An update on recent progress in oncology managed care.
ASCO Submits Comments on the Proposed Medicare Physician Fee Schedule Rules
In July of this year, CMS made public proposed policy changes to the Medicare Physician Fee Schedule (MPFS),1 with updates on payment policies, payment rates, and quality provisions. These are the first set of proposed changes after the Sustainable Growth Rate repeal and include important changes to the Physician Quality Reporting System (PQRS), the Physician Value-Based Payment Modifier, and the Medicare Electronic Health Record Incentive Program.
In response, the American Society of Clinical Oncology (ASCO) submitted a letter to CMS at the end of the public comment period recommending that CMS should “reconsider revisions to payment policies that could be administratively burdensome to oncology practices and result in reimbursement that inadequately supports optimal cancer patient care.”
Although agreeing with some of the policy changes, ASCO drew attention to certain provisions that would impact patient care, physician payment, and quality of care. The following are concerns of and recommendations from the organization:
Additionally, ASCO has urged CMS to reconsider the valuation of radiation oncology services to allow continuous patient access, particularly in community clinics. For biosimilar products, ASCO has proposed fair and adequate reimbursement by CMS to allow patient access to these biologicals at a lower cost. The letter applauds the CMS proposal to provide reimbursement for advance care planning with the flexibility of seeking advice from multiple providers. ASCO has recommended that CMS should establish new codes and payments for cognitive services performed in oncology care, which CMS has recognized as an important task performed by specialists who care for certain subsets of Medicare beneficiaries. Other suggestions address tailoring quality and value measures for oncology and implementing alternate payment models to improve quality while reducing cost of care.
CMS Changes to Physician Fee Schedule Face Resistance From Radiation Oncologists
Although the comment period for the MPFS1 for 2016 ended September 8, 2015, physicians have not held back in expressing concerns and their opposition to some of the provisions within the MPFS. The main opposition comes from community oncology centers and freestanding cancer care facilities who would feel the greatest impact from the proposed cuts. According to the proposal, there would be a 3% overall reduction in payments to radiation oncology specialists, although the cuts would vary depending on the patient population and could even reach 10%.
Some of the proposed changes by CMS for radiation oncology include:
Immediately after the policy and payment changes were proposed, the American Society for Radiation Oncology (ASTRO) issued a press release expressing concern over the cuts. “The implementation of these 3 dramatic policy changes at once represents too much, too fast for community-based clinics to absorb and could have devastating effects, particularly for those centers in rural and underserved areas,” said ASTRO Chair Bruce G. Haffty, MD, FASTRO, in the release.
In a related blog on The Hill,2 Christopher M. Rose, MD, chief technology officer at Vantage Oncology, Inc—a coalition of 296 freestanding cancer care facilities across 35 states—wrote that the proposed changes could have devastating effects on care delivery and patient access, especially the more vulnerable populations. “If the proposed PFS changes were adopted, the payments for a course of care for prostate and breast cancer will be reduced by 25% and 19%, respectively. Furthermore, this same care will be reimbursed 36% less and 32% less, respectively, in the freestanding setting than care delivered in the hospital setting,” he writes.
The final rule is expected to be issued by November 1, 2015, and will become effective January 1, 2016.
Cancer Drugs Driving 340B Growth Even More Than Understood, Report Finds
The discount drug program intended for safety-net hospitals and AIDS clinics has mushroomed even more than earlier reports suggested, with oncology drugs fueling much of the growth, according to a new report commissioned by community oncology providers.1
An examination of Medicare Part B hospital outpatient spending shows that 340B institutions accounted for 58% of all spending on drug payments in 2013, with oncology drugs making up 40% of the Medicare fee-for-service costs. The study, by Aaron Vandervelde of the Berkeley Research Group of Washington, DC, was sponsored by the Community Oncology Alliance (COA), which has sounded the alarm about unrestrained 340B growth in recent years.
Figures from 2010 through 2013 reveal explosive growth in cancer drug spending in the 340B sector: Medicare Part B reimbursement rose 123% for oncology drugs in this period compared with 31% for non-340B hospitals and a 5% decrease for community oncology practices. Medicaid expansion may only exacerbate these trends if there are no changes to the program, according to the report.
Cancer drugs have become “the pot of gold at the end of the rainbow,” for 340B hospitals, said Ted Okon, MBA, executive director of COA, in an interview with Evidence-Based Oncology. Okon said the report underscores 2 key problems: it’s too easy for hospitals to qualify for the program and hospitals have powerful financial incentives to buy up oncology practices, so these financial strategies can proliferate at sites beyond the hospital walls.
The original purpose of 340B was noble: hospitals caring for patients who may be uninsured or underinsured can buy drugs at discounts of 20% to 50%, but charge full price to those able to pay or to their insurer, which can include Medicare or Medicaid. However, if this practice extends to oncology practices owned by the hospital, the ability to buy discounted drugs and charge insurers a higher price does many things at once.
First, it forces independent oncology practices to compete with hospital-owned providers when they lack access to similar discounts; many are compelled to either join with the hospital or go out of business. Second, Okon explained, the ever-increasing pool of providers buying “discounted” drugs means those rebates have to be built into the overall price, which has contributed to trends in oncology costs seen today. “Already, 340B expansion has had unintended consequences,” Okon said. “Anyone who doesn’t think all these rebates are not fueling drug prices is not paying attention.”
Although a July report by the Government Accounting Office (GAO) found that the 340B program had created perverse incentives for hospitals to prescribe more drugs and more expensive drugs, its finding that 40% of hospitals were enrolled did not fully capture the scope of recent growth. By looking at actual spending on prescriptions instead of comparing 340B and non-340B hospitals, Okon said, the report shows that “the big growth is on the hospital side, not the grantee side”; the latter group includes federally qualified health centers and Ryan White HIV/AIDS Centers. In addition, spending on cancer drugs appears to be a business strategy among the 340B hospitals; left unchecked, this will only encourage more program growth, with consequences for all payers, Medicare and Medicaid, and patients who will face a combination of higher co-payments and fewer care options in their communities.
The report stated, “Oncology drug reimbursement has increased by 86% at continuously enrolled 340B hospitals and 58% at non-340B hospitals. Although some of this growth is a function of changing demographics and advancements in chemotherapy (which typically come with an increased cost), the disparity in growth rates between 340B and non-340B hospitals speaks to the disproportionate role that 340B hospitals play in the acquisition of community oncology practices.”
“This is, in large part,” the report concluded, “a function of the sizeable profits that 340B hospitals realize on Medicare and commercial reimbursement of oncology drugs.”
Among the report’s findings:
The report confirms the overall conclusions of the GAO findings. The agency said, “While it is not unlawful for hospitals to benefit financially from the drug discount program," such practices are “not consistent with the legislative intent of the 340B program.” It noted that taxpayers, generally, and patients, individually, suffer harm, since Medicare Part B beneficiaries are responsible for a 20% co-payment, which will rise along with drug prices. That report also questioned whether all healthcare provided in 340B hospitals is appropriate, stating, “Absent a change in financial incentives, potentially inappropriate spending on drugs may continue.”
The report comes as the Health Resources and Services Administration (HRSA)2 takes comment on a proposed guidance that would increase oversight and double the number of conditions needed to qualify for 340B status. Some hospital groups have questioned whether the rules will simply make oncology care more bureaucratic and inconvenient for patients, and whether limits on access will result.
“The 340B program is very administratively complex and costly to administer now,” Beth Feldpush, senior vice president of advocacy and policy for America’s Essential Hospitals, said when the guidance was issued. “For our members that rely on the savings, I could see where if HRSA narrowed the program so much, a hospital could say the costs to run this program may outweigh (the benefit of) participation in it.”
Comment on the guidance continues through October 27, 2015.