The evolution of oncology payment models

What can we learn from early experiments?

Pioneering health plans and provider groups are experimenting with value-based payment models in oncology to try to improve the cost-effectiveness of cancer care.

They are piloting these models in the commercial market—financial incentives for adhering to clinical pathways, patient-centered medical homes (PCMHs), bundled payments, and accountable care organizations (ACOs)—and it is uncertain which will achieve the dual goals of improving outcomes and controlling costs.

Key findings

  • Patient-centered medical homes (PCMHs) and bundled payments without downside risk are the most common types of payment models.
  • Regardless of payment model, early health plan and provider collaborations have identified successful strategies to reduce unexplained variations in care and control costs.
  • Several of the early pilots have lowered costs by reducing variability in drug spending and using fewer emergency room (ER) and inpatient admissions.
  • Applying these results to our analysis of commercial plan claims data shows that implementing these strategies can reduce spending by 22 percent across 1,385 episodes studied. Episodes include all costs over a six-month period, starting at the first dose of chemotherapy.
  • While successful in reducing costs, most pilots to date have described performance on key quality measures, such as survival, recurrence, and complications, as staying the same; a few have seen improvement.

A look ahead

It is unclear how value-based payment models might impact the uptake of newly available, expensive treatments. Implementing evidence-based pathways could, in some instances, increase the use of new treatments and diagnostics, potentially resulting in cost offsets in other areas. Current pilots are experimenting with different approaches to allow for the use of these treatments, such as carve-outs, stop-loss provisions, and adjusting bundle prices on a contemporaneous basis.


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