Change to Reimbursement Is Coming! Do We Believe It and Are We Ready?

Andrew L. Pecora, MD
Published: Tuesday, Jul 29, 2014
Andrew L. Pecora, MD

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

I find it striking that some of my colleagues believe the changes in reimbursement that are under consideration in oncology care delivery will be one of many trends that rises dramatically from the ever present background noise only to later fade into oblivion—and is replaced by a new trend discussion. In the current issue of Oncology Business Management, several diverse topics that at face value may seem unrelated, provide insight why this reimbursement trend is different and here to stay. Nonetheless, in my 25 years of private practice medicine, change in oncology care reimbursement has been under discussion. So why should we care and listen much more intently now?

In training, the level of care and the time I spent with a patient was solely dictated by that patient’s medical and emotional need. Concierge service is discussed in the current issue where patients elect for more time, greater access, and agree to pay more for this level of service. The question to be raised is what happens to the other patients cared for by that practice since time is not mutable (unless of course you are moving near light speed). Are fewer patients cared for or do those who are not part of the concierge plan get less time with the doctor? The bigger question is what market forces led physicians to consider the care they provide more as a service—with different tiers of care and compassion based on compensation level—and not patient need?

I remember brown bagging in high school and college but now oncologists are facing so called white bagging. I will not spend the time here discussing the medical issues that this sort of practice raises but the economics of it are potentially troubling. At face value it sounds great. Physicians avoid all of the problems with buy and bill, and payers can deal with a limited number of specialty pharmacies. As if it is some sort of gift, advocates of this approach proudly point out that physicians maintain their ability to charge the administration fee.

Let’s follow the money.

Investors invest in pharmaceutical companies and are rewarded economically as stock prices go up with drug approvals. Pharmaceutical companies have incredibly high profit margins, in part to pay for discovery, but also to reward their employees—otherwise why do it? Specialty pharmacies need to make a margin on the drugs they buy and bag, otherwise they will not do it.

The amazing thing here is that none of these entities actually treat patients and yet their returns and margins are expected and acceptable. Back to the oncologist. Taking away the drug margin eliminates a significant portion of physician income. Administration code reimbursement just about covers the expense of administration and in some cases does not. Evaluation and management (E/M) codes have not kept up with the rise in the cost of maintaining a practice.

So at some point, oncologists will ask, “why do it?” Or they will create new forms of revenue streams such as concierge services. Is this in the best interest of patients?

Finally a good friend of mine, and a colleague I respect immensely, John Sprandio, MD, has led the nation in changing the practice of oncology not to increase his revenue but to bring greater value to the system. His efforts are detailed in the current issue. John is focused on reducing unnecessary expenditures like emergency room visits and hospital stays. From the patient side oncology care is becoming less affordable even with good insurance.

So let’s sum it up: oncology reimbursement reform, concierge service, white bagging, and medical homes. What is driving these changes and what is all this leading to? There are only 12,000 or so oncologists capable of caring for the millions of Americans with cancer. If we do not change the economics of the current system and instead stay on the course that we are on then why will oncologists continue to do it? They will not—I believe that the change in reimbursement that is coming will stick, but are we truly ready?


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