Understanding the Implications of Mandatory Vendor Imposition in Oncology

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Oncology & Biotech News, November 2010, Volume 4, Issue 11

In Partnership With:

Partner | Oncology Network Providers | <b>The US Oncology Network</b>

The rising costs of healthcare have caused payers to analyze spending and take measures to contain costs.

The idea of Mandatory Vendor Imposition (MVI) in oncology is burgeoning again. The rising costs of healthcare have caused payers to analyze spending and take measures to contain costs. One of their prime targets is specialty drugs, and many are considering models that eliminate the buy-and-bill process for expensive office-administered drugs and biologics used by oncologists. As the attempt to implement this method becomes more prevalent, it is critical to understand what MVI is and the risks and consequences associated with MVI programs to be able to work proactively with payers to find alternative solutions.

History of MVI

MVI programs are designed to create arrangements between payers and specialty pharmacies to supply drugs to patients. MVI can take the form of the concepts commonly referred to as brown-bagging and white-bagging. Brown-bagging requires patients to receive prescribed drugs directly from the vendor or specialty pharmacy and then bring them to the clinic for administration by the clinic staff. In this situation, physicians do not acquire, store, or manage the drugs they are providing to their patients. With white-bagging, the clinic receives a patient’s drugs from the third-party pharmacy and must store these patient-specific drugs in separate inventory. The idea behind both concepts is to remove the buy-and-bill process from physicians, thus eliminating payment of physician markup on drugs and capitalizing on cost savings through the use of contract pricing and manufacturer rebates that are currently received by physicians.

MVI is not new. In fact, physicians have been successful in pushing back against the idea with private payers in numerous states over the past decade. They also fought MVI when the Centers for Medicare and Medicaid Services (CMS) attempted to instate the Competitive Acquisition Program (CAP) in 2006 as part of the Medicare Modernization Act (MMA). This voluntary white-bagging program encouraged physicians to purchase and receive drugs from vendors who would handle the billing of Medicare and collection of copayments owed by the beneficiary. Only one vendor, BioScrip, opted to participate in this program, and physician participation, especially among oncologists, was very limited. Then in 2008, CMS announced it was ending the program due to contractual issues, but the agency indicated that it might revisit the idea in the future.

Currently some private payers, especially smaller, local payers who administer mostly self-insured plans, are heading down this same path. They are introducing benefit structures that include MVI and using approaches that range from highly restrictive to seemingly “voluntary.” The more restrictive plans require patients to receive their drugs from specialty pharmacies. Patients whose benefit schedules include these requirements are not allowed to receive drugs from physicians at all. Other structures allow patients to receive drugs from their physician or the specialty pharmacy, but the financial incentives to use the specialty pharmacy are so great that most patients would be hard-pressed to make any other choice. In these situations, the payer may set small, patient-fixed copayments for specialty pharmacy drugs and a significant patient coinsurance (usually a significant percentage of the allowed amount) for drugs obtained from physicians. In some cases, payers offer to let practices opt out of the business of buyand- bill for the payer’s patients, but in other cases, they have gone as far as threatening to lower reimbursement for practices that do not choose MVI.

Safety Must Be Paramount

Regardless of which approach payers are taking, MVI has serious consequences for patients, the most significant of which affect patient safety. Brown-bagging and white-bagging remove important clinical controls that exist to ensure the safety and reliability of cancer drugs. Removing these controls means that oncologists no longer know the origin and chain of custody of the drugs. This increases the patient’s risk of receiving drugs that have been tampered with, are counterfeit, or come from the highly unregulated secondary market. In fact, brownbagging and white-bagging undermine drug pedigree laws passed by states like Florida and California. The intent of these laws is to ensure that providers are able to track a drug back to the original manufacturer should there ever be a need to identify the chain of custody.

Proposed Policy on Mandatory Vendor Imposition (MVI)

A practice should adopt a policy like the one below that clearly states its position on MVI, helping the practice’s physicians and administrators easily communicate the practice’s concerns to payers when necessary:

[The practice] and its affiliated physicians oppose the actions of payers and of pharmaceutical/ biotechnology companies that require practices to obtain and receive injectable drugs from a vendor mandated by the payer or pharmaceutical company. Such actions pose risks to our patients and liability to our physicians with respect to the product authenticity, product integrity, labeling, and dosing accuracy. The legitimacy of the drug’s original source and the appropriateness of subsequent storage and handling cannot be assured by our physicians.

The move to MVI raises deep concern about the risks that might arise from physicians’ loss of control over product authenticity, product integrity, labeling and dosing accuracy, and the consequences to practices and their patients. If forced into MVI, some oncologists might decide the risks associated with administering drugs whose origin and safety they cannot verify are too great, as is the responsibility to store and handle these drugs. As a risk-mitigation strategy, oncologists might elect to send their patients elsewhere for infusion—most likely to a hospital—inconveniencing patients and possibly increasing costs. Hospitals typically prohibit patients from using drugs obtained outside the hospital while at their facility because of the need to ensure the integrity of the products they give their patients—a concern that is no less valid for physician practices.

Brown-bagging also raises concerns about whether it is safe for patients to handle their drugs, especially biologics. Many drugs are fragile and toxic, requiring special handling to guarantee their efficacy. Patients have not been trained to handle and transport these agents to the clinic properly and securely. Placing the responsibility for transorting these drugs literally in the hands of patients and caregivers risks exposing them to toxins and could damage the drug.

Compromising Quality of Care

Benefit plans that prohibit patients from using drugs dispensed by physicians erode the oncologist’s ability to modify treatments, compromising the quality of care. For example, if a patient arrives at the clinic for treatment with drug in hand and unexpected laboratory values or concerns about intolerance of the original regimen convince the physician that the prescription should be modified, the physician will not be able to provide the patient with the timely treatment needed.

Even if a specialty pharmacy provides the drug, treatment delays are inevitable if a physician must change the course of therapy—a change that cannot be anticipated prior to the patient’s arrival at the clinic. Patients must typically return to the office once they receive the new drugs, inconveniencing the patient and, in some cases, incurring another copayment. Brown-bagging and white-bagging scenarios hamper oncologists’ ability to adjust treatments based on a patient’s current health status. Ultimately, the patient suffers when treatments must be delayed because the correct drugs are not immediately available.

Potential Hidden Costs of MVI

Payers’ goal for MVI programs is to reduce payments to physicians by eliminating margins on drugs. On the surface, this seems like a reasonable method of saving money. In the long-term, however, these savings might ultimately be offset by higher costs to payers in other areas, such as the expense of drug waste and sending more patients to hospitals for cancer treatments.

Mandatory Vendor Imposition (MVI) Risks and Concerns

Safety − MVI removes existing clinical controls that ensure the safety and reliability of cancer drugs and their handling.

Quality — MVI increases the risk of delay in access to treatment (drug not available, dosing adjustments required).

Cost — MVI requires drugs to be ordered and stored on a patient-specific basis and results in increased drug wastage.

Efficiency − Practices must purchase or house specialized storage cabinets to maintain segregated inventories, greater quantities of hazardous waste are generated, and practices incur increased paperwork.

Liability — MVI breaks the existing chain of custody, imposes unnecessary delays in treatment, increases risk of improper handling of drugs, and may violate states’ drug pedigree laws.

Inconvenience — Patients must receive, handle, and transport the drug before treatment (specifically, brown-bagging).

As an example, in a brown-bagging scenario, if a patient cannot receive the treatment he or she brought to the clinic or if there is excess of a drug dispensed for a specific patient, most states’ pharmacy laws mandate that the drug be discarded. In addition to cost of wasting expensive drugs, now there is the expense of properly disposing of the drug—a cost that typically is not reimbursed to the clinic. Having patients handle the drugs also invites opportunities for the drugs to end up lost or mishandled, requiring their replacement.

It is important to consider one of the hidden costs of MVI: reducing patients’ access to cancer care. For years, community-based oncology practices have been providing cancer patients with convenient access to high-quality care. The ability of patients to receive treatment and battle their diseases with as little disruption as possible to their daily lives and the lives of their caregivers has great value, even if it cannot be measured in dollars.

With declining reimbursements, practices are struggling to cover the costs of providing care, let alone realizing a reasonable profit. Costs for storing, compounding, administering, and properly disposing of drugs often are not reimbursed at a level high enough to cover costs to the practice; sometimes, they are not reimbursed at all. Without margins on pharmaceuticals to help cover these costs, many community practices will not survive and patients will no longer have easy access to the cancer care they need. That has already occurred in many communities, and if this trend continues, patients will be forced to receive treatments in hospitals, where costs are typically much higher.

About the Authors

Roy A. Beveridge, MD, is executive vice president and medical director for US Oncology. Prior to this role, Beveridge served as part of the United Network of US Oncology as a medical oncologist, caring for patients at Virginia Cancer Specialists, formerly known as Fairfax Northern Virginia Hematology Oncology. He is board certified in internal medicine and medical oncology and has been published extensively in the field of stem cell transplantation, medical oncology, and hematology. He has worked with many organizations, including the American Society of Clinical Oncology and the American Society for Blood and Marrow Transplantation, and he has been involved with patient advocacy and public policy.

Michael A. Kolodziej, MD, specializes in hematology and medical oncology and is board certified in internal medicine, medical oncology, and hematology by the American Board of Internal Medicine. Kolodziej is a medical oncologist with New York Oncology Hematology, Albany Cancer Center, and serves as medical director for oncology services for US Oncology and chairman of the US Oncology Pharmacy and Therapeutics committee.

Matt Brow is vice president of corporate communications, government relations, and public policy in US Oncology’s Washington, DC, office. In this role, Brow directs the activities of the Government Relations and Public Policy staff; leads the network’s federal legislative initiatives; and oversees state government affairs, related research and analysis projects, and public outreach and grassroots advocacy efforts in support of the network’s federal and state public policy goals.

Finding a Sustainable Approach

The real solution will come when physicians and payers work together to create a more comprehensive approach to ensuring quality of patient care and cost-effectiveness. To begin with, we oncologists must do a better job of defining and proving our value to payers. We must be more diligent about tracking and reporting outcomes and adopting pathways that factor in cost of treatment. We must address the key factors that drive up healthcare costs, such as unscheduled hospital and emergency room visits and a lack of advanced care planning. Adopting a collaborative mindset, especially as the payfor- performance incentive trend continues, is crucial.

We cannot fault payers for looking for ways to save money. We all do the same in our practices and businesses. As oncologists, however, we see firsthand the effects of MVI on the quality of care our patients receive. It is our responsibility to advocate for our patients; educate payers on the risks, consequences, and potential hidden costs of MVI; and offer alternative, sustainable approaches that benefit everyone involved.

Oncology & Biotech News neither asked for nor received compensation for publishing this perspective authored by officers at US Oncology.