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J Oncol Pract. 2012 March; 8(2): 71–74.
PMCID: PMC3457831

Where Does Oncology Fit in the Scheme of Accountable Care?


With cancer services representing 10% of health care costs, oncology would seem an attractive candidate for achieving cost savings, which could then be shared under the umbrella of an accountable care organization (ACO), the vehicle through which the Centers for Medicare & Medicaid Services has implemented the Medicare Shared Savings Program. The Cancer Center Business Summit focused its 2011 annual survey on the topic of oncology's fit within the context of accountable care planning and discovered that oncology, for a variety of reasons, is not considered an attractive candidate for readily achievable cost savings in an ACO initiative. However, despite the somewhat marginal status of oncology within accountable care initiatives, the commercial health insurance sector has been quite active in pursuing nontraditional and innovative methodologies in payment redesign for oncology services. This article explores the key findings and implications of the 2011 Summit survey, Positioning and Payment for Oncology Within Accountable Care Initiatives.


Much fervor in the health care industry has been generated as a result of the March 2010 passage of the watershed Patient Protection and Affordable Care Act1 and the Health Care and Education Reconciliation Act of 2010,2 known together as the Accountable Care Act (ACA). Industry response was further heightened by the subsequent promulgation by the Centers for Medicare & Medicaid Services (CMS) of regulations that established the accountable care organization (ACO) as the vehicle through which CMS has implemented the Medicare Shared Savings Program established by Section 3022 of the ACA.3

ACA envisions a sea change in the way that health care services, including oncology services, will be delivered and paid for in the future. ACA contemplates transforming Medicare and Medicaid payments from a fee-for-service system to a value-based purchasing system. The concept is to move from payment methods that financially reward the provision of a volume of services to new payment methodologies that reward the delivery of high-quality health care services and the lowering of costs.

Against this backdrop, the Cancer Center Business Summit (Summit) focused its annual industry survey on the positioning and payment redesign for oncology services within the context of accountable care initiatives being undertaken by providers, whether such initiatives were in direct response to federal health reform (eg, ACOs) or otherwise. The Summit is an educational forum focused on matters of oncology/cancer care delivery; oncologist-hospital alignment; and integration and the business, legal, and financial models associated with such initiatives.4 Recognizing that the quality improvement and cost reduction tenets of accountable care were not unique to the federal government's vision, the Summit survey also took into consideration accountable care initiatives already underway or under development in the private health insurance sector, which according to one study, involve some 58% of all private payers.5

Survey Findings

The 2011 Summit survey, entitled Positioning and Payment for Oncology Within Accountable Care Initiatives, was conducted during the 4-month period of June through September 2011. Individuals at 36 organizations were surveyed through direct phone interview using a standardized survey instrument.

Candidate organizations for interview were identified from a number of sources, including: (1) roster of CMS Physician Group Practice Demonstration sites, (2) rosters of member organizations of the Dartmouth-Brookings ACO Learning Network and Dartmouth-Brookings ACO pilot sites, (3) media news releases in which organizations self-identified as launching ACOs, and (4) professional network referral and media releases identifying provider and payer organizations participating in oncology-specific payment redesign demonstration projects. A breakdown of the categories of organization interviewed is shown in Table 1.

Table 1.
Five Categories of Organization Interviewed

Survey interviewees were asked to respond to the following:

(1) Market and Competitor Profile

Is the character of the local market fragmented, somewhat fragmented/partially consolidated, or highly consolidated? And is the character of the local market minimally competitive/collaborative, somewhat competitive, or highly competitive?

Because of the wide range of organizational types interviewed, there was understandably a full range of responses to this question. However, a common characteristic recognized among proactive ACO responder organizations was that they were in somewhat to highly consolidated and competitive markets and were themselves somewhat to highly consolidated organizations.

(2) ACO Readiness

With respect to viewpoint on ACOs, is the organization characterized as proactive, exploratory, nonresponsive/wait and see, or not interested/ignoring? (Table 2).

Table 2.
Viewpoints Regarding ACO Readiness

Following are some noteworthy survey interviewee comments with regard to ACO readiness:

  • “The proposed rules are so onerous that I am not aware of anyone in our market running to join” (oncology practice executive, southwest).
  • “Most of our attention right now is on all the Medicare ACO data reporting requirements. How do we gather and report the data … our data is much better with diabetes or heart patients … we don't have that maturity with cancer data” (oncology executive, academic medical center, mountain states).
  • “I don't think there has been a really consistent definition of cancer care … without that definition it's hard to dig financially into any organization's operations to determine true costs” (health plan executive).
  • “Many organizations will find out they have to spend a lot of political capital with their physicians to get ready for ACO” (oncology executive, academic medical center, mountain states).
  • “We are spending a lot of time and effort determining which physicians are fully aligned with us and which are not … because we want to know for our future ACO planning … we want to know who we should form relationships with” (health system cancer center executive, midwest).

(3) Oncology Positioning Within ACO Responder Organizations

How are oncologists aligned with the ACO responder organization: closely aligned/employed, loosely aligned, or nonaligned/competitive? Not surprisingly, given the profile of organizations in a position to take the initiative in responding to ACO regulation, the majority (65%) indicated that oncologists were closely aligned with and/or employed directly by the organization (Table 3).

Table 3.
Oncology Positioning Within ACO Rresponder Organizations

(4) Nontraditional Payment Methodologies Within ACO Responder Organizations

Nontraditional payment methodologies were defined for survey purposes as anything other than fee-for-service payment for oncology services, for example, capitation/subcapitation, episode of care, bundled payment, shared savings, or other methodologies that are not solely based on payment for discrete services provided (fee-for-service).

There were a limited amount of system-wide capitation methodologies reported (two health systems), but with oncologists paid at a negotiated fee schedule rate rather than a subcapitation amount. In addition, one system indicated that it was reimbursed a bundled rate from one payer for bone marrow transplantation procedures. Another system reported that it was in the process of implementing a bundled payment methodology for coronary artery bypass graft procedures, and that once in place, the system intended to pursue bundled pricing for oncology services for certain common cancers (breast, lung, colorectal, prostate, ovarian). Our assessment of this series of inquiries is that with regard to oncology/cancer care services within those organizations that are seen as most responsive and assertive with regard to an ACO undertaking, there is currently essentially no variation from traditional fee-for-service reimbursement methodologies in oncology.

(5) Prioritizing Oncology Within ACO Responder Organizations

Interviewees were asked to respond to the following observation. Did they agree or disagree with the observation, and why?

“The costs of cancer care are often singled out as escalating far more rapidly than health care costs in general (15% per year or three times the escalation in overall health care spending). Cancer patients represent only 1% of commercial patient, yet consume 10% of the commercial health insurance ‘spend.’ Yet oncology/cancer as a health condition/disease seems to be of lesser priority in context of ACO planning. High volume/low cost chronic diseases, such diabetes, asthma, heart disease, chronic obstructive pulmonary disease (COPD) are cited as better candidates for cost savings and for ‘lower hanging’ ACO shared-savings opportunities.”

Below are several noteworthy interviewee responses to this inquiry:

  • “ACO concepts have developed around primary care physicians, and there has been much less thought given to subspecialty care … a problem with our current health care system is fragmentation in subspecialty care. I think that oncology care lends itself to medical home models” (health system medical director, southeast).
  • “Oncology is too big and complicated to try and tackle … they are cutting their teeth on the more straightforward ones … hip, knee, heart surgery [are] much more predictable … cancer is too broad to get disease focus” (health system oncology service line executive, mid-Atlantic).
  • “I think that there has been a lot of focus on chronic disease because it has been more predictable from a cost perspective. The point is to address costs across the whole continuum … and that is where global payments may be the tool to make this happen” (multispecialty medical group practice chief executive, northeast).
  • “So much of the cost occurs in the 6-months end-of-life period … my point is we really spend too much money on futile care because we are afraid to have the conversations about end-of-life care with all its social and political implications … somewhere, somebody has to be courageous enough to say this out loud” (academic medical center medical director, physician network, northeast; health system oncology service line executive, mid-Atlantic).

(6) Oncology-Specific Nontraditional Payment Redesign

Despite the status of oncology/cancer care within the broader context of ACO initiatives, the commercial health insurance sector is quite actively pursuing nontraditional and innovative methodologies in payment redesign for oncology services, typically at the community oncology level. United Healthcare and Aetna have been involved in earnest with oncology-specific payment redesign pilot programs for the last couple of years: United Healthcare with its five-site episode payment pilot, and Aetna with its shared savings–oriented pilot with Texas Oncology. Much of the payer activity in bending the oncology cost curve has surfaced within the past year, with initiatives in oncology payment redesign underway with a solid representation from Blue Cross plans, including oncology-specific pilot/demonstration projects in Maryland, New Jersey, Tennessee, Michigan, South Carolina, and southern California.

Oncology-specific payment redesign methodologies tend to focus on drug cost reduction achieved through compliance with clinical pathways. The predominant model has been to compensate oncologists at a premium for compliance with agreed-on clinical pathways. Typically, 80% compliance results in enhanced drug reimbursement, and noncompliance can result in a reduction in reimbursement.

Trends to Watch for in 2012

In addition to election-year intrigue around the future of ACA as we know it today, several trends to watch for in 2012 regarding accountable care undertakings (federally envisioned or otherwise) and related experimentation in oncology payment redesign are offered. These prognostications are derived from the Summit 2011 survey experience and from anecdotal observations subsequent to the conclusion of the survey period.

  • Trend 1. Expect to see an acceleration in commercial health plan/payer experimentation beyond clinical pathways, with programs that incorporate care processes to manage emergency room use, hospitalization, and advance care planning—features of the so-called oncology medical home model.
  • Trend 2. Expect to see increased interest in oncology practices organizing to position themselves as specialist collaborators with primary care medical homes—the building block of ACOs.
  • Trend 3. Expect to see renewed interest in compatible oncology practices organizing to scale as clinically integrated oncology networks, with common treatment pathways and health information exchange capabilities bringing data connectivity and advanced informatics and reporting capabilities to such networks.
  • Trend 4. Expect to see increased interest and even experimentation in bundled pricing arrangements for oncology care as the final outcome of the payment redesign dialogue. As an example, the CMI Healthcare Innovation Challenge program6 could become a proving ground for oncology bundled pricing methodologies.


The 2011 Cancer Business Center Summit research survey was successfully conducted through the persistence of Amy Wyeth, MS, Cancer Business Center Summit Research Associate.

Author's Disclosures of Potential Conflicts of Interest

Although all authors completed the disclosure declaration, the following author(s) indicated a financial or other interest that is relevant to the subject matter under consideration in this article. Certain relationships marked with a “U” are those for which no compensation was received; those relationships marked with a “C” were compensated. For a detailed description of the disclosure categories, or for more information about ASCO's conflict of interest policy, please refer to the Author Disclosure Declaration and the Disclosures of Potential Conflicts of Interest section in Information for Contributors.

Employment or Leadership Position: Ronald R. Barkley, Cancer Center Business Summit (U) Consultant or Advisory Role: None Stock Ownership: None Honoraria: None Research Funding: None Expert Testimony: None Other Remuneration: None


1. Patient Protection and Affordable Care Act. 2010. P.L. 111-148.
2. The Health Care and Education Reconciliation Act. 2010. P.L. 111-152.
3. Medicare Program; Medicare Shared Savings Program. Accountable Care Organizations. 2011 Nov 2;Vol. 76(Issue 67) CMS-1345-P. Federal Register. [PubMed]
4. Cancer Center Business Summit.
5. Xcenda, Managed Care Network. The Drive to High-Value Health: Are Accountable Care Organizations the Answer?
6. Center for Medicare & Medicaid Innovation. Health Care Innovation Challenge.

Articles from Journal of Oncology Practice are provided here courtesy of American Society of Clinical Oncology