Oncology & Biotech News
June 2007
Volume 1
Issue 5

Reimbursement and Managed Care News: June 2007

Topics covered in this issue include: 1) High Cancer Drug Costs Altering the Research and Treatment Dynamic 2) $128 Million Settlement to Physicians 3) Coinsurance Change for Medicare Beneficiaries for Colon Cancer Screening, and more

%u25BA High Cancer Drug Costs Altering the Research and Treatment Dynamic

Wall Street Journal

The on March 15 had indicated that the costs of cancer drugs approved by the Food and Drug Administration since 2004 have ranged between $36,000 to $67,000 per patient. With managed care plans increasing patient out-of-pocket spending for these agents, the approach to bringing these agents to market and how they are used is being reevaluated.

Lee Newcomer, MD, Business Leader, Oncology Services for UnitedHealthcare, Minneapolis, stated that $354,000 may be spent to add one extra year of life expectancy to a patient with lung cancer with today’s drugs, only because “you don’t know in advance who will respond to a particular therapy.” The life-threatening nature of cancer had made questioning the utility of treatment taboo, but this may yet change. With costs this high, the question of value is important, he suggested.

In remarks at an annual meeting of the National Comprehensive Cancer Network in Florida, Schumarry Chao, MD, President of SHC Associates, Los Angeles, said that the pharmaceutical industry was beginning to take a more cautious view of bringing expensive oncology drugs to market as well. Dr. Chao commented, “The dynamic is changing. Companies are doing more market-driven research. In one case, a company decided that it would not invest $400 million in Phase III and IV clinical trials and it would pull the plug on its product” because of the likelihood that consumers would have to bear a greater load on the product’s cost.

Panel discussion, presented at the 11th annual meeting of the National Comprehensive Cancer Network, Hollywood, Florida, March 14-18, 2007.


$128 Million Settlement to Physicians

Twenty-three Blue Cross and Blue Shield organizations settled with physicians regarding a four-year old class-action case, claiming that business practices of managed care organizations and other insurers inappropriately delayed or denied payment to providers.

The case, based in Miami federal court, is related to another class action case that was settled from 2003 to 2006, resulting in payments of up to $405 million to physicians. In this case, the Blue Cross and Blue Shield plans are ponying up $128 million and agreeing to change their payment practices, including streamlined claims communications between insurers and the clinicians’ offices. The settlement includes oncologists among the hundreds of thousands of physicians across the country involved in the class action.

The only remaining actions on this wide-ranging litigation are possible settlement of the remaining 10% of Blues plans that did not agree to join, and an appeal of a decision by the federal judge, Federico Moreno, to dismiss the class-action claims against the number 1 national insurer, UnitedHealthcare, and multistate insurer, Coventry Health.


Coinsurance Change for Medicare Beneficiaries for Colon Cancer Screening

The Centers for Medicare and Medicaid Services recently announced a change in how sigmoidoscopies and colonoscopies are reimbursed when performed in certain settings.

A 25% beneficiary coinsurance will now be required for flexible sigmoidoscopies and colonoscopies when conducted in hospital outpatient and ambulatory surgical center settings not billed under the outpatient prospective payment system. This has already been the case for procedures conducted in hospitals billing under the outpatient prospective payment system. In the past, beneficiaries were responsible for both a deductible and coinsurance.

This change applies specifically to the Healthcare Common Procedure Coding System codes listed in the Table. These changes will be implemented July 2 (but were made effective January 1—the Centers for Medicare and Medicaid Services indicate that they will not actively search for such services prior to the implementation date, but will act on any brought to their attention).




Colorectal cancer screening; flexible sigmoidoscopy


Colorectal cancer screening; colonoscopy on individual at high risk


Colorectal cancer screening; colonoscopy on individual not meeting criteria for high risk

CMS Manual System: Pub 100-04 Medicare Claims Processing. Transmittal 1160, Change Request 5387.


Managed Care Penetration: Not a Source of Significant Variation in Rectal Surgery Follow-up

Variation in clinical practices has long been a subject of quality improvement in the health policy arena. Jan Wennberg, MD, from Dartmouth University had begun this fight in earnest in the early 1990s, exposing wide geographic variation in the use of coronary bypass surgery. Since then, the federal government and managed care organizations have relied upon the use of education regarding practice guidelines in an effort to minimize practice variation.

Researchers from St. Louis University Medical Center, St. Louis, studied how patients undergoing surgery for the treatment of rectal cancer were managed after their operation to better understand any factor influencing variation in practices within this area. Through the use of clinical case studies and a questionnaire, they collected responses from members of the American Society of Colon and Rectal Surgeons. These responses were compared by metropolitan statistical areas (MSAs) and data on geographic managed care organization penetration.

They found that the responses did not vary significantly by MSA, but post-surgical surveillance patterns were altered somewhat when managed care penetration was considered. Specifically, managed care penetration was correlated with increased office visits and computed tomographic scanning of the abdomen and pelvis; managed care penetration was not significantly associated with the intensity of the surveillance, however.

The researchers point out that clinical outcome differences were “rather modest” and emphasize the need for controlled trials to better elucidate any real differences resulting from managed care’s effect on rectal cancer practices.

Neils DM, Virgo KS, Longo WE, et al: Geographic variation in follow-up after rectal cancer surgery

2007;Mar; 30(3):735-42.

. In J Oncol


Specialty Pharmacy Distributors Likely to Be the Norm for Oncology Agents

As new drug therapy costs rise, managed care organizations have increasingly turned to a relatively new intermediary in the drug dispensing process—even for oncology agents—specialty pharmacy distributors.

Specialty pharmacy organizations usually manage procurement, payment, and delivery of a high-cost and/or low-utilization agents. Typical examples might include blood factors for hemophilia, products for multiple sclerosis, or others. Today, this may extend to cancer treatments, such as imatinib or bevacizumab. However, specialty pharmacy suppliers can strain the relationship between health plans and oncologists.

“These services take some responsibilities out of the hands of oncologists or other department personnel,” wrote a pair of pharmacy directors from Lovelace Health System, Albuquerque, New Mexico. “The work is done outside of the organization, and time delays may occur. At times, it can be difficult for oncologists to understand that the health plan or the pharmacy department does not have control over third-party performance or speed.”

Pharmaceutical companies or managed care organizations can make the choice to dispense specific products through specialty pharmacy suppliers. When that happens, “the pharmacy department is put in an unenviable position, because it is the interface between the patient and the insurer,” said Larry Pesko, MS, PhD, RPh. Dr. Pesko, Senior Director, Pharmaceutical Care at Lovelace, commented that the ensuing delays can be very difficult to explain: “Often, the patient, and sometimes the physician, does no understand the criteria and the constraints that this new medication distributor requires for the product.”

Mark JL, Pesko L: Pharmacy and cancer care.

2007;16, Mar (3 suppl 4):13-15.

Managed Care


Better Practices for Cancer-Related Infections

As patients undergoing chemotherapy or radiotherapy can be severely immunocompromised, and several new modalities are now available to help prevent these patients from contracting serious infection, the National Comprehensive Cancer Network (NCCN) has released a revised set of practice guidelines.

This revision to the Fever and Neutropenia guidelines, available at, has been expanded from the management of neutropenia and fever in patients undergoing cancer therapy, to include prevention and treatment recommendations for patients who:

• Undergo allogenic stem-cell transplants

• Are at risk of graft-versus-host disease

• Take high-dose corticosteroids

• Take purine analogues or other immunocompromising agents.

Several other areas were expanded or revised within the guidelines. Now titled, “Prevention and Treatment of Cancer-Related Infections,” the guidelines incorporate the availability of newer anti-infective agents and the latest study results, particularly with respect to use of fluoroquinolones in patients with neutropenia.

Often, managed care and other insurers utilize NCCN practice guidelines to advise drug formulary decision making and to inform their quality measurement initiatives.

NCCN Updates Prevention and Treatment of Cancer-Related Infections Guidelines (press release). National Comprehensive Cancer Network (Accessed at, May 4, 2007.


Radioimmunotherapy Underutilized in Lymphoma?

Why do fewer than 10% of patients with recurring non-Hodgkin’s lymphoma receive radioimmunotherapy, even though this form of treatment has a very good chance of response, may result in long periods between recurrences for those who do respond, and it’s given over only one week? The manufacturers of two drugs, ibritumab (Zevalin®) and tositumab (Bexxar®), would like to find out.

Both Biogen IDEC and GlaxoSmithKline, respectively, have been trying to introduce oncologists to this relatively new form of treatment. In radiotherapy, antibodies are attached to a radioactive drug, delivering focused radiation right to the tumor cells. Since the treatment is more targeted than standard chemotherapy, it may be less toxic to the system. Furthermore, either of these agents are given in two shots over the course of one week, reducing therapeutic time.

One barrier is that the radioactive infusion must be done by a nuclear radiologist, because most oncologists do not perform this service. That may raise the question of how the treatment is reimbursed. Another barrier is that Biogen Idec also produces the principal therapy now used to treat non-Hodgkins lymphoma—rituximab (Rituxan®).

Biogen is seeking to sell ibritumab, because of its apparently limited market. In the meantime, other radioimmunotherapy drugs are in the pipeline, poised to treat a number of other types of tumors. However, will they find a viable market?

Neergaard L: Lymphoma drug failure frustrates experts. Associated Press April 30, 2007.

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