Curbing Financial Toxicity: What Might Work, and What Won’t Work

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To stem the rising tide of financial toxicity in cancer care, creative physician reimbursement strategies, by themselves, will not work, according to a thought leader in the field who advocated for elimination of the federal mandate against price negotiation, curbing the power of monopolies, and commitment by physicians to end financial toxicity in their own practices. In the Keynote Address at the 2018 National Comprehensive Cancer Network (NCCN®) Annual Conference,1 Lee N. Newcomer, MD, MHA, described lessons learned from his efforts to develop new reimbursement strategies as the former Senior Vice President of Oncology and Genetics at UnitedHealthcare. He also had suggestions for effective strategies in addressing rising costs of cancer care.

Role of Reimbursement Strategies

First addressing the issue of physician payment, Dr. Newcomer—an oncologist himself—maintained that novel reimbursement strategies alone are not the answer. Although creative approaches are being explored—and some may help—the weaknesses in the system are more complex than how physicians are paid, he said.

The current fee-for-service model relies on two incentives: physicians work harder, produce more, and therefore get paid more, or physicians raise their fees. In the past 5 years, 80% of inflation related to health care is the result of the latter—higher prices. “It’s a failed system,” he said. “It is driving trends that are unsustainable in this country. We’ve got to do something else.” Value-based payments (ie, “bundled payments”) and gain-sharing arrangements are two approaches being proposed, and they have not been slam dunks, he noted.

Bundles are simple single payments for a group of services over a defined period. They require the provider group to be “coordinated” from both a treatment perspective and a financial and record-keeping standpoint. “Providers need assistance to figure out whether they made money under the system or they didn’t,” he said.

From Dr. Newcomer’s experience at UnitedHealthcare, bundled payments have unpredictable payoffs. The conclusion from several of the company’s pilot programs in head and neck and early-stage lung cancers was that bundles are doable, but not without the enrollment of many patients and not without substantial resources. “Bundled payments are not off the table, but their use is going to be limited,” he predicted.

Interestingly, a month after Dr. Newcomer’s presentation at the NCCN conference, an analysis published in the Journal of Oncology Practice suggested that including cancer drug costs in bundled payments under Medicare risks destabilizing the cancer care delivery environment and would result in significantly less money to practices with a large volume of complex cases.2

Bundled payments are not off the table, but their use is going to be limited.
— Lee N. Newcomer, MD, MHA

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With gain sharing, providers compare their performance to an outside standard and reap rewards if theirs is better. An - “episode-based” pilot was conducted by UnitedHealthcare among 5 provider groups, who were allowed to determine the best treatments for 19 different categories of cancers. After about 4 years and 810 patients, treatment within the pilot program resulted in at least a 30% savings over costs incurred in standard practices, according to an analysis of patients matched in their fee-for-service database. “That was a huge reduction in cost. In addition, toxicity was less, hospitalizations went down, and the survival curves in the lung cancer segment were exactly the same [as with fee-for-service]. It was a huge, whopping win,” he reported.

Based on this success, these 5 groups were allowed to return to fee-for-service for the subsequent 810 patients—under the assumption they would apply what they had learned. “Unfortunately, the second time around, their costs were exactly the same as [those] in the rest of the community. That savings disappeared,” he revealed.

Another pilot program involving 1,000 patients within the Texas Oncology system demonstrated no cost benefit for the gain-sharing program as compared with the general fee-for-service oncology community. However, some savings were seen when the comparative pool of controls also included patients treated in hospital outpatient clinics.

“So what have we learned? First, leadership is absolutely essential. If you do not have a strong clinical business leader who is backing that program constantly, the program is going to fail. Second, everybody has to be all in. And third, you have to develop and maintain internal controls. There has to be someone in your practice who says, ‘Here’s the way we are going to practice medicine,’ and deviation from those practices is discussed,” he said. “Without those elements, things tend to fall apart.” These programs were not “failures,” he said, but learning experiences that demonstrated “financial incentives, by themselves, will not be enough.”

Timely feedback is also important, he added. “We need to find a more contemporary way to get data to providers right away so they can start acting on them.”

Beyond Financial Incentives

Dr. Newcomer advocates elimination of the mandate that requires all U.S. payers (including the federal government) to reimburse for any U.S. Food and Drug and Administration–approved cancer drug. The mandate was well intended—to pay for expensive treatments that physicians and patients feared would not be—“but now the unintended consequence of that law is that it’s limiting access to cancer care,” he maintained.

“You say, ‘How can that be?’ The answer is, we’re making treatments too expensive, and without the ability to negotiate, prices can go anywhere they want to go,” he explained.

For example, he pointed to the class of anaplastic lymphoma kinase (ALK) inhibitors in lung cancer. Four ALK inhibitors are recommended in the NCCN Clinical Practice Guidelines in Oncology (NCCN Guidelines®), yet there is very little market competition by price: $14,374 for alectinib (Alecensa), $15,300 for ceritinib (Zykadia), $15,900 for crizotinib (Xalkori), and $20,001 for brigatinib (Alunbrig), per month. “Four drugs, yet remarkably priced all the same,” he observed.

“I’ve been using razors from Harry’s lately. I’d been paying Gillette $4 a blade for 15 years. They just kept raising their prices. Harry came along and said, ‘I can do this better.’ Same blade, half the price. That’s called competition. That’s called open market. Gillette ought to be sweating a little bit,” Dr. Newcomer said.

“But competition doesn’t exist today for -cancer medications, because of the mandate, so instead of prices -going down with more competitors, they actually rise. And the more they rise, the more people can’t afford care and the more I had to charge in premiums, when I was a payer. We’ve got to introduce competition and change the mandate!” he emphasized.

Another obstacle to affordable health care is the domination of one or two large health-care systems within almost every market, he continued. When payers enter into negotiations with those systems to obtain hospital beds, they are essentially forced to pay whatever the system asks for its cancer treatments. It may be much higher than a community oncology fee schedule, but payers need the beds.

UnitedHealthcare has shown that average community oncology groups charge approximately 28% above cost for the drugs they use. Hospital-owned facilities, on the other hand, glean 156% over cost because of this linkage to hospital beds and the monopoly they hold.

“So a patient is billed five times more, simply because of the sign over the door,” he said. One acquisition of a community practice by an academic center resulted in an additional cost of $4 million a year to UnitedHealthcare. “We can’t keep sustaining that.”

Hospital administrators argue that the profit from the oncology practice makes up for losses in other hospital areas. In essence, this means a patient with no control over their diagnosis supplies funding for the rest of the health-care system, he noted. “ ‘And by the way, if it bankrupts you, that’s okay, because you’re helping out with the emergency room.’ It’s not right that we are taking advantage of vulnerable cancer patients because we can’t balance our books…. It’s got to stop.”

Transparency of Data: A Positive Prediction

On the positive side, the emerging transparency of data will enhance efficiency within practices, according to Dr. Newcomer. Oncologists will become privy to information from claims databases that will reveal the cost and the outcomes associated with specific regimens. They will be able to determine whether a certain treatment may be “too expensive, for too little value,” he said.

A case in point is an analysis of bone-modifying agents for treating bone pain in patients with metastatic breast cancer.3 The study found zoledronic acid (every 12 or 34 weeks) to be equivalent to denosumab (Xgeva; every 4 weeks), although the effect of both was modest. The average sales price, however, was very different: approximately $200 per year for zoledronic acid vs $26,000 for denosumab. “Are we really getting $25,000 worth of benefit from zoledronic acid? I’d argue no,” he commented.

With these kinds of data, the question all oncologists will have to face is whether to use them. “Will you stop writing a drug you know does not offer any real additional clinical benefit but adds substantially to the cost of care? You have the power to do something about this. You are the ones who can start doing something about financial toxicity,” he emphasized.

At this point, Dr. Newcomer challenged NCCN attendees to “pledge to make financial toxicity as important as medical toxicity and outcomes.” He continued: “This has to become part of your daily life. When you do this, costs will come down; I can guarantee it. Our first pilot did that, but providers lost a little focus…. You have the power.” ■

The views expressed in this article are Dr. Newcomer’s and do not necessarily reflect the policies or opinions of UnitedHealthcare, ASCO, or The ASCO Post.

DISCLOSURE: Dr. Newcomer is a shareholder of UnitedHealthcare.


1. Newcomer LN: A Managed Care Perspective: Where We Are, and Where We Could Go. 2018 NCCN Annual Conference. Invited Presentation.

2. Ward JC, et al: J Oncol Pract. April 12, 2018 (early release online).

3. Van Poznak C, et al: J Clin Oncol 35:3978-3986, 2017.