Driving Value-Based Care and Improving Oncology Outcomes

J Clin Pathways. 2025;11(1):52-54.

Oncology clinical pathways have been used to guide treat­ment decisions for 20 years as of 2025.^1,2 Since their in­ception, pathways have grown in depth and complexity from a handful of indications^3,4 to now covering well over 90% of cancers (by incidence), and, in the case of Elsevier ClinicalPath, no less than 2600 indications.

But after all these years, do they still matter? And perhaps even more importantly, do they still matter in a value-based care (VBC) environment? To get to that answer, let’s unpack what VBC means and determine how practices manage them in this environment.

Most VBC programs and their associated payment arrange­ments are modified fee-for-service contracts with bonuses, withholds, and/or a shifting of risk. Even if they are contracted as bundles or sub-capitation arrangements, the easiest way to determine whether these arrangements are economically viable is to translate the costs associated with them into fee-for-service equivalents.⁵

To understand the economics of VBC, it is important to un­derstand the structure of claims. Each medical claim is made of up of one or more line items. Each line item represents the cost billed to the payer for a discrete service or product.^6(pp4,15) On each line, one will generally find:

• A code representing a product or service provided to a patient, such as a unit of time delivered by a provider, supplies, or a milligram of chemotherapy;
• The number of units provided to this patient on this encounter;
• The unit cost (billed charges) for each unit of the product or service; and,
• The fee for the line, which is simply the number of units multiplied by the unit cost.

The reality of claims processing is much more complicated, but at its core, this is the essence of a claim. In a fee-for-service world, payers would apply a series of adjustments to covered charges based on which services are allowed, and their respective con­tracted rates and the practice are reimbursed accordingly. VBC adds a new dimension: practices have the responsibility for man­aging the total cost of care for a patient under their care.

During a patient’s interaction with the health care sys­tem, many different practices and health care providers file many claims throughout, for example, a six-month treatment episode for a patient with cancer. Adding all of these up–the scans, tests, chemotherapy, infusion administration costs, and maybe even an office visit for an orthopedist to treat an old knee injury–gives you the total cost of care for the six-month episode of care for a patient with cancer under a VBC arrangement.

If the practice has an arrangement for one-sided risk, they will get a bonus if they keep costs under a certain projected threshold.⁷ For two-sided risk agreements, practices receive a bonus for staying below the threshold or would have to pay back money if they go over. For bundled payments, they must remain under the bundle amount to make a profit, or they will have a financial loss for that patient. Regardless of the payment arrangement, under a VBC program, the practice is now in­terested in managing the total cost of care for each patient and providing the most appropriate care for the patient.

Under VBC arrangements, practices are incentivized to understand the costs of goods and services for patients and areas where investing in lower-toxicity drugs or supportive care services will help save costs in the long run. For example, if a practice implements a nurse triage line and can help patients avoid emergency room visits and hospitalizations, the total cost of care for that member will be lower.

While oncology practices may be accountable for the total cost of care, ie, all health care expenses for a patient over a period of time, not all of those costs are billed through the practice or even related to cancer treatment.⁸ If a patient has an auto accident and breaks their arm or decides to have a knee replace­ment, these costs are part of the total cost of care.

Consider this analogy: in your household budget, you have a set amount to spend each month (your disposable income). Your “total costs of purchases” need to come in under your disposable income. Otherwise, you are forced to dip into your savings or borrow. Some money goes to things you cannot control, such as taxes, mortgage, health insurance costs, etc. But there are many items over which you have some measure of control. You and your spouse decide to eat out: do you go to your favorite white-tablecloth restaurant and spend several hundred dollars, or do you get take-out from the neighbor­hood place for a fraction of that cost? In either case, you do not control the prices on the menu, but you can control how much of those goods and services you purchase.

You not only have to think about the cost of the items you are purchasing, but you may also do well to consider long-term costs. If you decide to buy new shoes, do you buy a pair of well-made but somewhat expensive shoes that will last for several years, or do you buy a pair of discount store fast-fashion knock-offs that not only hurt your feet but fall apart the first time they get a bit wet, forcing you to spend more on anoth­er pair much sooner? In addition to items you are purchasing, you also need to budget for unanticipated expenses such as a car repair, for example. Similar to the unexpected costs oncol­ogy practices are often accountable for in their total cost of care calculation.

At the end of six months, you could add up all your dispos­able income for the period, then subtract your expenses (your total cost of purchases)–expected or not, in your control or not—for that period. If you have a surplus, it is yours to save or spend; if you have a shortfall, you probably need to borrow or dip into savings.

How do practices go about managing total cost of care? Let’s recall how all this started: with the claim line. From my perspective, there are three levers that can be adjusted on the claim line, eg, the products and services selected, the number of units of them, and the cost per unit.

Most health care providers have little control over the cost per unit of the products they buy. Oncology practices’ larg­est expenses are the drugs they use for patients, accounting for 40%-70% of the total cost of care for patients in treatment. Pharmaceutical manufacturers set the drug’s price and managethe average sales price (ASP) through several factors, including what they will agree to in their negotiations with group pur­chasing organizations (GPOs) on behalf of practices. In some cases, practices may receive discounts and rebates, but those are marginal improvements at best, usually accounting for at most 2%-6% of the average sales price of the drug.⁹

Oncology practices must consider an exercise similar to how you manage your household budget. While they cannot control the unit costs, what oncology practices and individu­al oncologists can determine is the selection of drugs and the number of units they will use, though drug dosing is primarily dictated by the package insert and the patient’s characteristics and status.

Oncology practice administrators could dictate physician drug choices, requiring older, generic, and, therefore, less expensive therapies. However, physicians prefer to avoid be­ing told what to do and would not consider that to constitute adequate care for their patients. Such an administrator would soon find themselves out of a job. On the other hand, allow­ing physicians to choose whatever they want will soon result in runaway costs and losses for the practice—another career-limiting move in a value-based care environment.

Just like your household decision-making, oncology prac­tices need tools to:

1. Make appropriate treatment selection decisions (eg, information about dining options and costs).
2. Ensure that they avoid future unnecessary costs (eg, understanding which shoes will last).

For the first set of decisions, oncology practices need tools to ethically provide guidance to physicians as they choose the most appropriate, effective, and highest-value treatments for patients. The decisions about what constitutes appropriate care for a particular disease presentation needs to involve the phy­sicians who will use the therapies. The guidance needs to be nuanced enough to cover a wide range of known variants in cancer types and needs to be focused on ensuring that the most effective and safest treatments are prioritized, helping to avoid future costs of treatment failure.

Pathways remain the single most effective tool for man­aging costs in a value-based setting by emphasizing efficacy, safety, and cost.^10,11 Provider pathways help prioritize the most effective and safest treatments for very specific disease pre­sentations–up to 2600 unique indications in one example.⁵ Furthermore, provider-initiated pathways, such as those from McKesson, Elsevier, OneOncology, and Emory are created by physician panels using input from their peers as well as pub­lished literature or National Comprehensive Cancer Network (NCCN) evaluation. All pathway programs also have a safety valve: by allowing off-pathway treatments, pathways preserve the physician’s autonomy and professional judgment to decidewhich treatment is best. The unique combination of clinician input, patient-prioritized output (efficacy and safety first), and physician autonomy provides a treatment selection tool that clinicians continue to value.

On the second set of decisions, oncology practices and on­cologists have worked to transform their practices in such a way as to prevent avoidable and unnecessary (and costly) care for patients. Dose adjustments, care coordination, and side effect management are ways that practices help patients to prevent adverse effects of the treatment that could result in emergency room visits and hospitalizations. Many of these decisions are also supported by pathways programs, such as the pathways developed by Emory’s Winship Cancer Center.¹²

When pathways were first deployed, VBC did not yet ex­ist for oncology reimbursement.¹³ The original intent for pathways was to reduce unnecessary and unproductive varia­tions in care using a strict patient-centric framework. In some cases, they helped lower costs by identifying more efficient treatments. In other cases, the more effective treatment costs more than older, less expensive but much less effective treatments. That is still true today. Pathways emphasize efficacy first, then safety, then cost, but only when there are multiple treatments with similar efficacy and safety, and that happens only about 5% of the time.¹⁴

The value represented by pathways in a VBC environ­ment is to provide a framework to help oncologists make rational, predictable, and ethically sound decisions effi­ciently. While lowering costs may seem like the game in VBC, it is about managing costs against a budget. And that requires predictability.

Pathways may have been around for 20 years, but the core of pathways dictates that efficacy, safety, and cost (in that or­der) are the determining factors for about 80% of patients. This model has not fundamentally changed. Physicians are involved in the determination of what will be recommend­ed on pathways, and the decisions made are supported by published, and, therefore, verifiable evidence. This allows individual clinicians to review the literature themselves to de­termine that a pathway recommendation is right for the spe­cific patient in front of them or if they should recommend an off-pathway treatment option to the patient.

At the end of the day, when the administrator is review­ing the practice’s costs against the budget, they can know that the practice made the right choices for patients for the most effective therapies with the least amount of avoidable cost and treatment variability, thanks to pathways.