Pathways Offer Providers a True Value Proposition

July 2012, Vol 3, No 5

Houston, TX—“The key question on everyone’s mind is, how do we monetize the value of pathways?” said Peter G. Ellis, MD, Deputy Director of Clinical Services and Associate Chief Medical Officer, University of Pittsburgh Cancer Centers, PA, at the Second Annual Conference of the Association for Value-Based Cancer Care. Clearly, Dr Ellis said, the use of pathways has internal practice value.

Pathways:

  • Drive consistency and quality of care for patients
  • Lower bad-debt risk by reducing payer denials
  • Increase practice efficiencies through uniformity of care
  • Reduce emergency department visits
  • Have the potential to reduce medical errors
  • Support clinical trial participation
  • Serve as marketing tools for practices.

Pathways do all this while achieving clinical outcomes that are at least equivalent to off-pathway practices.

“We say that pathways are good for patients, good for physicians, and good for the insurance companies. Why isn’t everyone using them?” he asked.

Providers make a financial investment in using pathways, and these pathways produce savings that accrue to payers. “So shouldn’t payers have skin in the game?” Dr Ellis asked.

He suggested that, “in a perfect world,” payers would increase existing fee schedules or pay management fees to physicians, contract for gain share on savings, steer patients to practices that use pathways through preferred network status, and modify patients’ benefit designs to allow for lower copays or coinsurance for using practices with pathways.

Although these things are all possible, they do not happen, mostly because:

  • The majority of payers’ members are self-insured: new program costs must be approved by their customers; otherwise, savings go straight to the customer, but costs are borne by the plan
  • Cancer is not a top priority for payers
  • Some payers think oncologists are already paid too much and should not need more money for providing “quality”
  • Payers are not accustomed to outsourcing utilization management to the providers themselves
  • Pathways is a novel program in a politically sensitive area (cancer); payers do not understand it or who in their organization “owns” the pathways or will oversee it
  • Payers want easily scaled solutions brought to them by companies that offer a suite of products and speak their language.

As a practicing oncologist, Dr Ellis pointed out how operating an oncology practice is expensive in ways that payers may not appreciate. He suggested ways that providers can contract with payers to help them stay in community practices.

Opportunities to Recoup the Costs of Practice

Providers could try to avoid im - pending rate cuts or extend their current satisfactory reimbursement rates, by showing payers how they are “doing things better,” he said. They could enlist payers in attempting to reduce their administrative burden by eliminating precertifications and prior authorizations. Providers could try to prevent the payer from pulling drugs out of the practice via specialty pharmacy or infusion centers, and they could try to avoid reverse rate decreases.

“But practitioners should be careful what they wish for,” he cautioned. “If payers move forward and contract with third-party vendors for pathways- type programs, is this always a good thing for oncology practices and patients?” he asked.

The result could be that multiple payers require multiple pathways in a single practice, which would be complicated logistically and ethically, and could lead to the kind of variability within practice that is never beneficial, he said.

Practices may be better served to select and implement the pathways program that they want, and use them to preempt payer-imposed programs, Dr Ellis suggested. Physician-driven pathways are likely to offer a much larger value proposition.

Healthcare Reform Trends Will Affect Oncology Practices

The healthcare reform is also going to impact oncology practices by:

  • Shifting responsibility for total cost of care to accountable care organizations (ACOs)
  • Rewarding medical home practices for managing the entire spectrum of their patient’s care, including costs
  • Consolidating practices to ensure leverage with payers
  • Encouraging hospital acquisitions of oncology practices.

These situations offer pathways contracting opportunities. Hospital/private practice affiliations will also need pathways, he noted. Physicians who have experience in running their own practices are well equipped for implementing programs (ie, pathways) that will drive quality and savings and that will unite the various groups within the system; they can be financially rewarded for this, he suggested.

Pathways can also be used with nonaffiliated oncologists to help develop a clinically integrated network that will be able to contract better with payers.

Pathways will also help a patient-centered medical home deliver standardized and efficient care. Medical homes that do not manage patients with cancer will outsource this to the practice that can demonstrate quality of care at the lowest cost. “That is a pathways practice,” Dr Ellis noted.

Similarly, oncologists will participate in ACOs, either directly or by referrals, and those practices with pathways will be able to prove quality and will likely “win the bid” to be the preferred oncology providers.

Dr Ellis emphasized that pathways will help providers prove their value to key stakeholders and will ensure the viability of their practices for the future. “Take control before someone else does,” he suggested.

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