Life Sciences

Payers weigh in on comparative effectiveness

Medicare & Reimbursement Advisor Weekly, August 12, 2009

The buy-and-bill compensation model of drugs doesn’t lead to the best incentives for patients and physicians, and most oncologists agree, but many—more than a quarter of them in a survey I wrote about for Oncology Business Review (to appear in September’s OBR)—do not think comparative effectiveness (CE) studies are a way to realign incentives and lower costs without compromising outcomes.

Here’s the payer-side reaction:

“I would have thought more oncologists would have favored thecomparative effectivenessmodel,” Sam Rajan, RPh, says of the results.

Rajan, formerly senior vice president of clinical operations at MemberHealth/Universal American and currently a principal at CoverMyMeds in Cleveland, says oncologists are clearly concerned about further cost controls.

“But what is interesting is that 25% say CE policies will never improve quality herein the United States,” Rajan says. “They need to be compensated fairly, but it is difficult to set their compensation based on buy/sell spread on the product that they use.”

“I would agree that greater focus on cognitive services and realigning incentives is needed, but comparative effectiveness may not ultimately save money if it’s not legislatively mandated,” says Mona Chitre, RPh, clinical strategy director at Excellus BCBS in Rochester, NY.

Joel Brill, MD, chief medical officer at Phoenix-based Predictive Health, thinks the survey results are interesting because they arrive on the heels of payment fluctuation ahead. In 2010, chemotherapy IV infusion reimbursement may decline about 40% under CMS’ Physician Fee Schedule proposal.

“I’d expect this to force more doctors to redirect patients to the hospital—even more than indicated in the survey,” Brill warns. How a cost effectiveness or CE policy here would affect where patients receive care is not yet known.

“It seems to me that all these proposals to change how oncologists are paid, especially for drugs, miss the mark,” Sheldon Josephs, administrator at the Center of HemOnc in Sacramento, says in response to the results.“Yes, oncologists are responsible for the variability of treatment costs, but not for the underlying cost of the drugs being administered.Greater adoption of pathways would take the problem of treatment variability off the table.”

Managed Market Takeaway

Take a look at the survey results when they appear in September, and you will begin to see how you can fill gaps in physician understanding about CE, as well as foster cross-setting dialogue among payers and providers.

Closing disparities and realigning incentives can still be achieved, but it seems, based on the survey, that there is more your customers on both sides can learn and share about the true value of CE studies, episode-based payment, and other ideas, such as salaried MDs.