Episode-of-Care Reimbursement Model in Oncology: Benefits and Challenges

Corbin Davis

March 2016, Vol 6, No 3 - Reimbursement


Given the high cost of care for acute leukemia, innovative payment strategies that reward longitudinal care and create economic incentives for data-driven care delivery are needed, according to Joseph Alvarnas, MD, Director of Value-Based Analytics, and Associate Clinical Professor of Hematology and Hematopoietic Cell Transplantation, City of Hope, Duarte, CA.

At ASH 2015, Dr Alvarnas discussed the episode-of-care payment model, emphasizing the importance of realigning infrastructure to support a continuum of care instead of restructuring healthcare based on the next intervention.

“Hematologists need to ensure that their care delivery model is based upon achieving ‘systemness’ in care,” said Dr Alvarnas, “which means both seamless multidisciplinary care coordination and transparency and consistency of care processes. The entire system must be aligned around patients’ needs.”

High Variability of Cost and Complications in Acute Leukemia

“While the sensibilities behind the episode-of-care payment model are correct,” he added, “it is unclear whether this particular financial model is suitable for acute leukemia.”

Acute leukemia represents only 1.7% of all cancer diagnoses but accounts for nearly 5% of all cancer spending, totaling $5.4 billion annually, said Dr Alvarnas. At the same time, on a case-by-case basis, many studies have shown high interpatient variability in costs.

“We’re not really sure how much it costs to treat acute leukemia effectively, due to low disease incidence,” said Dr Alvarnas, noting that cost estimates fluctuate from an average of $41,594 to $77,769 for patients who receive chemotherapy to $128,630 for patients whose disease relapses. “Predictions of costs are unlikely to achieve statistical significance without wide margins,” he observed.

In addition, the treatment of acute leukemia is rapidly evolving as a result of a growing understanding of cytogenetic, molecular, and genomic risk factors. “There are many patients for whom there is no clear standard of care,” said Dr Alvarnas.

Furthermore, escalating pharmaceutical costs, particularly targeted agents, and a high variability of complications that cannot be prevented, make building a sustainable payment model for acute leukemia challenging.

The Episode-of-Care Payment Model

Defined as 6 months of care, an episode of care begins with a new diagnosis, relapse, or disease progression. By assuming all risk for direct care costs, readmission, emergency department visits, and admissions for unrelated medical conditions, the goal is to develop more effective care coordination, incentivize appropriate care, and improve access to beneficiaries.

However, financial risk transfer works best when there is sufficient clinical volume to amortize risk, and providers have significant control over therapy-related complications.

“The absence of a robust set of clinical care data may severely hamstring the clinical effectiveness and financial sustainability of this payment model,” said Dr Alvarnas. “An alternative approach, like a shared-savings model, may incentivize more effective acute leukemia care models.”

Toward Value-Based Care Delivery in Oncology

Regardless of the payment model’s final form, we must move from a mind-set of cost-insensitive care delivery toward value-based care delivery, according to Dr Alvarnas.

“We need integrated care delivery models that provide care most efficiently at the lowest-priced setting, and we need to look for opportunities for increasing efficiency in care delivery—reducing duplicative testing, imaging, and non–value-added care,” he said.

In addition, hematologists need to tackle the issue of care mismatches at the end of life and ensure that patients are managed consistently, he said. Finally, consistently producing and reporting transparent care outcomes data is critical to ensure that economic incentives align with the most effective and appropriate care.

“Any care delivery economic model needs to be re-evaluated and revised iteratively based upon the provider having a thorough understanding of patient clinical process, outcomes, and economic data,” Dr Alvarnas concluded.