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Site of Care Matters: The Value of Community Oncology The Payer Value Proposition September 2012 Prepared for ION Solutions.

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Presentation on theme: "Site of Care Matters: The Value of Community Oncology The Payer Value Proposition September 2012 Prepared for ION Solutions."— Presentation transcript:

1 Site of Care Matters: The Value of Community Oncology The Payer Value Proposition September 2012 Prepared for ION Solutions

2 2AmerisourceBergen Consulting Services – Confidential Outline Changing Oncology Landscape Community vs Hospital-based Oncology Care Current State of Oncology Management

3 3AmerisourceBergen Consulting Services – Confidential The Value of Community Oncology Patients managed in an office-based setting are less costly than those managed in hospital outpatient settings Care provided in a community office-based setting is more accessible and less costly for patients Patients in community settings utilize more generics and less brand therapies, which results in savings for payers Community practices are more willing to participate in pay-for-quality pathway programs, which will translate into improved outcomes and savings for payers

4 Current State of Oncology Management

5 5AmerisourceBergen Consulting Services – Confidential Consolidation in the cancer care landscape continues as larger hospital groups acquire, purchase, or merge with private, community-based practices 1.Practice Impact Report. Community Oncology Alliance. April 4, Accessed August 23, 2012http://www.communityoncology.org/pdfs/community-oncology-practice-impact-report.pdf 241 Clinics Closed 442 Practices Struggling Financially 47 Practices Sending Patients Elsewhere 392 Hospital Agreement/Purchase 132 Merged/Acquired by Another Entity Changing Business Structure of 1,254 Oncology Clinics/Practices From 2008–2012 1

6 6AmerisourceBergen Consulting Services – Confidential In 2011, nearly 1 in 4 practices (24%) indicated that they are currently changing their business structure or may only remain viable for another year or so 1.Barr TR, Towle EL. National Oncology Practice Benchmark, 2011 Report on 2010 Data. J Onc Pract. 2011;7(6S):67S-82S. How long to you expect this business structure will remain unchanged and viable? 24%

7 7AmerisourceBergen Consulting Services – Confidential Payers’ Understanding of the Issue Payers understand that oncology is unique and must be approached differently than other specialties Payers often consider 2 opposing goals when managing oncology 1 –Find ways to more aggressively control oncology spending –Craft management policies that are politically and clinically defensible Payers focus their management attention on the most prevalent and high-cost cancer types to generate the largest return for their efforts in developing and implementing management programs –These cancer types are: 1. McConnell K, Wu J, Dautel N. Payers Must Create Defensible Oncology Management Strategies. Oncology Business Review BreastLungColon

8 8AmerisourceBergen Consulting Services – Confidential Payers prioritize costs before other relevant oncology issues, like site of care Although the provider landscape in oncology is rapidly changing, payers prioritize other aspects of oncology care before the movement of community-based care to hospital- affiliated practices Priorities remain cost drivers such as the cost of hospitalizations or the cost of high- priced products 1.Xcenda. Managed Care Network. PayerPulse June Payer Priorities in Oncology 1 1.High-priced new products 2.Cost of hospitalizations 3.Ability to compare and analyze pharmacy and medical benefit 4.Need to increase use of generics 5.Appropriate use of biomarkers 6.Pathway implementation 7.Appropriate use of hospice 8.Compliance and persistency with oncology drugs 9.Cost of emergency room visits 10.Movement of community-based care to hospital-affiliated practices 11.Role of 340B

9 9AmerisourceBergen Consulting Services – Confidential There also appears to be a disconnect between payer and provider preferences for acquiring infused therapies; payers prefer SPP, while providers demonstrate a preference for buy- and-bill 1.Snyder M, Goldberg L, Ryan T. Payer Management of Oncology Gets Serious. Pharmacy Times. Management-of-Oncology-Gets-Serious. Accessed August 17, 2012.http://www.pharmacytimes.com/publications/specialty-pt/2011/May2011/Payer- Management-of-Oncology-Gets-Serious Providers’ Primary Infused Therapy Acquisition Channel 1 >70% of infused therapies for oncology are distributed via buy-and-bill 1 Average sales price (ASP) used as the primary method of reimbursement by payers Providers’ Primary Infused Therapy Acquisition Channel 1 >70% of infused therapies for oncology are distributed via buy-and-bill 1 Average sales price (ASP) used as the primary method of reimbursement by payers

10 10AmerisourceBergen Consulting Services – Confidential The Challenge of Establishing the Site of Oncology Care Payer Value Proposition There is somewhat of a disconnect between payers and oncology providers –Payers have other priorities in oncology that supersede site of care, despite the recent market changes Payers lack awareness of the value that community oncology practices bring to the market –Preferences for product acquisition vary and create an additional point of discussion and negotiation between the 2 groups Payers are seeking additional payment models that make oncology practices’ income independent of drug selection and reward physicians for improving outcomes and reducing costs As heard in a recent payer focus group, smaller regional payers may have different views, needs, and opinions than larger national payers 1 –National payers may have more lucrative contracts with hospitals, particularly larger hospital systems, than with smaller community practices, and therefore, may see comparable costs in patients treated in the hospital outpatient department (HOPD) setting The opposite being true for smaller payers Mid-size plans are more undecided and potentially able to be persuaded either way Payers are also looking for a demonstration of quality as part of the value equation 1 –ie: Value = Quality / Cost 1.Xcenda, data on file. Oncology Site of Care Virtual Payer Council. September 2012.

11 Community vs Hospital-based Oncology Care

12 12AmerisourceBergen Consulting Services – Confidential While HOPDs often profess to care for sicker patients to justify their higher costs, recent claims analyses show similarities in the demographics of office-managed vs HOPD-managed breast, lung, and colorectal cancer patients 1 1.Xcenda, data on file. Site of Care Claims Analysis Report. September Patient illness severity is roughly the same in the community practice setting as the HOPD setting across these 3 tumor types Slightly more females than males are treated in the HOPD compared to community practices The mean age of patients in the community practice setting is slightly higher than in the HOPD setting (58.7 years vs 56.9 years, respectively)

13 13AmerisourceBergen Consulting Services – Confidential The Value of Community Oncology Three separate analyses of managed care claims in commercial and Medicare populations demonstrate that patients managed in a community office setting cost less than patients managed in a hospital-based outpatient setting 1-3 –The difference in cost varies for individual tumor types; however, the data suggest that this applies to breast, lung, and colorectal cancer 3 Evidence suggests that patients managed in a community office setting have lower hospitalization rates than patients managed in a hospital-based outpatient setting The majority of common breast, colorectal, and lung cancer chemotherapy-specific costs are lower for patients managed in a community setting Patients managed in an office-based setting are less costly than those managed in hospital outpatient settings 1.Avalere Health Analysis Report of National Association of Managed Care Physicians member data. Total cost of cancer care by site of service: physician office vs outpatient hospital. March Fitch K, Pyenson B. Site of service cost differences for Medicare patients receiving chemotherapy. Milliman Client Report Xcenda, data on file. Site of Care Claims Analysis. September 2012.

14 14AmerisourceBergen Consulting Services – Confidential Analysis of 4 large commercial health plans reveals that patients who are managed in an office setting are 24% less costly than hospital- managed patients for common cancer types 1 1.Avalere Health Analysis Report of National Association of Managed Care Physicians member data. Total cost of cancer care by site of service: physician office vs outpatient hospital. March Types of cancer Office-managed episodes HOPD-managed episodes % difference in average episode cost # of episodes Average episode cost # of episodes Average episode cost Prostate3,503$21,299394$25, % Genitourinary system 3,152$8,960655$19, % Breast2,252$30,072860$33, % Lung3,036$32,9131,239$32, % Colon973$45,997233$46,2200.5% Digestive system 688$30,018266$30,0440.1% Leukemia581$39,008350$43, % Hodgkin’s/ lymphoma 2,131$39,080902$42,5378.8%

15 15AmerisourceBergen Consulting Services – Confidential There was a 114% difference in the average cost of episodes for office-managed patients ($26,800) vs HOPD-managed patients ($57,400) over 9 months 1 1.Avalere Health Analysis Report of National Association of Managed Care Physicians member data. Total cost of cancer care by site of service: physician office vs outpatient hospital. March Length of episode in months Office-managed episodesHOPD-managed episodes % difference in average episode costs # of episodes Average episode cost # of episodes Average episode cost 14,601$7,3501,784$9, % 32,502$19,2381,091$24, % 51,601$26,979481$40, % 71,091$26,395268$40, % 9734$26,794127$57, % 11302$47,46869$63, %

16 16AmerisourceBergen Consulting Services – Confidential In a Medicare population, office-managed patients cost $6,500 less per year than hospital-managed patients 1.Fitch K, Pyenson B. Site of service cost differences for Medicare patients receiving chemotherapy. Milliman Client Report

17 17AmerisourceBergen Consulting Services – Confidential Hospital-managed patients with breast, colorectal, and lung cancer were more costly than community- managed patients 1 1.Xcenda, data on file. Site of Care Claims Analysis. September 2012.

18 18AmerisourceBergen Consulting Services – Confidential Breast cancer patients managed in a hospital-based setting are more costly in all treatment categories 1 1.Xcenda, data on file. Site of Care Claims Analysis. September 2012.

19 19AmerisourceBergen Consulting Services – Confidential Colorectal cancer patients managed in a hospital- based setting are more costly in all treatment categories except bone metastasis agents 1 1.Xcenda, data on file. Site of Care Claims Analysis. September 2012.

20 20AmerisourceBergen Consulting Services – Confidential Lung cancer patients managed in a hospital-based setting are more costly in most treatment categories 1 1.Xcenda, data on file. Site of Care Claims Analysis. September 2012.

21 21AmerisourceBergen Consulting Services – Confidential In the same analysis, office-managed patients also had fewer hospitalizations during chemotherapy An analysis of 3 years of commercial health plan data reveals that oncology patients treated in an HOPD have higher hospitalization rates 1.Avalere Health Analysis Report of National Association of Managed Care Physicians member data. Total cost of cancer care by site of service: physician office vs outpatient hospital. March Office-managed 11 out of every 100 patients had at least 1 hospitalization during the chemotherapy episode HOPD-managed 14 out of every 100 patients had at least 1 hospitalization during the chemotherapy episode

22 22AmerisourceBergen Consulting Services – Confidential The majority of common breast, colorectal, and lung cancer chemotherapy-specific costs are lower for patients managed in a community setting 1 1.Xcenda, data on file. Site of Care Claims Analysis. September Key: CPL – carboplatin, CTX – cyclophosphamide, DOXO – doxorubicin, DTX – docetaxel, ZA – zoledronic acid Key: CPL – 5-FU – fluorouracil, BEV- bevacizumab, LV – leucovorin, OX - oxaliplatin Key: BEV- bevacizumab, DTX – docetaxel, ETO – etoposide, GC – gemcitabine, PL – platinum, PTX – paclitaxel, TPT – topotecan, VNR - vinorelbine

23 23AmerisourceBergen Consulting Services – Confidential HOPD costs are 40% to 54% higher than community practices for patients receiving non-targeted chemotherapy in breast, lung and colorectal cancers. This is primarily driven by physician costs being 89% to 1242% higher in HOPD vs community 1 1.Xcenda, data on file. Site of Care Claims Analysis. September $9,403 $13,149 $10,345 $15,902 $9,580 $13,632

24 24AmerisourceBergen Consulting Services – Confidential HOPD costs are 30% to 97% higher than community practices for patients receiving targeted chemotherapy in breast and colorectal cancers; however, lung cancer costs are comparable 1 1.Xcenda, data on file. Site of Care Claims Analysis. September $15,545 $20,236 $16,214 $32,010 $14,891 $15,050

25 25AmerisourceBergen Consulting Services – Confidential The Value of Community Oncology Care provided in community office- based settings is more accessible and less costly for patients Patient out-of-pocket amounts are higher for patients managed in an HOPD setting Most common chemotherapy regimens for breast, colorectal, and lung cancers are associated with lower patient out-of-pocket payments in a community office setting When patients receive care in an HOPD setting, they are more likely to wait longer for their first chemotherapy treatment Patients in rural areas are more likely to visit community office practices, indicating that community care is more accessible to these populations

26 26AmerisourceBergen Consulting Services – Confidential In a Medicare population, patient out-of-pocket amounts are 10% higher for patients receiving chemotherapy in hospital outpatient settings 1 1.Fitch K, Pyenson B. Site of service cost differences for Medicare patients receiving chemotherapy. Milliman Client Report Neumann P, Palmer J, Nadler E, et al. Cancer therapy costs influence treatment: a national survey of oncologists. Health Affairs. 2010;29(1): % of oncologists say that patients’ out-of-pocket spending influences treatment recommendations 2 Cancer Type Office-managed Chemotherapy Hospital-managed Chemotherapy Breast$759$814 Colon$938$975 Lung$852$847 Rectal$690$800 All cancers$700$773

27 27AmerisourceBergen Consulting Services – Confidential With respect to common breast, colorectal, and lung chemotherapy regimens, most patient out-of-pocket costs are higher for hospital outpatient-managed patients 1 1.Xcenda, data on file. Site of Care Claims Analysis. September Key: CPL – carboplatin, CTX – cyclophosphamide, DOXO – doxorubicin, DTX – docetaxel, ZA – zoledronic acid Key: CPL – 5-FU – fluorouracil, BEV- bevacizumab, LV – leucovorin, OX - oxaliplatin Key: BEV- bevacizumab, DTX – docetaxel, ETO – etoposide, GC – gemcitabine, PL – platinum, PTX – paclitaxel, TPT – topotecan, VNR - vinorelbine

28 28AmerisourceBergen Consulting Services – Confidential Access to community clinics is vital for patients in rural areas and Medicare beneficiaries without supplemental insurance 1 1.Shea AM, Curtis LH, Hammill BG, et al. Association between the Medicare Modernization Act of 2003 and patient wait times and travel distance for chemotherapy. JAMA. 2008;300(2): Location of first chemotherapy course, n (%) Patients in rural areas n=188 Medicare beneficiaries without supplemental insurance n=66 Hospital infusion center/clinic42 (22.3)14 (21.2) Hospital inpatient facility21 (11.2)6 (9.1) Infusion center affiliated with private oncology practice 60 (31.9)21 (31.8) Private doctor’s clinic56 (29.8)22 (33.3)

29 Changing Oncology Market Landscape

30 30AmerisourceBergen Consulting Services – Confidential The Value of Community Oncology Patients in community settings utilize more generics and less brand therapies, which result in savings for payers Breast, colorectal, and lung patients managed in a community setting are prescribed generic chemotherapy more frequently The maturing oncology portfolio will bring savings through competition and higher generic utilization in a community setting Breast, colorectal, and lung patients managed in a hospital setting are prescribed brand treatments more frequently An active pipeline creates more opportunity for payers to adopt aggressive management policies for hospital- based providers with high brand utilization

31 31AmerisourceBergen Consulting Services – Confidential Breast, colorectal, and lung patients managed in a community setting are prescribed generic chemotherapy more frequently 1 1.Xcenda, data on file. Site of Care Claims Analysis. September 2012.

32 32AmerisourceBergen Consulting Services – Confidential The maturing oncology portfolio will bring savings through competition and higher generic utilization in a community setting 2023 Thalomid 2005 Duragesic Transdermal Sandostatin 2006 Zofran 2007 Kytril Gemzar 2008 Femara Camptosar Fosamax 2011 Etopophos Xeloda Aromasin Femara Anzemet Istodax Plavix Avonex Neumega 2012 Eloxatin Enbrel Vidaza 2013 Neupogen Zometa Xeloda Taxotere Temodar Dacogen Epogen Procrit Remicade 2014 Remicade Leukine Rapamune Evista Xeloda 2015 Epogen Aranesp Rituxan Epogen Procrit Gleevec Aloxi Neulasta Peg-Intron Emend oral Alimta 2017 Neulasta Sandostatin Velcade Tysabri Iressa Velcade Xolair 2018 Tarceva Avastin Herceptin Clolar 2019 Revlimid Zytiga Exjade Boniva Orencia 2020 Nexavar Tykerb Revlimid Vectibix Sprycel 2021 Sutent Soliris Generic Introduced Patent Expiration 2016 Enbrel Erbitux Zevalin Elitek Humira Prialt 185% increase in available generics/biosimilars By 2020, there will be a robust portfolio of generic and biosimilar treatments

33 33AmerisourceBergen Consulting Services – Confidential Breast, colorectal, and lung patients managed in a hospital setting are prescribed brand treatments more frequently 1 1.Xcenda, data on file. Site of Care Claims Analysis. September 2012.

34 34AmerisourceBergen Consulting Services – Confidential An active pipeline creates more opportunity for payers to adopt aggressive management policies for hospital- based providers with high brand utilization The presence of numerous treatment options gives payers the opportunity to adopt more aggressive management policies by leveraging competitive market dynamics

35 35AmerisourceBergen Consulting Services – Confidential The Value of Community Oncology Community practices are more willing to participate in pay- for-quality pathway programs, which will translate into improved outcomes and savings for payers Evidence demonstrates community oncology practices are more likely to participate in pathways or pay-for- quality programs Pathway programs result in reduced costs of cancer care by reducing the rate of both drug and nondrug expenses High community practice participation rates in pathways programs creates an opportunity for payers to improve care and reduce costs

36 36AmerisourceBergen Consulting Services – Confidential An opportunity exists for payers to leverage community oncology practices’ willingness to participate in pay-for-quality pathway programs Evidence demonstrates community oncology practices are more likely to participate in pathways or pay-for-quality programs 1 –In a study where 362 oncology practices were eligible for participation, the highest participation rate was observed in community oncology practices 1 –In a related study, the pathway program resulted in reduced costs of cancer care by reducing the rate of both drug and nondrug expenses 2 –Total savings, factoring out the increased fee schedule for participating practices, was estimated at $8,585,148 2 Furthermore, pilot pathways programs suggest that the saliency of pay-for-quality incentives in academic and hospital settings should be further studied 1 1.Fortner BV, Wong W, Olson T, et al. Year one evaluation of participation and compliance in regional pay for quality (P4Q) oncology program. Poster presented at: International Society for Pharmacoeconomics and Outcomes Research; Atlanta, GA: May 15–19, Scott JA, Wong W, Olson T, et al. Year one evaluation of regional pay for quality (P4Q) oncology program. J Clin Oncology. 2010;28(Supl 15):6013.

37 Summary

38 38AmerisourceBergen Consulting Services – Confidential The Value of Community Oncology Three separate analyses of managed care claims in commercial and Medicare populations demonstrate that patients managed in a community office setting cost less than patients managed in a hospital-based outpatient setting Patients managed in a community office setting have lower hospitalization rates than patients managed in a hospital-based outpatient setting The majority of common breast, colorectal, and lung cancer chemotherapy-specific costs are lower for patients managed in a community setting Patients managed in an office-based setting are less costly than those managed in hospital outpatient settings Patient out-of-pocket amounts are higher for patients managed in an HOPD setting Most common chemotherapy regimens for breast, colorectal, and lung cancer are associated with lower patient out-of- pocket payments in a community office setting When patients receive care in an HOPD setting, they are more likely to wait longer for their first chemotherapy treatment Patients in rural areas and Medicare patients without supplemental insurance are more likely to visit community office practices, indicating that community care is more accessible to these populations Care provided in a community office-based setting is more accessible and less costly for patients Breast, colorectal, and lung patients managed in a community setting are prescribed generic chemotherapy more frequently The maturing oncology portfolio will bring savings through competition and higher generic utilization in a community setting Breast, colorectal, and lung patients managed in a hospital setting are prescribed brand treatments more frequently An active pipeline creates more opportunity for payers to adopt aggressive management policies for hospital-based providers with high brand utilization Patients in community settings utilize more generics and less brand therapies, which results in savings for payers Evidence demonstrates community oncology practices are more likely to participate in pathways or pay-for-quality programs Pathway programs result in reduced costs of cancer care by reducing the rate of both drug and nondrug expenses High community practice participation rates in pathways programs creates an opportunity for payers to improve care and reduce costs Community practices are more willing to participate in pay-for-quality pathway programs, which will translate into improve outcomes and savings for payers

39 39AmerisourceBergen Consulting Services – Confidential Recommendations Know your audience: –The value messages (as described on the previous slide) are likely to resonate best with small to mid-size payers Educate on cost and quality outcomes in the community setting compared to the HOPD setting Smaller payers are likely more in touch with the local providers already, and therefore likely need less convincing; mid-size payers are likely to need the most education and persuading Understand the hospital contracts and other drivers for large plans before approaching with these messages and tailor them accordingly Generate and publish outcomes data to complete the value equation: –While it has been demonstrated that community practices are more likely to follow and participate in pay-for-quality programs, the outcomes of those initiatives have not been widely analyzed and published – more data generation and publication on outcomes are needed

40 Thank you!


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