Pathways to Better Reimbursement

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Pathways to Better Reimbursement
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Patient
Payer
Provider
Cost of copays or coinsurance
Rising costs from price utilization
Declining reimbursement caught in the middle
Cost
Understanding total cost of care
Real and actuarial projections of growth
Inability to assume risk due to cost uncertainty
Predictability
Desire for assurance that treatments and
physicians are best available
Concerns over quality adoption and adherence to
Evidence Based Medicine
Difficulty monitoring quality in large practices
with physically disparate sites
Quality
Information overload on Internet and DTC
advertising create confusion
Complexity of disease and evidence base
traditional tools dont work
Difficulty being an expert in many diseases with
rapidly emerging science personalized medicine
Complexity
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Q
Value increases if Quality increases Or Cost
Decreases
V
C
There is a way to do bothCancer Care Pathways
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• Qualitymeans a lot of different things to
  different stakeholders
• Better Outcomes?
• OS
• TTP, PFS
• QOL?
• Adherence to Evidence Based Medicine?
• Reducing toxicities?
• Reducing hospitalizations?
• Fewer chemotherapy errors?

But will anyone pay for it?
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• Qualitymeans a lot of different things to
  different stakeholders
• Better Outcomes?
• OS
• TTP, PFS
• QOL?
• Adherence to Evidence Based Medicine?
• Reducing toxicities?
• Reducing hospitalizations?
• Fewer chemotherapy errors?

But will anyone pay for it?
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Monetizing the Savings from PathwaysCan it be
done?
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Is there a financial win/win/win with Pathways?

• Hospitalizations and ED visits
• Drugs
• Where the same efficacy toxicity exists between
  regimens of different costs
• 1,000 of cost to PayerPatient is only 200 of
  margin to Practice under ASP20
• Between 200 and 1,000 is a place for all sides
  to win

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Models for Monetizing Pathways

• Practice Internal
• Stressing accrual to Clinical Trials
• Lower bad debt risk
• Staying on Pathway reduces risk of Payer
  denials
• Practice efficiencies through uniformity of care
  and less variability
• Staffing productivity
• Physician productivity
• Lower inventory holding costs
• Practice Marketing
• Payers
• Referring Physicians
• Patients
• Assured compliance with practice PT decisions
• Kytril vs. Zofran

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Models for Monetizing Pathways

• Payer Opportunities
• Payer Steerage to Practice
• Network Status
• Benefit design to allow for lower
  copay/coinsurance
• Shifting dollars away from drugs (high
  vulnerability) to Pathways Fees
• Improve ASP rates
• Move generics to ASPxxx
• Guarantee current reimbursement rates
• Extend contract with locked in rates

• Decrease Administrative Burden
• Eliminate pre-certs / prior auth / Box 19 data
• Prevent Payer from pulling drugs out of practice
• Specialty Pharmacy
• Infusion Centers
• Negotiate a Pathway Fee
• Based on Pathways Adherence and Savings YOY
• Gain Share on Savings

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Models for Monetizing Pathways

• Payer Opportunities
• Payer Steerage to Practice
• Network Status
• Benefit design to allow for lower
  copay/coinsurance
• Shifting dollars away from drugs (high
  vulnerability) to Pathways Fees
• Improve ASP rates
• Move generics to ASPxxx
• Guarantee current reimbursement rates
• Extend contract with locked in rates

• Decrease Administrative Burden
• Eliminate pre-certs / prior auth / Box 19 data
• Prevent Payer from pulling drugs out of practice
• Specialty Pharmacy
• Infusion Centers
• Negotiate a Pathway Fee
• Based on Pathways Adherence and Savings YOY
• Gain Share on Savings

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Models for Monetizing Pathways

• Payer Opportunities
• Payer Steerage to Practice
• Network Status
• Benefit design to allow for lower
  copay/coinsurance
• Shifting dollars away from drugs (high
  vulnerability) to Pathways Fees
• Improve ASP rates
• Move generics to ASPxxx
• Guarantee current reimbursement rates
• Extend contract with locked in rates

• Decrease Administrative Burden
• Eliminate pre-certs / prior auth / Box 19 data
• Prevent Payer from pulling drugs out of practice
• Specialty Pharmacy
• Infusion Centers
• Negotiate a Pathway Fee
• Based on Pathways Adherence and Savings YOY
• Gain Share on Savings

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Models for Monetizing Pathways

• Payer Opportunities
• Payer Steerage to Practice
• Network Status
• Benefit design to allow for lower
  copay/coinsurance
• Shifting dollars away from drugs (high
  vulnerability) to Pathways Fees
• Improve ASP rates
• Move generics to ASPxxx
• Guarantee current reimbursement rates
• Extend contract with locked in rates

• Decrease Administrative Burden
• Eliminate pre-certs / prior auth / Box 19 data
• Prevent Payer from pulling drugs out of practice
• Specialty Pharmacy
• Infusion Centers
• Negotiate a Pathway Fee
• Based on Pathways Adherence and Savings YOY
• Gain Share on Savings

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Models for Monetizing Pathways

• Payer Opportunities
• Payer Steerage to Practice
• Network Status
• Benefit design to allow for lower
  copay/coinsurance
• Shifting dollars away from drugs (high
  vulnerability) to Pathways Fees
• Improve ASP rates
• Move generics to ASPxxx
• Guarantee current reimbursement rates
• Extend contract with locked in rates

• Decrease Administrative Burden
• Eliminate pre-certs / prior auth / Box 19 data
• Prevent Payer from pulling drugs out of practice
• Specialty Pharmacy
• Infusion Centers
• Negotiate a Pathway Fee
• Based on Pathways Adherence and Savings YOY
• Gain Share on Savings

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Models for Monetizing Pathways

• Payer Opportunities
• Payer Steerage to Practice
• Network Status
• Benefit design to allow for lower
  copay/coinsurance
• Shifting dollars away from drugs (high
  vulnerability) to Pathways Fees
• Improve ASP rates
• Move generics to ASPxxx
• Guarantee current reimbursement rates
• Extend contract with locked in rates

• Decrease Administrative Burden
• Eliminate pre-certs / prior auth / Box 19 data
• Prevent Payer from pulling drugs out of practice
• Specialty Pharmacy
• Infusion Centers
• Negotiate a Pathway Fee
• Based on Pathways Adherence and Savings YOY
• Gain Share on Savings

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Models for Monetizing Pathways

• Payer Opportunities
• Payer Steerage to Practice
• Network Status
• Benefit design to allow for lower
  copay/coinsurance
• Shifting dollars away from drugs (high
  vulnerability) to Pathways Fees
• Improve ASP rates
• Move generics to ASPxxx
• Guarantee current reimbursement rates
• Extend contract with locked in rates

• Decrease Administrative Burden
• Eliminate pre-certs / prior auth / Box 19 data
• Prevent Payer from pulling drugs out of practice
• Specialty Pharmacy
• Infusion Centers
• Negotiate a Pathway Fee
• Based on Pathways Adherence and Savings YOY
• Gain Share on Savings

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Models for Monetizing Pathways

• Payer Opportunities
• Payer Steerage to Practice
• Network Status
• Benefit design to allow for lower
  copay/coinsurance
• Shifting dollars away from drugs (high
  vulnerability) to Pathways Fees
• Improve ASP rates
• Move generics to ASPxxx
• Guarantee current reimbursement rates
• Extend contract with locked in rates

• Decrease Administrative Burden
• Eliminate pre-certs / prior auth / Box 19 data
• Prevent Payer from pulling drugs out of practice
• Specialty Pharmacy
• Infusion Centers
• Negotiate a Pathway Fee
• Based on Pathways Adherence and Savings YOY
• Gain Share on Savings

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But we need to PROVEthe savings
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• Study Results to Date
• Highmark NSCLC 5
• Highmark Breast TBA
• IntrinsiQ NSCLC 32-40

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NSCLC Study
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Total Cost Analysis
Allowance Per Patient
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• Highmark NSCLC Study Results
• 5 absolute Growth Rate difference for Total Cost
  of Care (UPMC 1 growth rate, Control Arm 6
  growth rate)
• 16 absolute Growth Rate difference in Hospital
  Costs (UPMC (12) decrease, Control Arm 4
  increase)
• Unfortunately, did not meet statistical
  significance

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• Highmark Breast Study Design
• Study Patients Included
• Female breast except DCIS with at least one
  J-code and one office visit
• Both commercial and Medicare Advantage with full
  coverage (e.g., Rx Benefit with Highmark)
• Experimental arm Study Patients under the care
  of UPMC physicians
• Control arm Study Patients under the care of
  non-UPMC oncologists
• Periods measured (including 5 month claims
  run-out)
• Pre Pathways Implementation July 2005 June
  2006
• Post Pathways Implementation January 2007
  December 2007
• Costs included
• All claims paid by Highmark (EM, Drugs, RT, DI,
  hospitalizations, etc)
• Rates Used
• Actual payment rates at contracted allowables

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Breast Cancer Study
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Review of Guidelines and PathwaysNon-small Cell
Lung Cancer
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Methodology

• Analyzed IntrinsiQs longitudinal data following
  NSCLC patients through different courses of
  anticancer drug therapy including important
  guideline and pathway variables stage of
  disease, performance status and histology
• Reviewed and analyzed differences between
  available treatment guidelines and pathways in
  NSCLC and actual clinical practice (looked at 36
  months ending June 1, 2009, of actual
  longitudinal clinical behavior)
• Calculated the financial consequences of
  physicians treating patients off
  guideline/pathway based on patient
  characteristics

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Illustration of Treatment Pathway in Stage
IIIB/IV NSCLC
1st Line
2nd Line
3rd Line
4th Line
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Illustration of Treatment Pathway in Stage
IIIB/IV NSCLC On Pathway / On Guideline
52-55 on pathway
1st Line
lt10 on pathway
100 on guideline
100 on guideline
24 on pathway
20 on pathway
2nd Line
60 on guideline
60 on guideline
3rd Line
24-30 on pathway
60 on guideline
4th Line
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Conclusions

• Sizeable cost savings could be realized across
  most aggressively metastatic tumors where
  physicians treat relapsed patients with
  anticancer drug therapy when there is no real
  clinical benefit, especially in poor performance
  status populations and/or patients who are unable
  to tolerate therapy and latter lines of therapy.
• With the exception of poor performance status
  patients, the broad nature of treatment
  guidelines/pathways for treatment-naïve patients
  might restrict the effectiveness of realizing
  cost savings in inappropriate drug
  expenditures. In 1st line, following
  guidelines/pathways often replaces the chosen
  therapy with more expensive therapy.
• Of patients receiving erlotinib in 1st line
  therapy, almost ¾ of them would qualify for
  bevacizumab-based therapy (non-squamous, ps
  0,1).
• Of the 2.0-2.2B spent on anticancer drugs in the
  NSCLC market, approximately 15 is consumed by
  patients on 4th LOT and beyond, 200MM
  overspent in performance status 2, and 50MM
  is consumed by patients with performance status gt
  2. An additional 220-240MM are spent annually to
  treat patients in relapsed NSCLC with Avastin.
  (Caveat Some double counting does occur and
  should be explored further.)
• Overall, approximately 40 (800MM) can be saved
  by treating patients within the pathway (see
  above caveat) however, cost savings by treating
  patients within treatment guidelines might only
  amount to 200MM and are almost entirely a direct
  result of aggressive therapy continuing beyond
  2nd line and poor performance status patients

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Average Sales Price XXCan we fix the
perverse incentives?
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Challenges with Flat Mark Up on ASP

• Newer novel Single Source agents have much higher
  ASP than older Multi Source drugs
• A flat mark-up creates a perverse incentive to
  use more expensive Single Source agents
• 20 of 2000 400
• 20 of 100 20

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Examples of Current ASPs at typical patient doses

• Breast Cancer - Late Stage
• Abraxane 100 mg/m2 weekly 4,975
• Taxotere 75mg/m2 2,526
• paclitaxel 75mg/m2 weekly 187
• Colon Cancer Late Stage
• Eloxatin 85mg/m2 D1 D15 6,132
• irinotecan 180 mg/m2 D1 D15 1,256
• Non Small Cell Lung Cancer
• Gemzar 1000mcg/m2 D1 D8 2,549
• paclitaxel 200mg/m2 139

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Final Thoughts Lessons Learned

• Oncologists do share an interest in improving
  quality and reducing costs to the healthcare
  system
• Pathways can create a quality and financial
  win/win/win for patients, physicians and payers
  if willing to collaborate under the right
  reimbursement models
• There are many ways to monetize the savings
  from a Pathways program
• However, providers may be expected to PROVE
  savings

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