Life Sciences

Conversation: Plans looking to align reimbursement incentives based on pathway compliance

Medicare & Reimbursement Advisor Weekly, August 12, 2009

CareFirst of Maryland is likely to reimburse oncologists at an average sales price (ASP) plus 20% for hitting pathway compliance thresholds. This means that doctors must meet the standards of care for prescribing by tumor type, and if they don’t, their reimbursement could be as low as ASP plus 12%. The major takeaway for managed markets and account teams is that commercial plans are now more aggressively seeking help from your physician specialists in designing studies that align reimbursement with first-line therapies and evidence-based treatment standards, as long as the providers follow the standards. It represents a larger share opportunity for certain products and for new launches with a cost-savings story to tell. It also represents a communication challenge for the sales force, who must understand the following:

  • Physicians are being incentivized based on their pathway compliance
  • Payers are moving toward more standardization, putting greater restrictions on use of second- and third-line agents

CareFirst used pathways developed by the UPMC Cancer Centers of Pittsburgh and let its network physicians in Maryland provide feedback to customize it, since UPMC’s focus is on doing clinical trials. In the first year of the program, CareFirst will require a 60% compliance rate with the pathway. With UPMC, the payment for reaching an 80% compliance rate for UPMC physicians has been the average wholesale price (AWP) minus 15% from Highmark, which represents 70% of the non-Medicare market in Pennsylvania, and “favorable reimbursement” from the center’s other major payer, UPMC Health Plan, says Stan Marks, MD, deputy director of clinical services for UPMC Cancer Centers.

Highmark has worked collaboratively with UPMC to develop retroactive studies that assess the cost benefits of standards-of-care pathways, says Bob Wanovich, RPh, vice president of pharmacy at Highmark. Its analysis of lung disease showed a worthwhile reduction in hospitalizations among UPMC physicians since its pathway implementation, compared to a control group of non-UPMC doctors.

I’ll have results for an additional study on breast cancer by the fall.