Public Release: 

MD Anderson, UnitedHealthcare launch new cancer care payment model

Pilot among the first in large, integrated clinical cancer setting; provides more holistic approach to cancer treatment that focuses on quality, patient preferences

University of Texas M. D. Anderson Cancer Center

The University of Texas MD Anderson Cancer Center and UnitedHealthcare have launched a pilot to explore a new cancer care payment model for head and neck cancers that focuses on quality patient care and outcomes. The collaboration is among the first using bundled payments in a large, comprehensive cancer center.

The bundled payment method reimburses a care provider or hospital for a defined episode of care under a single fee or payment. This is a shift away from the common fee-for-service structure in which a care provider is paid for each treatment, drug, appointment or test.

The program is based on MD Anderson's extensive mapping of the complex tests, treatments, follow-up care and supportive services required for the most common head and neck cancer diagnoses. The pre-priced payment provides an incentive to focus on the essential elements of care and to avoid unnecessary steps. This careful mapping is expected to produce improved patient outcomes, lower costs and a better quality of life for patients.

Similar payment models have shown to help reduce overall costs while providing for continuity of care and improving outcomes for patients. UnitedHealthcare launched a similar pilot in 2010 involving 810 breast, colon and lung cancer patients who were treated at five medical oncology groups around the United States.

The July 2014 issue of Journal of Oncology Practice featured the results of that study, which showed cancer costs were cut by a third and quality was improved. Those results prompted UnitedHealthcare to expand the bundled payment model and explore more complete models like the one at MD Anderson. The report, "Changing Physician Incentives for Affordable, Quality Cancer Care: Results of an Episode Payment Model," demonstrates the potential effectiveness of new approaches to the current "fee-for-service" payment model for cancer therapy.

The new three-year pilot will be conducted in MD Anderson's Head and Neck Center for up to 150 patients newly diagnosed with cancers of the salivary glands, oral cavity (including the mouth, lips, tongue, soft palate), throat and larynx, and who are enrolled in certain employer-sponsored benefit plans insured or administered by UnitedHealthcare.

Eight bundled payment models have been developed by MD Anderson and UnitedHealthcare for the program. Each bundled payment model was developed for the research-based clinical practices and protocols that have been created and refined over decades at the cancer center.

"For the last five years, MD Anderson and its Institute for Cancer Care Innovation have been looking at how to best approach a single price for treating cancers. It is a complex question because cancer is a complex disease and each patient unique," said Thomas W. Feeley, M.D., head of Anesthesiology and Critical Care, and head of the institute. "Bundled pricing is something that patients and care providers want, and this is our first opportunity to better understand how we can manage costs without sacrificing quality care and patient outcomes."

"Our partnership with MD Anderson Cancer Center marks an important step toward expanded bundled care payment models and away from the traditional fee-for-service payments for oncology care," said Lee N. Newcomer, M.D., United Healthcare's vice president, oncology. "Our recently completed pilot shows that these creative new cancer care payment models can reduce health care costs while improving patient outcomes. MD Anderson's work with value-based workflows makes them a natural partner for bundled payments."

Bundled payments are one of the many different ways UnitedHealthcare is working with care providers to transition to value-based reimbursement methods, which emphasize quality and patient outcomes over the volume of procedures performed. Care providers are showing strong interest, as UnitedHealthcare's total care provider reimbursements that are tied to a variety of value-based arrangements have nearly tripled since 2011 to $36 billion, and are expected to reach $65 billion by the end of 2018.

"Patients enrolled in the pilot will not have any change or adjustment in their care as a result of the payment structure," said Randal S. Weber, M.D., professor and chair of the Department of Head and Neck Surgery. Patients will receive the same care, approach, treatment and diagnostics for their disease as those who are not part of the program. The new payment model is designed to bill patients just once for their cancer treatment at MD Anderson, and because the cost of the tests, treatment and other services are priced upfront, they will know the cost of care early in their treatment program.

"Innovative health care payment reform among patients, employers, care providers and payers continues to be a topic that calls for careful study," said Brad Gibson, associate vice president and treasurer of MD Anderson. "MD Anderson is committed to looking at new opportunities in this research arena, and this pilot is one of those. It is a great chance to learn, explore and understand how a conceptual payment model works in a clinical setting with a defined control group of patients."

The National Cancer Institute estimates costs for cancer therapy in 2010 reached $124.6 billion, and the figure is projected to reach as high as $207 billion in 2020. Cancer therapy, including related pharmaceutical costs, currently accounts for 11 percent of UnitedHealthcare's commercial health plan spend.

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UnitedHealthcare selected MD Anderson's Head and Neck Center for the pilot because of its multidisciplinary quality care, and its work with Harvard Business School professors Michael E. Porter, Ph.D. and Robert S. Kaplan,Ph.D., leading academics in studying quality in health care and accounting methods that support quality measurement and bundled payment.

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