Risk-Based Contracting in Oncology

Andrew L. Pecora, MD, CPE: I’m not an economist, but I’ve read somewhat about economic theory, and one of the things that economists do is they think a lot about incentives to change behavior. And I just wonder if, as you answer this, if you could also put your economist’s hat on and give us your view. Is it a proper incentive for doctors to have downside risk? And what do you see as the potential risk of doing that?

Rena M. Conti, PhD: Right. So, I do not believe that bundled payment or risk-based payment that has a downside component to it will ever fully take over all of oncology care for the following reasons. Bundled payment and episode-based payment essentially put physicians and physician practices in the driver’s seat, with very strong incentives to reduce cost as much as possible and, at the same time, provide standard of care. There is a real risk of stinting on care or shunning certain types of patients that don’t fit perfectly in standard treatments because they’re too sick, they have other things going on in terms of other diseases, or they have other types of social service needs that make them a bad risk from a bundled-payment perspective.

The other thing that concerns me, or is part of something that we need to worry a little bit about, is innovation. In areas where there is very significant innovation that’s kind of happening in a sequential wave—I would argue non—small cell lung cancer treatment is like that, some of the leukemias are like that, as well, right now—there is incentive in the bundled payment to not give patients those new, really expensive treatments because if you do, you’ll blow your bundle. And so, there’s kind of an incentive to either not provide that care or put off providing that care to another episode. I’m not sure that that’s the right way of thinking about providing care to patients, particularly in an area of medicine where we’re seeing so much scientific promise. But, also, all Americans should share in that scientific promise, not just the ones that look like they’re the right risk type.

Because of that, I think we’ll see bundled or episode-based payments come in in areas of cancer where there’s a set of treatments that can be chosen from among where you can define the cancer really well and where we can kind of match treatments to those patient types pretty easily. But, in areas where there’s a significant amount of innovation, we may see pathway-type development to reduce that incentive to stint on care or not provide innovative care to patients.

Andrew L. Pecora, MD, CPE: Just a quick anecdote. So, when we went and proposed bundles, we had to present it to the Department of Banking and Insurance and we had to address all of the issues you just raised. Now, we were able to address them successfully because of the quality of data we have. And, in fact, you can have carve-outs in a bundle that allow for innovation and comorbidities.

Rena M. Conti, PhD: Right. So, carve-outs are another way of trying to deal with reducing the incentive to stint.