As the price of treating cancer skyrockets, employers are searching for ways to keep a lid on those costs.
Total nationwide cancer care spending is expected to reach more than $245 billion annually by 2030, according to the American Association for Cancer Research, as more patients are diagnosed at younger ages. With about half the US population on employer-sponsored health insurance plans, those employers are footing a bigger portion of bills.
Naturally, many employers are looking for ways to reduce those costs. Enter Carrum Health.
Founded in 2014, Carrum connects employers to a network of more than 400 of what its execs call “centers of excellence” that use value-based care payment models to reduce overall spending on cancer treatment. Founder and CEO Sach Jain told Healthcare Brew this model can save employers on cancer care costs.
What are centers of excellence?
These centers of excellence are facilities that provide high-quality cancer care.
Christoph Dankert, chief network officer at Carrum, oversees the team that finds and contracts with those providers. He said there are two things providers must do to be included in Carrum’s network: get great patient outcomes and deliver care in an efficient, cost-effective way.
“We look for the top 10% of providers nationally—that’s the bar. It’s a very, very high bar,” Dankert said.
To find such providers, Carrum uses machine learning to sort through patient claims data that identifies which providers meet its quality standards, according to Dankert.
Carrum uses around 50 different metrics to determine quality, including readmission rates, the number of patients who go to emergency departments after treatments, and five-year survival rates, Jain said.
Bringing down the cost of care
Jain said Carrum’s business model focuses on detecting cancers early and making sure patients get the treatments they need—both of which help lower costs.
Once a diagnosis happens, Carrum helps patients figure out how to get “the right care, as opposed to the most care,” according to Jain.
Carrrum reimburses physicians using bundled payments, according to Jain, rather than following a fee-for-service model in which physicians are incentivized to prescribe more treatments because their reimbursements are tied to the quantity of services provided. Bundled payments essentially combine all the services a physician provides to their patients into a single, predefined price.
Navigate the healthcare industry
Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.
Providers take on more financial risk with this type of reimbursement model, as they are responsible for managing the costs of care, whereas more of that risk falls on insurers under a fee-for-service model.
Taking into consideration a patient’s cancer type and treatment plan, Carrum sets a price so the treatment can be delivered regardless of the drugs used or number of sessions conducted, Jain said. “That immediately aligns provider incentives to make sure they are using the most cost-effective drug that has the same impact and using the right level of sessions.”
That bundled payment is also paired with a “two-year warranty,” Jain said, which means that if any related complications or emergency department visits happen during two years of a patient’s treatment, the provider has to cover it free of charge.
Why providers work with Carrum
While not all providers are willing to take on the extra financial risk that comes with bundled payments, the model does come with some perks.
For one, “because providers don’t have to fight with us over every dollar like in the fee-for-service world, there’s a lot of administrative efficiencies,” Dankert said. Under a bundled payment model, providers don’t need to work with insurers on things like prior authorizations.
“[Not having paperwork is] worth a lot of money to them, and that’s one of the reasons why they’re willing to give us a pretty significant discount” on the care they provide, Dankert said.
Plus, bundled payments are more efficient than the fee-for-service model because providers get paid right away instead of having to bill insurers or chase patients for payment, Jain said.
He added that Carrum’s model benefits employers, providers, and patients because employers spend less on cancer care, providers gain patient volume and get more efficient reimbursements, and patients get better care at a lower cost.
“We are trying to craft a model that, on one side, is bringing the cost down while also dramatically improving member outcomes as well as experience,” he said.