The Lynx Group

Improving Value by Understanding the Total Cost of Cancer Care

April 2016, Vol 7, No 3

The use of cost data to inform infrastructure investments can help cancer centers move toward value-based payment models, improve end-of-life planning, and reduce futile care, according to Kerin B. Adelson, MD, Chief Quality Officer and Deputy Chief Medical Officer, Smilow Cancer Hospital (SCH) at Yale-New Haven, CT.

“It is aspirational to think the best, highest-quality care would be remunerated accordingly, but for most institutions, this change still seems far off,” said Dr Adelson.

“In healthcare, higher cost does not mean higher quality,” she continued. “Often in the setting of advanced disease, costly drugs, invasive procedures, and repeated hospitalizations do not improve outcomes.”

Dr Adelson presented her group’s findings at the 2016 Quality Care Symposium.

Preparing for Value

“Step 1 of preparing for value is demonstrating that this is an opportunity, not a liability,” Dr Adelson stated. The inspiration for the value-based strategy at SCH was the Oncology Care Model (OCM) from the Centers for Medicare & Medicaid Services.

“OCM is a win-win,” she said. “We learn how to improve value without giving up fee for service, and we receive financial support to invest in infrastructure that will improve care.”

Medicare patients are enrolled at the time chemotherapy is initiated, in 6-month episodes, and fee for service is collected for all care delivery. The practice collects an additional $160 per patient monthly to support new infrastructure and care processes. Performance-based payments are structured on the shared-savings model, and quality metrics are met.

The second step in preparing for value is knowing your strengths and building on them, but also understanding your weaknesses.

The third step is understanding your population’s total cost of care. “This requires payer-level data and cannot be obtained with your own institution’s financial reports,” said Dr Adelson. “Understanding when in the trajectory of illness spending occurs, and what care patterns lead to higher cost, will identify opportunities for savings.”

The researchers accessed the 5% Medicare Limited Data Set (2012-2013) to map out the cost of care in 6-month episodes for all Medicare patients receiving chemotherapy at SCH. “Indeed, we saw that 20% of cost is incurred outside of our health system,” said Dr Adelson.

On average, a first episode of care at SCH cost $26,500; a second episode, $38,000; and a third, $45,600. The analysis also demonstrated important associations between increases in spending and emergency department utilization. Patients who had ≤1 emergency department visits during an episode averaged $21,000 versus $49,000 for those with ≥2 visits. “This cost is driven by the downstream inpatient services,” she said. And patients who died during an episode cost $53,000 compared with $25,600 for patients who lived.

The Importance of Urgent Care

“The Medicare database showed us that our elderly population has substantial comorbidity, suggesting the need for better care management,” said Dr Adelson. “We looked at causes of admissions outside the primary cancer diagnosis. Many of these could be prevented with enhanced ambulatory urgent care and extended early morning and evening hours.”

“Referrals to ambulatory palliative care earlier in the course of the disease will help patients express their wishes and goals, and for patients with disease progression, our goal is to initiate referrals to hospice from the ambulatory setting,” she added. “This is a big change from our care today.”

The final step in preparing for value is planning for infrastructure investments that will align quality improvement and cost-savings. “Changing how we care for patients at the end of life requires a major cultural shift, which is challenging for oncologists,” Dr Adelson said. “We will provide communication training for all of our oncologists and hematologists to help them elicit patient preferences earlier in the course of disease, and, finally, we will implement clinical pathways to standardized evidence-based cost-effective care across our large network.”

“We believe these investments will lead to significant cost reductions,” she added.

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