For Independent Oncology Practices, Storm Clouds Came and Went in 2016

Oncology Business News®, January 2017,

For independent oncology practices, 2016 was a year of struggle—struggle to achieve new levels of reporting to CMS, and struggle to improve interaction with patients and coordination of care.

Howard Kaufman, MD

For independent oncology practices, 2016 was a year of struggle— struggle to achieve new levels of reporting to CMS, and struggle to improve interaction with patients and coordination of care. It was also a year in which a slate of new acronyms and abbreviations from CMS became household words in oncology centers across the country, as the value transition took a stronger hold.

In 2016, storm clouds appeared on the horizon in the form of a Medicare Part B payment experiment from CMS intended to broadly reconfigure the average-sales-price-plus-6% formula for drug payment and thereby discourage volume billing for oncology services.

Also, the past year saw a major pharmacy benefit manager launch an abortive attempt to exclude many in-house dispensaries from issuing Medicare Part D oral oncolytic drugs, a move that caused great consternation among oncology practices. At the same time, CMS decided to take a go-slow approach to implementation of the Medicare Access and CHIP Reauthorization Act (MACRA), which significantly eased the pressure on physicians worried about the new performance measurements and payment incentives.

Those were some of the biggest headlines on the oncology business scene over the past year, and independents were highly active on the legislative scene as they sought to interpret these complex new reforms, ward off the payment experiment, and prevent CVS Caremark from going forward with its plan to isolate in-house pharmacies from Medicare Part D drug dispensing.

But a lot more was happening besides. The year 2016 saw Vice President Joseph Biden announce the start of the Cancer Moonshot, a highly ambitious effort to double the pace of cancer discovery based on the promise of precision medicine. Many physicians wondered about the trickle-down effect of this initiative and whether their cancer research programs would see any of the financial stimulus. The year 2016 also saw the much-vaunted 21st Century Cures Act become a reality, following overwhelming votes for approval in Congress and endorsement from the White House.

21st Century Cures promises to light up the medical scene like a $6.3 billion booster rocket, giving a 10-year lift to multiple initiatives that include precision medicine advancement, the Moonshot, curing Alzheimer’s, battling prescription opioid abuse, and brain research. Yet it also represents a test of nerves for those who worry that this legislation—while shaking loose some of the fetters on the pharmaceutical industry—may weaken the regulatory strength of the FDA by depriving it of data that some consider vital for the type of independent analysis the federal agency needs for drug approval determinations.

The past year has also seen multiple refinements and enhancements in the new slate of value tools promoted by such groups as ASCO and the National Comprehensive Cancer Network (NCCN), tools that promise to enable physicians and patients to discuss the economics of care and not just treatment. Even as these methodologies emerged, by the end of 2016 it was clear that yet another leap forward in the economic discussion is needed, one that encompasses the realities of immuno-oncology drugs. These drugs have the potential to work far more efficiently than cytotoxics, but they also cost far more. These dynamics prompted a group of oncologists and other industry representatives to hold a summit on the issue at the Society for Immunotherapy of Cancer (SITC) annual meeting in November.

“We need to develop a dialogue with other parties that are actively engaged in developing value platforms, engage a medical economist with expertise in value development, and consider whether further research or collaboration is the right next step,” said a co-organizer of the SITC event, Howard Kaufman, MD, FACS, chief surgical officer and associate director for clinical science, Rutgers Cancer Institute.

2016 was also a year in which the trend of mergers and closings among independent oncology centers saw little, if any, abatement. The Community Oncology Alliance (COA) came out with its biennial assessment of practice health and reported that since 2014, roughly 73 practices have merged with or been acquired by a hospital and 67 practices have closed their doors. The trend lines in this regard for the large part continue the upward trajectory they have maintained since COA began this set of statistics in 2008. Other information from the COA presses in 2016 included the observation that whereas 90% of commercially insured chemotherapy infusion was done in physician offices in 2004, hospital outpatient centers had captured 60% of the total by 2014.

The past year came with an advisory to oncologist practices that they need to be vigilant about who has access to their electronic health record systems. This point was underscored by 21st Century Oncology’s announcement that it was working with federal authorities to investigate a hacking incident in which 2.2 million patient records were compromised. It wasn’t long afterward that the Central Ohio Urology Group of 20-some locations learned that it, too, had been hacked—purportedly by a group of Ukrainian extremists. The hackers took a wide breadth of information, including patient addresses, treatment records, and payment information.

Like many things that happened in 2016, the hacking attacks signaled changing conditions that practitioners need to address in their planning more than ever before. Medical information is worth a lot on the black market because a thief knows it cannot be changed overnight the way you can cancel a credit card account. “As cyber-attacks on healthcare entities continue, the industry must constantly evaluate their cyber protection effectiveness in the face of evolving technologies,” said Ann Patterson, senior vice president of the Medical Identity Fraud Alliance. “At the same time, there is a great need to train the enterprise in all areas of PHI [protected health information] data loss in order to reduce the incidence of identity fraud. The many paths to fraud require an equal number of protections to be put in place to block those paths.” Over 65% of healthcare-related cyber-attacks in 2016 stemmed from unauthorized access to data, improper disposal of information, loss, and theft, she said. “These threats indicate we must continue to educate our workforce on PHI protection in order to reduce data loss through acts such as lost or stolen laptops and devices.”

Although the year in reflection was overshadowed by a variety of challenges, there were a few bright spots for independent oncology practices, particularly in the sense of anticipated difficulties that dematerialized before the arrival of the new year. For example, CVS Caremark backed away from plans to discontinue Part D payments to physician-run dispensaries by the start of 2017. The PBM, which owns 10,000 pharmacies and contended that CMS policy actually excludes dispensaries, dropped the policy change after taking broadsides from the oncology community and being accused of exploiting its Part D sponsor role for private gain. Whereas the company contended that CMS policy does not require inclusion of dispensaries, observers speculated that there weren’t that many physician dispensaries around when CMS crafted its policy on Part D inclusion, meaning that they were simply overlooked.

In another welcome turnaround, there was a seemingly fatal setback for CMS’s Part B “experiment” to change the Medicare payment formula for drugs, which was bitterly fought by the oncology community and other physician groups. The surprising Republican victory in the 2016 presidential election combined with the Republican majorities in the House and Senate left scant belief that Democratic support for the Part B payment revision would prevail. The hematological community contended CMS’s proposed drug payment changes would severely affect their profit margins. CMS had other ambitious payment initiatives in store as part of the Part B experiment. For example, it wanted to take a page out of the European drug book and introduce drug price referencing in the United States, which would involve paying for drugs according to their class, not according to what their manufacturer is asking for them.

Yet another twist on the regulatory front involved the decision by CMS to slacken the reform pace at which physicians must move from fee-for-service toward value-based doctoring. This came in response to a massive protest from the physician community, which contended the changes embodied by MACRA were too fast and too onerous. CMS responded by making 2017 a transition year, with an à-la-carte series of steps toward full involvement in physician reporting, outcome measurement, and incentive payments. Physicians now can jump in wherever they feel comfortable, and CMS announced that robust support would be extended to smaller and rural practices that are expected to be most challenged by MACRA. That said, oncology community experts promptly advised their constituents to move as deeply into reform as possible in 2017, on the theory that it isn’t going to go away and that practices will have to be successful with the program in order to qualify for the financial incentives CMS has made available.