UnitedHealth Group Inc. is launching a pilot program with MD Anderson Cancer Center in Houston that changes how the insurer pays for the treatment of certain cancer patients.
The "bundled-payment" program is part of a broader trend in health care to move away from the traditional "fee-for-service" payments, which critics say create incentives for doctors and hospitals to provide more care services than needed.
"I think a bundled payment really enables good-quality care," said Dr. Lee Newcomer, vice president for oncology services at the Minnetonka-based insurer. "More isn't always better."
Currently, about 100 to 150 patients per year with insurance from UnitedHealth seek care at MD Anderson for head and neck cancer. The Houston center traditionally has submitted a bill for each service provided for patients. With the pilot program, the cancer center instead will receive a pre-established sum that covers all costs.
The program includes quality measurements, Newcomer said, to make sure there's no detriment to good patient care.
"For the last five years, MD Anderson … [has] been looking at how to best approach a single price for treating cancers," said Dr. Thomas Feeley, an MD Anderson physician, in a news release. "Bundled pricing is something that patients and care providers want, and this is our first opportunity to better understand how we can manage costs without sacrificing quality care and patient outcomes."
Under the current payment system, head and neck cancer patients who require surgery might accumulate $60,000 to $75,000 in medical bills, Newcomer said. More complex cases can cost up to $250,000.
UnitedHealth is not disclosing the new bundled payment rate. The pilot program establishes eight different bundled prices for head and neck cancer patients, depending on particular treatment needs.
If actual care costs for a patient exceed the bundled payment, the cancer center loses money, Newcomer said. If costs come in below payment rate, the center profits.
The program should work for both the insurer and the cancer center, Newcomer said, because MD Anderson has gone through a process to eliminate waste in how it cares for head and neck cancer patients. That's no small task, he said, because patient care needs can range from just surgery to a more complicated set of treatments that include surgery, radiation and chemotherapy.
"We set the bundle price less than what we're paying today," Newcomer said. "As they've gone through and mapped out all the processes and gotten rid of the waste, they were able to offer us a bundle price that was less than our average price in the U.S. today."
In January 2013, the federal Centers for Medicare & Medicaid Services announced an initiative to bundle payments for 48 different types of health care episodes.
The federal health law also is promoting "accountable care organizations," which ask doctors and hospitals to take some financial risk for the cost of certain Medicare patients.
Among private insurers, Bloomington-based HealthPartners and Minnetonka-based Medica have bundled-payment programs for patients needing orthopedic joint replacement surgeries; Eagan-based Blue Cross and Blue Shield of Minnesota is launching that type of bundled payment program in January. All three insurers say they hope to bundle payments for other conditions, as well.
UCare plans to launch a bundled payment pilot with the Minnesota Birth Center for its Medicaid members in early 2015.
In July, doctors published study results from a different bundled payment program at United that showed savings with certain cancer patients treated primarily with medications. While that program involved 810 patients treated at five medical groups across the country, the new pilot program will include 150 patients treated over three years just at MD Anderson.
The new program is a significant development beyond the previous one, Newcomer said, because it involves treating a type of cancer that involves numerous specialties.
"If this is successful … we want to move quickly to more common cancers like lung cancer, prostate, breast cancer, where, again, you need multiple specialties and you need people that are working together," Newcomer said. "Head and neck cancer for us is a very small budget item."