Innovent Oncology, a division of US Oncology, has engaged the actuarial and consulting firm Milliman to help develop risk contracting methodologies – including episode rates, bundled payments and capitation – to help identify potential areas where oncologists can improve quality of care while lowering health costs.
Innovent intends to help physician-led oncology practices develop new methodologies for contracting around risk, with the intent of using this information in negotiating with payers in the first half of 2011. In conjunction with this effort, US Onoclogy is also investing in the technology infrastructure to support ongoing data analysis and administration of risk-based contracts.
"This investment will prepare US Oncology and physicians in the united network of US Oncology for the future of healthcare as payers consider the alternatives to the fee-for-service model," said Roy Beveridge, MD, executive vice president and medical director of US Oncology. "The better understanding of cancer care costs and outcomes gained through this investment will build on our strong foundation of deep clinical insight and rich data capabilities."
The initiative comes at a time when providers across the country are preparing for the new landscape expected under the Affordable Care Act. The Centers for Medicare and Medicaid Services will pursue alternatives to the fee-for-service model through its Medicare Innovation Center, as well as its Medicare Shared Savings Program slated for 2012, whereby Medicare will implement accountable care organizations.
Due to the size of its physician network, which numbers more than 900 oncologists, along with an electronic health record that includes more than 1.6 million patient charts, US Oncology and Milliman officials see this data as the foundation of creating effective risk-based contracts.
"Physician-led organizations are ideally positioned to assess and balance the clinical, quality and cost demands of today's healthcare environment," said Bruce Pyenson, principal and consulting actuary of New York-based Milliman. Through Milliman's work with US Oncology, Pyenson said they can "help oncologists create the healthcare delivery and reimbursement models of the future."
Earlier this year, US Oncology sought out Milliman to produce a comprehensive view of chemotherapy treatment costs. The study found that over the course of a year, a cancer patient receiving chemotherapy incurs, on average, approximately $111,000 in costs, almost four times the cost of a cancer patient not receiving chemotherapy, three times the cost of a typical coronary artery disease patient and six times the cost of a typical diabetes patient.
Officials said the data generated from this study supported the rationale for Innovent Oncology to continue working with Milliman to create oncology risk-contracting models.
"This is one more step along our journey to align reimbursement to recognize and reward high-quality, evidence-based care," said Bruce Broussard, chairman and CEO of US Oncology. "Our work with Milliman will help us arm oncologists with the tools they need to effectively collaborate with payers to align the interests of the patient, payer and physician. This is an example of the type of investment we have made and will continue to make to enhance the sustainability of community oncology."