VOL. 20, NO. 4 n THE AMERICAN JOURNAL OF MANAGED CARE n 303 n MANAGERIAL n © Managed Care & Healthcare Communications, LLC U nited States direct medical costs associated with cancer are projected to increase exponentially, from $104 bil- lion in 2006 to over $173 billion in 2020. 1 Variability in medical practice plays a large role in increasing costs without achieving better patient outcomes. 2 Clinical care pathways have been cited as solutions to help bend the rising costs of cancer care by reducing unnecessary and costly treatment variation while im- proving quality of care. 1-5 In August 2008, a large nonproft healthcare insurer for the Mid-Atlantic region of the United States partnered with Cardi- nal Health to launch the frst inclusive provider network can- cer care pathway in the United States. This program marked a milestone in the evolution of cancer treatment by demonstrating that an oncology pathway program can be deployed across an en- tire plan network comprised of disparate providers (single/group, community/academic, independent/afliated) beneftting all par- ties by improving consistency and quality of care while reducing costs without reducing provider reimbursement. 6,7 We previously reported that high participation and compli- ance levels in our pathways program led to changes in physi- cian patterns of care that resulted in signifcant decreases in overall oncology expenditures. 8 Similar physician behavior changes were observed in a Blue Cross Blue Shield Michigan pathway program, where aligned stakeholder incentives drove high levels of pro- vider participation and compliance. 5,9 Despite these and other pathway program successes, critics suggest that the observed sav- ings benefts are small and unsustainable. 10 The fee-for-service payment system has been identifed as one of the main drivers of cancer care cost—the more physicians do for pa- tients, the more reimbursement they receive. 11 In this model, oncolo- gists directly purchase chemotherapy from manufacturers and/or wholesalers (typically below, at, or slightly above average sales price [ASP]) and are reimbursed by the payer at prices usually exceeding ASP by 6% (Medicare presequestration) to 30% or more (commercial payers). Studies have shown that providers’ choice of chemotherapy can be afected by reimbursement, resulting in their prescribing chemotherapy more often and utilizing more costly brand name chemotherapy over less expensive brand or generic alternatives. 10-12 Physician Behavior Impact When Revenue Shifted From Drugs to Services Bruce Feinberg, DO; Scott Milligan, PhD; Tim Olson, MBA; Winston Wong, PharmD; Daniel Winn, MD; Ram Trehan, MD; and Jeffrey Scott, MD Objectives: In partnership with a large nonprofit healthcare insurer for the Mid-Atlantic region of the United States, we launched the first cancer clinical pathway in the United States in August 2008. Due to its early success with regard to sav- ings and physician participation and compliance, a second-generation pathways program—the Oncology Medical Home—was piloted in 2011. This program offered a physician reimburse- ment model that shifted the source of revenue from drug reimbursement margin to professional charges for cognitive services (evaluation and management codes). We report our observations of the impact of that reimbursement model on physician prescribing behavior. Study Design: This was a retrospective analysis. Methods: A select group of practices that partici- pated in the first-generation pathways program were invited to voluntarily participate in the On- cology Medical Home and its cognitive weighted reimbursement design. A matched control group was chosen from the first-generation pathways participants. Comparisons of physician behavior parameters were made pre- and postimplemen- tation and between the Oncology Medical Home practices and the first-generation pathways control group. Results: Physician behavior was not significantly modified by cognitive weighted reimbursement. No significant change in frequency of office visits for established patients was observed. No change in chemotherapy prescribing was observed. Ob- served increases in generic regimen use were no different than matched control. Conclusions: Observations from this oncology medical home pilot program suggest that re- imbursement methodology alternatives to the prevailing fee-for-service may have less impact on prescribing behavior than has been conjectured. Future research is ongoing to validate these observations and assess additional influences on prescribing behavior. Am J Manag Care. 2014;20(4):303-310 For author information and disclosures, see end of text. In this article Take-Away Points / p304 www.ajmc.com Full text and PDF