Decreasing Complexity, Improving Quality, & Reducing Cost in Oncology Care
Wes Chapman, President & CEO
PCD Partners, Inc.
June 24, 2012
The U.S. healthcare system is the most expensive in the world, yet comparisons with other industrialized countries show that it does not produce the best outcomes, either in patient expectations or in life expectancy. While the high costs do reflect the frequent use of advanced medical technologies, they also indicate the presence of waste, inefficiency, duplication, and unnecessary services. This is even more the case in the Medicare/ Medicaid system, which is plagued by a high incidence of fraud. Three underlying problems contribute to this situation:
- The Fee-For-Service payment system (FFS), which has resulted in healthcare billing procedures that account for as much as 15% of total healthcare system costs.
- The division of healthcare into primary care and specialty care, which has led to the creation of treatment and billing silos. This division negatively impacts the patient experience as well as the quality and cost of care.
- Medical treatment and medical fees that are not tied to outcomes – that is, the quality of treatment as experienced by the patient has little bearing on the bill – which provides no incentive for improvement.
Recently, the Centers for Medicare & Medicaid Services (CMS) have instituted a Bundled Payment initiative (BPI) that offers a direct opportunity to address these problems. As proposed, however, the BPI is flawed as a tool for oncology applications, primarily due to its focus on the Diagnosis-Related Groups (the DRGs) as a basis for specifying incidents of care, and therefore costs. With several adjustments, however, bundled payments, coupled with new patient centric care plans can provide an effective solution that will reduce complexity, waste, inefficiency, and costs, while at the same time improving objective care delivery, clinical outcomes, and the oncology patient experience.
The Core Problem Areas
Fee for Service
The Fee-For-Service payment model that currently predominates in health care has led to a treatment-centric practice rather than a patient-centric practice. As long as they can document that a given service was performed, hospitals and physicians get paid. The results of the service are not part of the calculation. This encourages physicians to prescribe more procedures, including many that are unnecessary or of limited value to either doctor or patient. The result is an increase in waste and expense, with no increase in benefit to the patient.
Fee-for-Service has also led to the development of extremely complex billing and bill-tracking systems that are expensive to operate and are open to both error and fraud. At the core for oncology, the fundamental problem is that oncology is a complex disease, requiring the effective interaction of numerous specialists who operate in a system that normally does not provide any method for integrated care planning and/or delivery. The result in most cases is uncoordinated and unplanned care. Worse still, there is virtually no method to integrate either patient preferences or documented evidence-based best practices into the system. The result: high costs, poor outcomes, disenfranchised patients, and operational chaos.
Treatment and Billing Silos
The division of healthcare into primary care and specialty care has led to the creation of treatment and billing silos. This has serious impacts on the patient experience, the quality of care, and the cost of care. Consider the case of patient Jill, who is diagnosed with metastatic colon cancer. Jill will need care from a large group of specialists – including medical oncology, radiation oncology and surgical oncology – in addition to a huge variety of diagnostic labs and diagnostic imaging. In most cases, these specialists operate on a referral basis, with limited information exchange and no planning. There is absolutely no way to ensure that Jill’s desires for quality of life are respected across all of the provider groups.
The Patient Experience
Patients with acute medical needs, like Jill, become physically and professionally separated from their primary care physician (PCP) and the local clinic or hospital that serves as their “medical home.” They’re forced to travel varying distances and deal with serious medical conditions without the personal connection and advice that would help them make the most informed and appropriate treatment decisions. While the specialist may have a highly experienced team, they won’t know Jill’s medical background or her level of knowledge and comfort. Jill probably won’t know what questions to ask nor understand who or when to ask. She won’t know when things are going right or wrong. The reverse occurs when Jill returns to her medical home for post-treatment care. The personnel there won’t know exactly how she was treated or the best way to deal with the specific complications or comorbidities that could arise from her treatment.
In the case of oncology, patients are often faced with very difficult choices and very poor prognoses from the initial diagnosis. Ensuring that patients understand the reality that they face and the actual choices available to them is currently impossible in most clinical care settings. Assuming that the patient chooses extensive treatment, there is typically nobody in the system actually responsible for that patient’s overall care and comfort.
Quality of Care
The value of specialization is usually an increase in quality of outcomes, because specialists get lots of practice. The literature is very clear that, more than any other single factor, experience – of both the provider and the medical center – determines the success or failure of a medical procedure. Birkmeyer et al. concluded, in a 2003 paper in the New England Journal of Medicine, “For many procedures, the observed associations between hospital volume and operative mortality are largely mediated by surgeon volume. Patients can often improve their chances of survival substantially, even at high-volume hospitals, by selecting surgeons who perform the operations frequently.” (N Engl J Med 2003;349:2117-27) These findings have been replicated many times.
In the case of people like Jill, however, the requirements for multi-specialty care swamp the patient’s ability to understand care interactions and effectively self-direct care. The result puts the patient in the center of potentially conflicting specialists, with no information or support, in a period when they are physically weakened and emotionally highly stressed. It hardly seems fair – and it is a recipe for chaos and wild cost overruns.
Cost of Care
Specialists, having no working relationship with the PCP or the medical home, often duplicate many of the diagnostic tests, which wastes time and increases costs. The reverse occurs when Jill returns home for post-procedural care. Her PCP may well ask for tests that have already been done or that are not needed. Meanwhile, both the medical home and the specialty acute care hospital deal with fees and billing in isolation, following the wasteful FFS model.
Treatment and Fees Disconnected from Outcomes
The quality of treatment as experienced by the patient has little bearing on the bill. In fact, the quality of the medical outcome is seldom related to the bill. Barring a malpractice suit, there are no warranties on healthcare. Key to this is the fact that there is no clear definition of quality that satisfies all the affected parties. Patients have no idea what the rational expectations for service outcomes are. Nobody wants to get sick, old, or die, and we have developed the ethos that modern healthcare can fix all of that. It cannot – not at any price.
CMS has dodged the question of defining quality of outcome, relying instead on “process metrics” as a surrogate for real specifications. There is some sense to this, for it relies on a definition of quality that integrates the system producing a product or service with its value to the customer: Quality is the ability to deliver, through a consistent and efficient system, a product or service that meets or exceeds a customer’s rational value expectations. This captures both the necessity of price considerations and the operational characteristics of the system involved, tying both to the customer’s (i.e., patient’s) expectations.
Now add to this the fact that the current billing and payment systems merely seek proof that a particular service was performed, not that it was needed or was performed well, and you can see that there is an institutionalized financial disincentive to clearly define quality. The result has been to institutionalize waste, inefficiency, and the increased costs that result.
Movement Toward a Solution
Best Practices and Process Metrics
Over the past two decades, medical specialty organizations have developed catalogs of evidence-based best practices, clearly defining the appropriate procedures required to deliver each. The best practices are linked to specific medical conditions through the standard diagnostic codes (ICD 9/10). At the same time, the Agency for Healthcare Research & Quality (AHRQ) has developed an extensive list of process metrics for healthcare, inspiring many medical specialty organizations to do the same.
This combination of best practices related to clearly defined diagnostic codes and to process metrics provides a way to move from Fee-For-Service to a pricing model that fits the disease. Instead of a grab-bag of procedures, the physician and patient can choose from several appropriate treatment plans that are clearly defined best practices. The process metrics provide clear documentation that the chosen treatment plan was followed and therefore payment is due. We move from profit-centric to patient-centric treatment, while still providing appropriate payment levels.
The Oncology Specific Bundled Payment
The BPI, launched by the CMS in August of 2011, provides a second component necessary to move away from the FFS model. Though it is flawed, it points the way. Under the BPI, the medical silos are broken open. Treatment plans can span a complete episode of treatment, from diagnosis through specialty treatment to rehabilitation and, if necessary, palliative care. With adjustments to the BPI, the patient’s PCP and medical home can become a part of the treatment plan, through co-management agreements with the ACH that provides the specialty care. Note that the patient, supported by the PCP, becomes an active, informed participant in the treatment decision-making process.
As we described above, every stage of the treatment plan can now be based on clearly defined best practices. A refined payment bundle aligns with both the best practice treatment plan and the co-management agreement, spanning locations as well as medical specialties and procedures. The payment bundle specifies the total to be paid for the entire treatment plan, and the various participants each receive their appropriate portions as specified in their co-management agreement. The payor processes one item, the bundle; the payee deals with sharing it out.
The Combined Effect
Process metrics, which can now be applied to every part of the treatment plan, indicate that it was not only completed, but was completed properly, which will be a key requirement for payment. In addition, the process metrics also allow for continuous quality improvement.
While still complex, the medical treatment process for each episode is now more defined and therefore more easily measured. Continual measurement paired with regular re-evaluation allows patient and provider to decide if the expected outcomes are being achieved. If not, the treatment plan can be adjusted to achieve the most appropriate outcomes, again using best practices, and adjusting the payment bundle to reflect the change in treatment. In this way, the best practices can also be adjusted and improved.
Process metrics and continual quality improvement have the combined effect of improving efficiency, reducing errors, and reducing waste – all of which will reduce costs – while also improving medical outcomes and patient satisfaction. The simplified billing and payment systems associated with defined best-practice treatment plans and bundled payments should also reduce error and inefficiency, which will not only reduce costs but also greatly reduce the opportunities for fraud.
Required: A Patient-centric Care Plan with Timely Information and Process Control
Central to success in this problem are: 1) the ability of different care providers to form a defined team to design and implement a patient-oriented care plan, based in documented best practices, with documented patient involvement and education; 2) the ability to share information regarding the patient and the execution of the plan across diverse EMR’s and related systems in different venues; 3) the ability to track the execution of the care plan by all participants – including the patient – and provide documented adherence or rationale for variance from the plan; 4) the ability to update and adjust the care plan based on outcomes – i.e., the ability to reset as needed; and 5) the requirement that all providers respect the life choices and treatment requirements of the patient.
This is hard, but it can be done, and no realistic bundle in oncology can be put in place until it is.
Charting the Waters – Oncology Bundled Payments
PCD Partners is currently managing a pilot project designed to test the solutions outlined in this white paper. The Care Enhancement Pilot Project (CEPP) is focused on a patient population of geographically isolated adults and seniors with cancer in Vermont and New Hampshire. This is an underserved rural population whose medical homes are small critical access hospitals (CAHs), federally qualified health centers (FQHCs), and similar clinics, but who need oncology care from a specialty center that is not local.
This population was chosen not only for its level of need, but also because their diagnoses allow us to define oncological treatment plans that span the total episode of care, cross venue and cross specialty, with corresponding payment bundles accepted by the state agencies involved in distributing payments. These plans can involve a mix of diagnosis and screening, chemotherapy, radiation therapy, surgery, post-operative care, inpatient, and outpatient care, rehabilitation, palliative care, and hospice care. In each case, the PCP at the medical home is able to oversee the entire episode of care, simplifying the process and creating continuity, which will lead to improved patient convenience and satisfaction.
The model utilized by the CEPP is expected to: 1) improve patient education and experience, 2) improve clinical outcomes through the use of and adherence to clinical practice guidelines, 3) improve objective care delivery through utilization of process metrics, and 4) reduce costs. This will be achieved through the following program goals:
1) The implementation of clinical pathways and protocols that extend across multiple venues. Treatment is provided between Northeastern Vermont Regional Hospital (NVRH) in St. Johnsbury, Vermont and affiliated FQHCs from Northern Counties Health Care, the Norris Cotton Cancer Center (NCCC) at the Dartmouth-Hitchcock Medical Center (DHMC) in Lebanon, New Hampshire, and the NCCC facility in St. Johnsbury, VT. The CEPP builds upon an existing program – the Vermont Payment Reform Oncology Pilot Project – which is jointly sponsored and funded by the State of Vermont, VT BC/BS, DHMC, and NVRH.
2) Control and improve care delivery through integrated adherence to patient-oriented protocols. All care will be delivered according to approved clinical pathways vetted and approved by the patient, the primary care physician, the palliative care team, and the key oncologist participants. The implementation of data collection and an ISO-style quality management system provide a mechanism for continuous improvement.
3) The implementation of novel cost bundles to reduce overall cost of care. In this pilot program, the focus on cross-venue payment bundles that encompass an entire episode of care, from diagnosis through rehabilitation/palliative care; the use of ICD 9/10 based coding for bundle determination; and protocol-based care and shared decision making among PCPs, oncologists, and palliative care teams establishes a unique and innovative alternative to FFS billing used in the past.
Already, the Care Enhancement Pilot Program indicates that the model described here can work. Adjustments can be made to the BPI, all stakeholders can be educated and involved, and care can be taken to implement an appropriate, functional quality improvement system. These changes can be extended throughout the U.S., in all healthcare organizations, for all patients and services, including Medicare/Medicaid cases, as long as the following required components of the model are implemented:
1) Implementation of clinical pathways and protocols that extend across multiple venues and specialties.
2) Integrated adherence to patient-oriented protocols, with the patient fully informed and included in all treatment decisions.
3) Implementation of clearly defined cost bundles based on best practices and ICD 9 codes and spanning an entire episode of care, across venues and specialties.
4) Inclusion of all stakeholders (including payers) in defining the bundles.
5) Implementation of an ISO-style QMS, using process metrics and patient feedback to document proper adherence to the treatment plan, which will trigger payment and allow continuous improvement.
6) Education of healthcare providers so they clearly understand the goals of the bundled care initiative and the connections between the process data they are collecting and the resulting improvements in quality and patient satisfaction.
When these requirements are met, we can expect to achieve our goals to:
- improve patient education and experience
- improve clinical outcomes
- improve objective care delivery
- reduce complexity, waste, inefficiency, and the opportunity for fraud
- significantly reduce costs
What can this mean in dollar terms? On a national scale, we estimate that there are savings of 10% of total system costs just related to billing. While this may differ from place-to-place, the noted investment bank, Cain Brothers, estimates that 15% of total medical costs related to the simple act of billing and collection. The movement to bundles dramatically simplifies this problem, and should easily reduce costs by 10%.
Secondly, we estimate that reduction of unnecessary testing and repeated services due to the complex referral patterns in oncology can reduce total costs by 5-10%. Finally, the movement to protocol based drug regimens and related clinical pathways has been shown to reduce costs by up to 15% in drug cost alone. In total, this amounts to 35% of total costs, or over $35 Billion dollars annually nationwide. This figure does not consider the additional savings that may be forthcoming from patient preference for palliative/supportive care, instead of the more difficult and painful alternatives.
PCD Partners, Inc., tailors solutions to the complex needs of healthcare and health management organizations to enable them to reduce costs, improve quality, and enhance patient satisfaction. Based in New Hampshire, PCD Partners is targeted at the application of quality tools – ISO, Lean, and Six Sigma – together with cloud-based healthcare IT systems and clinical innovation to improve value in oncology care. http://pcdpartners.com/