The playing field regarding Medicare reimbursement and drug pricing has to be leveled between hospitals and community oncologists in order for physicians to compete for patients on the basis of the quality of care they provide,
The playing field regarding Medicare reimbursement and drug pricing has to be leveled between hospitals and community oncologists in order for physicians to compete for patients on the basis of the quality of care they provide, said Barbara McAneny, MD, chief medical officer of New Mexico Oncology Hematology Consultants.
What are the most significant struggles facing stand-alone oncology clinics in the community?
Stand-alone clinics for cancer have increasing drug costs and decreasing reimbursement. We have to have a significant infrastructure to be able to safely get the chemotherapy out of the little bottles and put it safely into a patient. We did an experiment in our office: we looked at how much does it cost me in terms of pharmacy infrastructure, having the right refrigerators, having all the right regulatory concerns met, having the appropriate personnel—pharmacists, oncology nurses—and how much does it cost to get the drugs out of the little bottles and into the patient safely, and Medicare pays about 40% of that cost.
So the main threat to community oncologists is that we have to safely deliver expensive chemotherapy drugs and we are not paid sufficiently to actually administer those drugs. Medicare assumes that the drug quote margin, the ASP [Average Sales Price] plus 4.3%, is actually profit. It is not. It does not even make up the shortfall in what Medicare pays us to deliver those drugs in a safe environment to our patients. We need to have realistic pricing, if community oncology is going to continue to do well.
There's also no reason why hospitals can get 340B pricing so they can buy our most expensive supply at about 72% to 75% of what we buy it for and be paid more and be tax exempt in many instances. That's a difficult competition. We need to level that playing field. We need to allow physicians to be able to compete for patients on the basis of quality of care they give, the personal care we give in terms of sort of customer service, and be able to compete not based on who signs your paycheck on the front. We really need to level that playing field and let community oncology compete in a fair field.
If we do that, then I think patients will recognize that the value that they get from an independent practice is so much greater than the value that they get from a large, vertically integrated institution. Then community oncology will do well.