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Insurer tries new way to pay doctors

WASHINGTON — One of the nation's largest health insurers said Wednesday that it was testing a new way to pay for some cancer treatments, aiming to identify the best medicines and to limit doctors' profits from dispensing in-office chemotherapy drugs.

The action by UnitedHealthcare comes as insurers, employers and the government look to streamline costs by paying doctors and hospitals lump sums for an entire course of care, rather than fees for each service provided.

Payment for chemotherapy has been particularly controversial because some doctors, including oncologists, buy drugs at wholesale prices, dispense them by injection or infusion to patients in their offices, then charge insurers higher, retail prices.

A government report found that Medicare, for example, reimbursed doctors at least $532 million more in 2000 than the doctors had paid to purchase the medicines. In 2005, Medicare changed the way it pays for in-office drugs, ratcheting down payments to average sales prices plus 6 percent. A few private insurers followed suit.

UnitedHealthcare takes a different approach. Its program, under way with five oncology practices in five states, pays physicians lump sums for each patient's course of chemotherapy for breast, lung or colon cancer. The payment is based on regimens the doctors draw up themselves, plus case management fees.

It's the first large foray into payment "bundling" for chemotherapy by a private insurer, although other insurers are testing the approach for hip and knee replacements, and Medicare will launch a program next year that combines drugs with dialysis services. The new health overhaul law also calls for such payments.

The insurer aims to "separate oncologists' income from their drug selection" and to "start searching for the best practices and move to them," said Lee Newcomer, UnitedHealthcare's senior vice president for oncology.

The lump sum is based on what the insurer was paying the doctors under the old rules, so none is expected to lose money this year: That sounds good to doctors, who say Medicare is squeezing them.

Oncologists say the Medicare model cuts into revenue they need to provide services that otherwise aren't paid for, such as counseling patients. Some doctors respond by selecting more expensive drugs to boost revenue, sending some patients to hospitals for chemotherapy or closing their practices altogether.

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