack thereof) of oncology in current ACO activity.

The survey interview participants included 40 representatives from Medicare ACOs, 7 from commercial ACOs, and 17 industry thought leaders on ACOs. Of those interviewed, 31.3% were based in the Northeast, 21.9% in the Southeast, 20.3% in the Midwest, 14.1% in the West, and 9.4% in the Southwest. The only national representation (3%) came from commercial ACOs.

The majority of responders indicated that specialties, including oncology, were involved in ACOs, and that oncology was indeed a focus. More than one third (38%) noted that oncology as a specialty was included in the leadership of their ACO; another third (33%) indicated that oncology was not specifically included in their leadership, but that other specialties were; and 84.6% of those responses noted that cardiology was the other predominant specialty.

Not surprisingly, there was less consensus with regard to financial compensation related to oncology and whether oncologists were participating in any ACO shared-savings.

The majority (28%) of the responders noted that oncologists at some point could participate in savings, but that the specialist pay formula was not yet determined. The remaining responders were divided regarding the question of shared-savings in relation to specialists, who often take risks not taken in primary care.

Role of Oncology in ACOs

Why should oncology as a clinical specialty get involved with ACO development and discussion, if the financial expectations are so uncertain? Because no matter what oncologists do, their business will be affected by successful ACO development, Mr Barkley noted.

Current ACO development is much different from the old hospital-physician alignments that occurred in the 1990s. Greater information technology and decision support tools exist than they did back then. The emphasis on these new integrations is far more focused on care coordination and patient-centered orientation.

The new expectations related to outcomes mean that all aspects of the healthcare continuum will be examined, and cost-effectiveness evaluated. Whether or not a specialty participates, they will be evaluated as an element of health system costs, and primary care referrals for specialist services will be shifted away from providers that either are not “in the ACO network” or are found to be less cost-effective than alternative options, even if all of the specialists are outside of the ACO network.

A specialist’s participation in an ACO activity may evolve to measures and evaluations of the provider to which they may not be privy unless they participate—even if they are not allowed to participate financially in the shared-savings model.

Mr Barkley suggested that most ACOs have not yet finalized the details of the shared-savings models; most are too new in development to have any basis upon which to discuss real savings, but that does not mean that the expectation and movement toward seeking savings is not already a game changer in markets where ACOs are becoming active.

Challenges and Solutions

The big challenges for emerging ACOs, according to Mr Barkley, are bridging the gaps in communication across diverse provider groups, and addressing a lack of coordination in care “handoffs” between providers.

Patient navigation. Patient navigators are emerging as one possible solution, but where these services should be housed and funded (ie, the health plan, hospital, primary care, specialist for one disease) is still very much in flux. Oncologists will need to develop processes for integrating these communication and care-management improvements into their practice (both incoming and outgoing). Even oncology groups that are developing their own oncology medical home concepts are faced with building these bridges between the nononcology clinical issues and patient care coordination gaps.

Value. Oncology is not alone. Regardless of the specialty, all care providers are, by necessity, developing new strategies for bringing value (in its many definitions and forms) into their practices. The overriding goals when moving into a value-focused environment include (1) avoiding the unnecessary use of the emergency department by patients with cancer, (2) providing proactive counseling of patients with cancer and treatment of side effects to keep patients from developing the severity of symptoms that could send them to the emergency department, and (3) developing triage protocols and communications that enable patient access to providers on a 24-hour, 7-day-a-week basis to manage patient care proactively (which includes, at its most basic level, phone triage that involves talking to the patient even during lunch breaks and other hours the office may be closed for routine patient communications).

End-of-life care. Patient care at the end of life is one of the most costly periods of the healthcare process, and oncology is obviously a key area affected by a review of end-of-life costs. Proactive treatment expectations from ACOs and other programs that are developing value-based treatment evaluations for end of life in oncology could include a treatment focus toward keeping patients out of the hospital and the emergency department during this period, the timely use of palliative care and hospital services, as well as recalibrating patient and family expectations of treatment and options.

Prepare for the future. How do oncologists prepare for a game-changing situation where they may not be invited to the table, they may not see any of the shared-savings generated, and they may be subject to significant shifts of patients with cancer from referring primary care physicians who are an integral part of these new ACOs? Mr Barkley had 7 suggestions:

  1. Accept that this is a time of transition and the ACO paradigm is not going away
  2. Perform an honest organizational self-assessment: move to fix any gaps in strengths or actual weaknesses
  3. Explore opportunities: be proac­tive in outreach to emerging ACO leadership and discuss the role you can play in bending the cancer-cost curve in their market
  4. Propose to take on a leadership role within the emerging ACO as a representative of oncology: prepare to integrate any oncology medical-home efforts you may have already started
  5. Engage your major health plans upfront
  6. Address your informatics infrastructure: recognize what clinical and business data elements need to be measured and how savings would be measured, then make sure you can deliver
  7. Do not agree to too much volunteer work: remember that both you and the practice need to be appropriately paid for value and quality services rendered, even as the payment model is in flux.