As the Blue Ribbon report of the Cancer Moonshot1 called for in 2016, we need to build the national cancer data ecosystem that is equal in dimension to the disease burden cancer imposes on society and the resources that we put into cancer care. Value-based contracting is an approach that has much potential. The challenge of shifting current stakeholders to such a value-based model is an excellent opportunity for clinical pathways to play a role in identification of the critical elements needed for value-based contracting. Bundled payment models are garnering much attention in this area, as all stakeholders are required to be at the same table in order to be successful.
Historically, Medicare has made separate payments to providers for each individual service provided, such as for inpatient care, for providers, and for drugs—each has been paid separately, in a silo. This approach results in fragmented care with no coordination across providers and care settings. This form of payment has rewarded the quantity of services offered by providers rather than the quality of the care.
An alternative approach that has arisen is value-based contracting—a strategy in which payers and biopharmaceutical manufacturers agree to specific terms that tie payment to results.2,3
Although groups such as the American Society of Clinical Oncology (ASCO) and the Institute for Clinical Effectiveness Review have done important research and strategizing to create frameworks for gauging the value of therapies, no framework to date has gained universal acceptance among all stakeholders.4 Value-based contracting directly with the Centers for Medicare & Medicaid Services (CMS) may be impossible, which paves the way for value-based contracting through bundled payments with guidance from clinical pathways. This presents an opportunity for clinical pathways to be developed across organizations and stakeholders to devise frameworks for deciding which patients will receive these therapies, what expectations we should have of therapeutic performance, what we will attempt to learn about these therapies as we observe outcomes over time, and what we will pay.
Bundled Payments for Care Improvement
In the drive to add more value to care, bundled payments will serve as a major vehicle for change. Research has shown that bundled payments can align incentives for providers and pharmaceuticals, allowing these stakeholders to work in coordination toward improved clinical and financial outcomes.5
The Bundled Payments for Care Improvement (BPCI) initiative is comprised of “four broadly defined models of care which link payments for the multiple services beneficiaries receive during an episode of care.”5 Under this initiative, organizations enter into payment arrangements that include financial and performance accountability for episodes of care. These models are designed to lead to higher quality and more coordinated care at a lower cost to Medicare.
This model presents an ideal arena for clinical pathways to guide providers, payers, and patients to these desired outcomes; you could also add to this group pharmaceutical manufacturers that are looking for ways to partner with these stakeholders through value-based contracting. Bundled payments allow clinical pathways to integrate not only the most appropriate treatment path but also the metrics to define success, with these 2 components serving as a foundation for bundled payment value-based contracting between CMS/payers, providers, and pharmaceutical manufacturers.
The BPCI initiative was developed by CMS through their Center for Medicare and Medicaid Innovation (CMMI). CMMI was created by the Affordable Care Act to test innovative payment and service delivery models that have the potential to reduce Medicare, Medicaid, or Children’s Health Insurance Program expenditures while preserving or enhancing the quality of care for beneficiaries. Over the course of the initiative, CMS is working with participating organizations to assess whether the models being tested result in improved patient care and lower costs to Medicare.
Under BPCI, the inpatient stay in an acute-care hospital triggers the bundled payment episode, which includes post-acute care and all related services up to 90 days after hospital discharge. BPCI Episode Initiators include acute-care hospitals, skilled-nursing facilities, physician group practices, home health agencies, inpatient rehabilitation facilities, and long-term care hospitals that trigger an episode of care. But these bundled payment triggers could also be initiated from a diagnosis of a disease that requires a period of treatment, such as with many forms of cancer.
Bundled Payments in Oncology
In a recently published article, Susan Dentzer, president and CEO of The Network for Excellence in Health Innovation (NEHI), outlined opportunities and challenges in value-based contracting for high-cost cancer treatments that require specific terms of engagement.6 This is particularly relevant now as many of the emerging cancer drugs provide targeted therapies tailored to the specific genetics and molecular pathways of different types of cancer. Drugs already on the market, such as the chimeric antigen receptor (CAR) T-cell therapy tisagenlecleucel (Kymriah; Novartis)7 and the programmed cell death-1 inhibitor pembrolizumab (Keytruda; Merck),8 have demonstrated very successful outcomes for some patients and cancer types. For example, they can produce added months of survival without any progression of disease or total remission for some patients with previously untreatable or relapsed cancers.
To encapsulate the difficulty of some of these challenges, consider the example of Kymriah, which is approved by the FDA for use in patients up to 25 years old who have acute lymphoblastic leukemia that is either relapsing or refractory (ie, the cancer did not go into remission with other leukemia treatments). The FDA approved the treatment in August 2017, after a phase 2 trial in which 63 patients showed an 83% remission rate within 3 months of infusion.9 To produce the therapy, a patient’s T cells are extracted through a special process in qualified hospitals, frozen, shipped to a special manufacturing facility where they are genetically reprogrammed, shipped back to the hospital, and reinfused into the patient after the patient undergoes low-dose chemotherapy to prevent the re-engineered cells from being rejected.
At the time of approval, Novartis said that Kymriah would cost $475,000 for the one-time treatment for pediatric and young adult patients.10 Some of the roughly 40 treatment centers that have been certified to offer the treatment have told payers that their “all-in” costs of treating a patient, including the cost of Kymriah, will top $1 million.11 At the same time, as the FDA issued its approval of Kymriah, Novartis also announced an agreement with CMS,12 presumably around the use of the therapy for patients on Medicaid. Under the agreement, Novartis offered the assurance that, if a patient treated with Kymriah for this indication does not respond in the first month, there will be no charge for the drug to patients and to payers, including Medicaid. CMS heralded the agreement and the approval of Kymriah as “reinforc[ing] our belief that current healthcare payment systems need to be modernized in order to ensure access to new high-cost therapies.”12 It promised to issue future guidance to explain how pharmaceutical manufacturers can engage in these and other innovative payment arrangements.12
For Novartis to have agreed to “no charge” for patients who did not respond within a month of treatment—without the “price” then becoming zero and triggering the same improbable price, or a deeply discounted one, for all of Medicaid, 340B and Medicare Part B—it appears that CMS simply agreed that, in such circumstances, no sale would be deemed to have taken place. But CMS has said nothing publicly since to confirm this interpretation, nor has it yet issued any of the promised guidance about how other innovative payment arrangements could legally be struck in the face of other federal regulations that pose similar obstacles, such as the Anti-Kickback Statute.
Bundled Payment Value-Based Pharmaceutical Contracting
Combining pharmaceutical value-based contracting with a bundled payment can align providers and pharmaceutical manufacturers, providing greater care coordination while removing CMS from direct pharmaceutical contracting. Direct pharmaceutical contracting by CMS has been unsuccessful to date despite CMS touting how the “pay-for-performance” arrangement would save lives and cut Medicare and Medicaid costs. Such was the announcement made by CMS immediately after the FDA approved Kymriah—CMS and Novartis discussed12 paying full price if Kymriah produced results in patients after 1 month. This was considered by many to be an unrealistically short timeline for evaluating a complex cancer treatment. This situation highlights an opportunity for clinical pathways to describe more appropriate measures of outcome success. Enormous operational challenges will accompany value-based contracting, chiefly around the collection, analysis, and use of data. Predicating a contract on patient outcomes means there must be a means of tracking them, not just in the immediate aftermath of the treatment but possibly for years. At no level, anywhere in health care, are current data tracking systems sufficient to accomplish this task.
However, despite CMS’ asserted belief in value-based contracting, just 7 months after this announcement CMS pulled out from direct contracting. Although CMS has not said why, emails obtained by Politico show that administration lawyers expressed discomfort over how much Novartis itself was influencing the arrangement, including giving advice on the payment criteria for Kymriah.15 Novartis continues to offer the performance-based deal to private-sector clients, which may demonstrate that a relationship with CMS through providers via bundled payments may provide an independent path for these type of value-based contracts. In addition, these types of relationships can protect providers from potential downside risk resulting from failure to delivery desired outcomes required in these bundled payment arrangements.
In general, innumerable challenges that must be overcome if value-based contracts are to become a standard feature of the oncology care landscape. This approach of bringing all key stakeholders together collaboratively, which is critical for successful bundled payment models, is being promoted by the NEHI, an organization dedicated to identifying innovations that improve the quality and lower the costs of health care.16 NEHI reports to have a network of nearly 100 health care organizations, providing a foundation for consensus solutions that cut across traditional silos and drive policy change.
Including Evidence Beyond the Label in Clinical Pathways
Many newer oncology drugs are likely to be reviewed and approved by the FDA under expedited pathways for drugs that address unmet medical needs in treating serious or other, life-threatening conditions. For example, the FDA approved enasidenib (Idhifa; Celgene), a targeted treatment for a type of acute myeloid leukemia, after phase 2 trials alone were completed.17 Such expedited approvals mean that at least some proportion of new therapies will not even have been tested in a broader phase 3 trial against standard therapies before being approved. Biopharmaceuticals and manufacturers alike would like the FDA to issue clear guidance about what will be permissible in the realm of communications from manufacturers about therapies that have not been approved and about uses of a given therapy that may not have been spelled out on the therapy’s label but are consistent with it (eg, data from patient-reported outcomes collected in the course of the drug’s FDA-approved clinical trial). In these specific situations, clinical pathways can be used to provide guidance beyond the label to dispel some uncertainty. By basing clinical guidelines on data beyond the FDA label, a clear picture can be presented to stakeholders for more appropriate treatment management.
Conclusion
As many as several dozen value-based contracts have been reached between manufacturers and payers in recent years, and there is great appetite among manufacturers for negotiating more, which is consistent with where CMS would like to move—toward value-based care. These emerging strategies are not themselves a solution to the challenge of paying for high-cost oncology therapies or other medications, nor do they yet add up to a cohesive framework around value. But they do start the parties down the road to agreeing on the terms of engagement around value as they pertain to particular drugs. And, in the absence of overarching frameworks for having discussions about value of high-cost therapies—especially in as fragmented a system of health care payment and delivery as that of the United States—they may be the best available option especially when managed through providers under bundled payment models.
References
1. National Institutes of Health, National Cancer Institute (NCI). Cancer Moonshot Blue Ribbon Panel. NCI website. https://www.cancer.gov/research/key-initiatives/moonshot-cancer-initiative/blue-ribbon-panel#ui-id-3. Updated April 26, 2017. Accessed August 22, 2018.
2. Network for Excellence in Health Innovation (NEHI). Rewarding results: moving forward on value-based contracting for biopharmaceuticals. NEHI website. https://www.nehi.net/publications/76-rewarding-results-moving-forward-on-value-based-contracting-for-biopharmaceuticals/view. Published March 23, 2017. Accessed August 22, 2018.
3. Dentzer S, Hubbard T. Value-based contracting for oncology drugs: a NEHI white paper. Network for Excellence in Health Innovation website. https://www.nehi.net/writable/publication_files/file/nehi_vbconcology_final.pdf. Published October 24, 2017. Accessed August 22, 2018.
4. Dalzell M. Considerations for designing “value calculators” for oncology therapies. Am J Manage Care. 2016;5:22-29.
5. Centers for Medicare and Medicaid Services (CMS). Bundled Payments for Care Improvement (BPCI) Initiative: general information. Cms.gov website. https://innovation.cms.gov/initiatives/bundled-payments/. Updated July 30, 2018. Accessed August 22, 2018.
6. Dentzer S. Value-based contracting: creating the terms of engagement around high-cost cancer cancer therapies. Am J Manage Care. 2018;24(5):SP149-SP150.
7. Novartis. KYMRIAH (tisagenlecleucel); efficacy. hcp.novartis.com website. https://www.hcp.novartis.com/products/kymriah/acute-lymphoblastic-leukemia-children/efficacy/. Accessed August 27, 2018.
8. Beasley D. Merck’s Keytruda extends lung cancer survival in two trials. Reuters. https://www.reuters.com/article/us-health-cancer-merck-keytruda/mercks-keytruda-shown-to-extend-lung-cancer-survival-in-two-trials-idUSKCN1IZ0GN. Published June 3, 2018. Accessed August 27, 2018.
9. Food and Drug Administration (FDA). FDA approval brings first gene therapy to the United States [news release]. Silver Spring, MD: FDA Newsroom; August 30, 2017. https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm574058.htm. Accessed August 22, 2018.
10. Nisen M. Read the fine print on the $475,000 price of a cancer breakthrough. Bloomberg Businessweek. https://www.bloomberg.com/news/articles/2017-08-31/novartis-kymriah-cancer-drug-475-000-but-read-the-fine-print. Published August 31, 2017. Accessed August 22, 2018.
11. Szabo L. Cascade of costs could push new gene therapy above $1 million per patient. Kaiser Health News. https://khn.org/news/cascade-of-costs-could-push-new-gene-therapy-above-1-million-per-patient/. Published October 17, 2017. Accessed August 22, 2018.
12. Centers for Medicare and Medicaid Services (CMS). CMS: innovative treatments call for innovative payment models and arrangements [press release]. Baltimore, MD: CMS Newsroom; August 30, 2017. https://www.cms.gov/newsroom/press-releases/cms-innovative-treatments-call-innovative-payment-models-and-arrangements. Accessed August 22, 2018.
13. Centers for Medicare and Medicaid Services (CMS). Medicaid drug rebate program. Medicaid.gov website. https://www.medicaid.gov/medicaid/prescription-drugs/medicaid-drug-rebate-program/index.html. Updated November 24, 2017. Accessed August 22, 2018.
14. Kumar H, Fojo T, Mailankody S. An appraisal of clinically meaningful outcomes guidelines for oncology clinical trials. JAMA Oncol. 2016;2(9):1238-1240.
15. Karlin-Smith S. CMS dropped cost-saving test for $475k treatment amid concerns over industry influence. Politico. https://www.politico.com/newsletters/prescription-pulse/2018/07/09/cms-dropped-cost-saving-test-for-475k-treatment-amid-concerns-over-industry-influence-273033. Published July 9, 2018. Accessed August 22, 2018.
16. Network for Excellence in Health Innovation. https://www.nehi.net/. Accessed August 22, 2018.
17. FDA approves new treatment for leukemia. Genetic Engineering & Biotechnology News. https://www.genengnews.com/gen-news-highlights/fda-approves-new-treatment-for-leukemia/81254750. Published August 2, 2017. Accessed August 22, 2018.
