Andrew L. Pecora, MD
Editor-in-Chief of Oncology Business Management
Chief Innovations Officer, Professor, and Vice President of Cancer Services
John Theurer Cancer Center at Hackensack University Medical Center
President, Regional Cancer Care Associates, LLC
There is a growing chorus that seems to be debating separate issues—340B drug pricing, the sequester, site of service differential, etc. But the debate revolves around a singular issue—where should cancer care be delivered? It is an uncontested fact that delivery of state of the art oncology care is getting significantly more complex and expensive. Also, without question, the practice of oncology is currently migrating from the office (private practice/community) to the hospital (ie, oncologist as employee) setting. Is this good for patients? Is this good for oncologists? Is this good for payers? In the long run is this good for hospitals?
Before I attempt to address each of these questions let’s review some facts and current activities aimed to address the issue. Oncology drug reimbursement was not created by oncologists. In 2004, the Medicare Modernization Act capped payments to oncologists at 6% above the average wholesale price (ASP) to cover the risk and expense of purchasing, keeping in inventory, administering, discarding, and billing for chemotherapy, supports agents, and biologics. Over the past several years the cost of some agents increased substantially and the cost to administer the agents also increased. Evaluation and management code reimbursement during this time period has ranged from being flat to negative when taking inflation into account. On March 1, 2013, Medicare applied a 2% absolute cut to reimbursement because of the sequester.
Thus, drug reimbursement dropped from 6% above ASP to approximately 4%. For some practices this cut resulted in an inability to acquire, store, and deliver some drugs without taking an economic loss.
As a consequence, and initiated in some cases by the ability of hospitals to purchase drugs at a reduced cost due to 340B pricing, many oncologist are leaving office-based private practice and taking employment by hospitals. Recent independent analysis, however, has shown that this shift is actually increasing the overall cost of cancer care, while increasing the copayment responsibility of already financially strapped patients due to the cost of cancer care and in many cases an inability to work while on therapy.
In part, as a response to avoid displacing patients with cancer from their community oncology office, the United States House of Representatives introduced a bill (HR 1416) entitled, “The Cancer Protection Act of 2013.” The bill, sponsored by Representative Renee Ellmers (R-NC), is intended to restore reimbursement for physician administered drugs and biologics under Medicare Part B to pre-sequester levels. It is believed that HR 1416 will also stem the tide of physicians leaving the practice of community oncology in the private setting.
So let me return to the questions posed above. How could it be good for patients to have to receive their care from a practicing oncologist who is under economic pressure with drugs that might be indicated for that patient, but can only be delivered at an economic loss to the oncologist? Equally, if that oncologist is forced to leave his private practice and join a hospital, how is that good for the patient or the payer if the cost to deliver drugs is greater and the copayments are higher than they would have been in the oncologist’s office—even accounting for eliminating the sequester?
Is it really beneficial for an oncologist to leave a private practice community based model, not because he wanted to, but because he had to? What will be the work ethic and professional satisfaction? Finally, as hospitals acquire more oncology practices and consolidate services, they will face future reimbursement cuts and probably not be able to deliver oncology care at the cost basis of a community oncologist—so in fact may suffer losses over time.
It would seem logical to reflect strategically for a moment. Keeping community oncology viable would seem rational for all parties listed above. There is clearly a role for hospital-based oncology, particularly for research and complex care (ie, bone marrow transplant). However, dismantling community based oncology through adverse reimbursement, and taking away patient choice and a lower, and many times, more convenient cost basis site of care, would seem irrational. Then again…..never let the facts get in the way of a good story.