Federal Indecisiveness Belies Significant Changes in Medicaid Policy State by State

Debra Patt, MD, MPH, MBA
Published: Friday, Oct 13, 2017
Debra Patt, MD, MPH, MBA
Debra Patt, MD, MPH, MBA
Today’s healthcare landscape is rapidly evolving, with many trends emerging and policy changes under consideration that have far-reaching implications for cancer care. As a medical oncologist at Texas Oncology, I have been very active in collaborating with ASCO, the Community Oncology Alliance, and The US Oncology Network to heighten awareness of issues that may affect access to quality care for patients with cancer. What follows are a few of the major issues we are closely watching.

Policy Changes and Trends

Healthcare reform

As we have seen recently, there is much executive interest in modifying the Affordable Care Act (ACA) or replacing it with new legislation, such as the American Health Care Act (AHCA). Although the AHCA failed to pass, the future of repeal and replace is undecided, creating uncertainty about healthcare policy.

While we wait for developments on the federal level, tremendous changes are occurring in various state Medicaid programs, affecting how cancer care is managed in each state. Many states expanded Medicaid under the ACA, while some chose instead to rely on other funding systems. Some states have a very low percentage of uninsured individuals on Medicaid, while others have a large percentage. Consequently, healthcare coverage is highly variable because of the choices state governments made concerning Medicaid expansion and other funding sources. Frequently, states that have not expanded Medicaid have expanded funding for programs that deliver care to a high percentage of uninsured individuals, but these programs have limited deliverables and oversight, which is a threat to their effectiveness in helping underserved populations.

The transition in reimbursement strategy from the sustainable growth rate (SGR) calculation to new quality payment programs also affects care. The Medicare Access and CHIP Reauthorization Act of 2015 replaced the SGR mechanism with a focus on new quality payment program models. The legislation defined 2 reimbursement paths: the Medicare Merit-Based Incentive Payment System (MIPS) and alternative payment models (APMs).

With MIPS, practices are learning how to document quality benchmarking differently to meet specific requirements. Only 1 cancer-specific APM has been launched so far, the Center for Medicare & Medicaid Innovation’s Oncology Care Model, which has 192 oncology practices participating. Both reimbursement paths stress quality and value over quantity, a trend that represents the future of healthcare reimbursement. APMs try to influence the entire continuum of patient care in meaningful and innovative ways.

Attempts to control drug prices

There is strong bipartisan support for better control of escalating drug prices, such as:
  • Attempts to change Medicare reimbursement for both Part B and Part D drugs
  • A growing interest in value-based programs
  • An interest in reference pricing benchmarked to international standards


Additionally, there are targeted efforts to control cancer drugs. Last year, the oncology community successfully fought a proposal from CMS to change Part B drug reimbursement from the legislatively mandated average-salesprice-plus-6% formula to a fixed fee with a smaller percentage of reimbursement. Because some small and rural practices purchase drugs at an above-average price, the reduced reimbursement would have made it financially challenging for them to administer expensive drugs, reducing access to novel treatments for Medicare beneficiaries. There is still much interest in modifying structures of reimbursement, as illustrated by the Medicare Payment Advisory Commission’s interest in a voluntary drug value program or alternative structure of reimbursement for Part B drugs.

340B Incentives

The 340B Drug Pricing Program was initially designed to help hospitals and select community and disease-specific health clinics that care for a disproportionately high share of indigent and low-income patients. The federal program allows 340B-eligible hospitals to purchase drugs at upward of a 50% cost reduction compared with what private-practice oncology centers and others pay.

Although well intended, the 340B program is exploited for financial gain, and this is hurting patients with cancer and our cancer care system. Challenges with eligibility, implementation, and oversight of 340B have led to unprecedented growth of hospitals in the program and the profit it generates for them. The 340B program provides a tremendous financial incentive for hospitals to abuse it by purchasing drugs at a huge discount and selling them to patients at full price. The savings that hospitals generate from 340B do not have to be used to lower the cost of patient care. Instead, hospitals can use those profits for executive bonuses, new buildings, and other things that benefit their institutions, not patients.


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