Physician Behavior Impact When Revenue Shifted From Drugs to Services | Page 3

Published Online: April 21, 2014
Bruce Feinberg, DO; Scott Milligan, PhD; Tim Olson, MBA; Winston Wong, PharmD; Daniel Winn, MD; Ram Trehan, MD; and Jeffrey Scott, MD
There was no difference in the percentage of patients who received all-generic chemotherapy regimens between the study groups, though there was a trend for increased use of generics in year +1 for both groups; Oncology Medical Home providers increased the use of generic-only regimens by 43% in year +1 compared with first-generation pathways providers, who increased use of generics by 42%. The migration of broadly used agents gemcitabine, docetaxel, irinotecan, and oxaliplatin (transiently) from brand to generic status during the study period was largely responsible for the increase in generic-only regimen prescribing among both groups. The generic regimens lacking any of these 4 drugs accounted for 25% and 23% of control and Oncology Medical Home patients, respectively, in the program year. In the preprogram year, all-generic regimens accounted for roughly 25% of control and 28% of Oncology Medical Home patients.


We found that, surprisingly, moving financial incentives from drug administration toward cognitive services did not alter physician behavior with regard to type or frequency of chemotherapy administrations. We say surprisingly, as expectations based on prevailing wisdom suggest physicians behave in their economic best interest as long as patient outcomes are not jeopardized. This has been demonstrated in previously published reports showing that decreased reimbursement schedules correlate with increased rates of chemotherapy administration and use of more costly chemotherapeutic agents.10,21 In fact, a recent New York Times editorial cosigned by 20 leading academics cited fee-for-service reimbursement as the primary driver for the spiraling cost of cancer care in this country.11 Our results are quite inconsistent with this idea. Whether this pattern of care was pathway-influenced or is the result of National Comprehensive Cancer Network and other guidelines, brand name prescription drug detailing, cognitive dissonance, our culture of medicine, or other factors, is speculative without more information.

Additionally, the results from this study indicate that, despite a nearly 3-fold increase in E&M code reimbursement, no significant change in established or new patient visits was observed. This was contrary to expectation and could be related to external influences on physician practice behavior, including the historically lower contribution of E&M reimbursement to revenue, standardized and established practice patterns, and maximized throughput within office flow. If so, then the speculated impact of reimbursement reform may be overestimated.

The reimbursement level for generics did not differ between the control and the Oncology Medical Home participants. We acknowledge the potential impact due to the patent expiry of 4 drugs in the program year, which may have minimized pressure to increase reimbursement from E&M claims. However, this is a separate issue from the main question of whether physicians behave to maximize financial gain. The data we provided suggest that given the opportunity to maximize revenue by increasing select cognitive services, physicians remained unchanged in their behavior.

The nature of this observational study may raise questions over bias, and ultimately, conclusions. The methodology of conducting research in such circumstances is difficult; by definition, selection bias exists when programs are voluntary and financially incentivized. However, any selection bias incurred impacted both control and experimental cohorts, which were then matched by propensity scoring. To account for differences in disease focus, diagnosis mix was considered. To account for differences in heavily treated versus newly treated patients, and in earlystage versus later-stage treatment, the distribution of chemotherapy lines (“extent of treatment”) was considered. To account for overall treated patient burden, comorbidity index was considered. Taken together, we believe these measures yielded propensity scores indicative of case mix. However, we acknowledge that claims data, and nearly all secondary data sources, are not sufficient to account for more diverse disease stratifications. For example, race, socioeconomic status, biomarker status, disease stage, or disease histology are not sufficiently represented in claims data. Despite the absence these factors, we believe these cohorts are appropriately matched and the comparisons are valid.

We initiated the Oncology Medical Home program with the intent of further removing financial impact by offering a “white bag” drug delivery system where patient specific medications and supplies are delivered directly to practices from a dedicated specialty pharmacy. Alternatively, practices could continue their legacy buy-and-bill arrangement at a reduced fee schedule, 8% margin over ASP predetermined to be adjusted annually, where they would assume risk for price increases in brand drugs not mitigated by price equilibration for those drugs recently converted to generic. The 8% margin was selected for 2 reasons. First, this was the lowest bid by specialty pharmacy suppliers, as they are unable to purchase drugs at the same discounted prices as oncologists. Second and more importantly, modeling suggested that the 8% margin over ASP, drug utilization from the baseline control period, and the most recent Medicare fee schedule would create no net profit. All practices in the Oncology Medical Home chose to retain their current buy-and-bill practice for drugs. Acceptance of white bagging would have made cohort comparisons less complicated, but the continued buy-and-bill preference by participants, despite profit neutrality and assumed risk, represents an interesting behavioral observation. We recognize that the Oncology Medical Home program was limited to a single payer, which may not have accounted for sufficient per practice volumes to impact behavior. However, that payer represented approximately one-third of the payers of first-generation pathway providers and more than 50% of their profit, making the program financially relevant to participating practices. Although Medicare may contribute the majority of patients to an oncologist’s practice, its contribution to profit is much less significant, making commercial payers increasingly relevant to a practice’s financial integrity.

Finally, we recognize that Oncology Medical Home providers, being mature pathways participants of nearly 3 years, may have had established patterns of care that limited variance, thereby reducing the influence of reimbursement. If this is true, then pathways programs such as the first-generation program described herein may be a more palatable provider solution to an unsustainable cost curve than radical reimbursement reform.

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Issue: April 2014
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