Insurers Test New Cancer Pay Systems

Chris Keane for The New York Times
Dr. David Eagle, an oncologist in North Carolina, says that he does not want health insurance companies restricting treatments.

By REED ABELSON
Published: October 19, 2010
Several large health insurers, including UnitedHealthcare and Aetna, are focusing on one of the country’s most costly diseases: cancer.

Michael Falco for The New York Times

Dr. Lee Newcomer of UnitedHealthcare says high costs require new ideas from insurers.

The insurers have begun tightening oversight of the care provided to patients with many different types of cancer, hoping to lower expenses by experimenting with new ways to pay specialists.

UnitedHealthcare plans to announce on Wednesday a one-year project with five oncology practices, offering doctors an additional fee. The new fee is meant to encourage doctors to follow standard treatments rather than opting too often for individualized and unproven courses of therapy, which can include the most expensive drug combinations. By proposing a different type of payment structure, companies hope to lower doctors’ dependence on a system that generates substantial sums for cancer specialists who routinely favor top-of-the line treatments.

Regional insurers in some states, including California, Washington and Pennsylvania, are negotiating similar limits with doctors and their clinics. WellPoint, another large insurer, is developing a way of paying oncologists to coordinate and manage patient care.

By almost any measure, cancer treatments can be exorbitantly expensive. Cancer care in the United States costs almost $100 billion a year, and medical bills for the average patient on chemotherapy can top $100,000 a year.

With the new health care law, everyone is under pressure to find ways to save money. Many specialists favor the most aggressive care even if there is little to no evidence the patient will benefit, because both doctors and patients have every incentive to spare no expense. Patients and their families often demand one last treatment. And oncologists can reap tremendous profits, sometimes earning more than half of their income on the difference between what they pay for chemotherapy drugs and what they charge the insurers for the patient’s treatment plan.

Dr. Lee Newcomer, the oncologist who is heading the UnitedHealthcare program, said that yearly double-digit increases in the cost of cancer care had forced insurers to confront the issue. “Oncology, or cancer care, has been a bit of a sacred cow,â€