A Pathway Through the Bundle Jungle

Bundled, or episode-based, payments are ingrained in the oncology reimbursement reform lexicon. Adopting these reimbursement policies in the outpatient oncology setting is appealing. Payers are able to reimburse defined, predictable payments for each patient for a set period of time, and providers have the freedom to practice medicine without being micromanaged by payers. Payers also benefit by moving away from existing policies that reward providers for doing and billing more. In other words, under these reform policies, revenue centers become cost centers for providers, upending the fee-for-service paradigm. A focus on bundled payment in outpatient oncology treatment is now of urgent concern with the announcement of the Center for Medicare and Medicaid Innovation’s oncology care model (OCM). The OCM incorporates bundled payment with a shared savings program based on spending for all care provided to patients with cancer upon the initiation of chemotherapy, inclusive of all chemotherapy and supportive care drugs (whether intravenous or oral), day surgeries, diagnostic tests, emergency department visits, and inpatient stays. However, implementing the OCM and other bundled payment policies in realworld practice has raised a multitude of questions.Foremostamongthemiswhether thebenefits of includingdrugs in the bundle for practices to manage outweigh the risks? Among key opinion leaders and policymakers, the inclusion of drugs in an outpatient oncology bundle seems a foregoneconclusion. Both the prices of these drugs and their use pose challenges to the system; launch prices for new, branded drugs are high and have grown on average 12% per year since 1995, outpacing spending growth on cancer care more generally and overall medical care. Overuse and misuse of these drugs also likely account for a nontrivial amount of spending levels and trends. Policymakers tout the benefits of including all drugs in bundled payment policy for the following reasons. First, physicians, rather than patients, are the ones who control demand because insurer coverage andpayment fornovel drugsused on and off label are virtually guaranteed because patients are generally well insured at the margin via Medigap policies and/or are covered by charity organizations. Second, practices generate substantial revenue from drugs covered under the insured patient’s medical benefits because of the buy and bill system. If oncologists are at financial risk for the drugs they choose to use to treat patients with cancer, then they will be more likely to choose the least costly regimens when efficacies are similar; this will mitigate spending growth and promote the use of generic and biosimilar drugs when available. Third, because oncologists will become more price sensitive under these payment policies, theywill seek out better prices for the drugs they use to treat patients through negotiationswithmanufacturers and other parties in the drug distribution chain.