An Insurer Aims to Put Your Oncologist on a Budget

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Young woman receiving chemotherapy

An oncologist who administers chemotherapy drugs in his office has a business plan a little like a general contractor who renovates your house. These doctors buy drugs from manufacturers are wholesale prices, tack on a little extra and bill insurers at retail prices.

A pilot program from United HealthCare aims to change this.

As Julie Appleby of Kaiser Health News reports, the insurer is now experimenting with paying oncologists lump sums for full courses of cancer treatments, based on 2010 prices, instead of paying for each service performed. The idea is to remove the financial incentive doctors have to use more expensive drugs. (More on Photos: The Landscape of Cancer Treatment)

Slowing the growth in medical spending in America is a necessity, but doing this is not easy. United HealthCare’s idea, known as bundling, is one thing that might help. Appleby reports:

It is the first large foray into payment “bundling” for chemotherapy by a private insurer, although other insurers are testing the approach for hip and knee replacements, and Medicare will launch a program next year combining drugs and dialysis services. The new health overhaul law also calls for such payments.

The insurer aims to “separate oncologists’ income from their drug selection” and “start searching for the best practices and move to them,” says Dr. Lee Newcomer, United’s senior vice president for oncology.

Bundling is not a new idea. As I reported in July 2009, the Centers for Medicare & Medicaid Services is in the midst of a similar demonstration project, targeting 37 common surgical procedures. Other privately funded pilot programs have also taken up the bundling mantle, encouraging insurers to pay doctors fixed amounts for everything from managing a patient with congestive heart failure to one with diabetes.

It’s an idea academics believe could realign financial incentives for doctors, rewarding them for providing safe and effective care and penalizing them for performing overly expensive or unnecessary procedures. (More on Special Report: Advances for Breast Cancer Patients).

Doctors sometimes bristle at this kind of talk, saying neither the government nor insurers should interfere with patient care. The alternative, however, is what we currently have — a medical system whose costs are unsustainable in the long term. Plus, as Kaiser Health News reports, the American Society of Clinical Oncology and the American Cancer Society Cancer Action Network are optimistic about United HealthCare’s cancer treatment pilot program.

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