The way forward for alternative payment models in oncology

April 2018

The Department of Health and Human Services (HHS) aims to have 50% of Medicare payments delivered under alternative payment models (APMs) or population-based payments by the end of 2018. Following HHS’s lead, payers and providers across the United States have introduced a variety of new APMs for rewarding value-based care provision in medical specialties, including cancer.  These models attempt to encourage standardization and quality of care and reduce the cost of treatment, which will cost the United States $174 billion by 2020, according to the National Cancer Institute.  

As the paradigm shift from volume to value advances in the United States, some stakeholders are questioning the progress and impact of APMs in oncology. Oncology is complex to manage and expensive to treat, and innovation in diagnostics and therapeutics is rapidly evolving. Therefore, some oncology leaders wonder whether APMs in this specialty will succeed. They also question whether oncology APMs, given their many variations and discrete pilots across the United States, share common goals. 

To help address these issues, Tapestry Networks spoke with relevant leading stakeholders and held a roundtable workshop in March 2018 in Washington, DC. The workshop included a select group of public and private payers, providers and provider association representatives, patient advocates, manufacturers, and other experts in oncology APMs. Co-hosted by the American Cancer Society and sponsored by biotechnology manufacturer Amgen, the meeting served as a platform for participants to discuss:

  • The unique challenges oncology presents for APM design and implementation. Participants largely affirmed that oncology was unique among specialties given its clinical complexity, rapid pace of innovation, high cost of care, and emotional implications for patients. That said, some noted that stakeholders could still consider and adopt lessons and approaches from APMs in other specialties. For more details, see page 5. 

  • APM goals across public-payer, commercial-payer, and provider-developed models. Participants also agreed that various oncology APMs share the same two-fold objective—reducing cost and improving quality of care—but weigh these two factors differently. Some participants questioned whether one APM can, at this point in time, achieve both. Furthermore, not all APMs are definitively moving to risk-based or capitation models or expect to meaningfully reduce costs to the system. Some participants welcomed this diversity of approaches; others expressed a greater sense of urgency that APMs work to “bend the cost curve” more rapidly. For more details, see page 6.

  • APMs’ current pain points. To their surprise, participants largely agreed on many of the pain points and challenges associated with implementing oncology APMs. These included: a lack of consensus on appropriate measurements for quality and performance; the need for technology infrastructure that makes data capture and analysis cheaper, quicker, and easier for providers; inadequate incentives for payers and some providers to participate; complexity in defining and utilizing clinical pathways and standards of care; and the uncertain prospects for APMs’ financial sustainability. For more details, see page 7.

  • Suggestions to improve the pain points. The group proposed several improvements that need to be made to ensure high quality and appropriate care delivery, make APMs work better, and create a continuous learning environment for APM implementation and evaluation. In particular, they called for an environment and pilot framework that allows for more flexible experimentation, iterations, and fast fails for both providers and payers. They also reiterated the crucial leadership role that the Center for Medicare and Medicaid Innovation (CMMI) plays in spearheading oncology payment reform. For more details, see page 14.

This ViewPoints reflects views of leading thinkers in value-based payment reform and oncology, as well as results from the March 2018 workshop. It offers both a synthesis of stakeholder perspectives and recommendations for improving oncology APMs.