Managed Care Updates in Oncology

Evidence-Based OncologyOctober 2015
Volume 21
Issue SP14

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:

  1. “Incident” to billing. ASCO recommends that CMS should not implement its proposal to change the “incident” to rules without clarifying that the ordering physician may differ from the supervising physician for chemotherapy administration.
  2. Potentially misvalued codes. ASCO recommends that CMS should use methodologies other than the "high expenditure by specialty screen" to identify potentially misvalued codes.
  3. Cancer staging measure. ASCO recommends that CMS should not finalize its proposal to eliminate the cancer staging measure from registry reporting in the PQRS. ASCO urges CMS to retain this measure and consider refining it to apply only to a period of time following the initial office visit.
  4. Chronic care management. ASCO recommends that chronic care management services have the potential to provide meaningful opportunities to improve oncology care management and lower Medicare's overall expenditures. CMS should continue to focus resources on providing beneficiaries with access to medical advice and eliminating counterproductive administrative burdens on providers that hamper patient access.


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.


  1. Proposed policy, payment, and quality provisions changes to the Medicare Physician Fee Schedule for Calendar Year 2016 [press release]. Baltimore, MD: CMS; July 8, 2015. Accessed September 23, 2015.
  2. Letter RE: CMS-1631-P. Medicare Program: revisions to payment policies under the Physician Fee Schedule and other revisions to Part B for CY 2016. ASCO website. Published and accessed September 8, 2015.

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:

  • The implementation of new treatment delivery codes that were delayed in the calendar year 2016 PFS Final Rule, as well as CMS modifications to those codes
  • CMS's proposal to increase the equipment utilization assumption for the linear accelerator from 50% to 70%
  • Corresponding increases in other radiation oncology codes due to an increase in the indirect practice cost index.

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.


  1. Proposed policy, payment, and quality provisions changes to the Medicare Physician Fee Schedule for Calendar Year 2016 [press release]. Baltimore, MD: CMS; July 8, 2015. Accessed September 23, 2015.
  2. Rose CM. Proposed Medicare cuts to radiation therapy are bad medicine. The Hill website. Published September 3, 2015. Accessed September 23, 2015.

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 340B program grows each year. In 2010, there were 89 new hospitals enrolled that qualified as “Disproportionate Share,” or DSH, along with 342 non-DSH. A hospital’s DSH status is calculated based on whether patients qualify for Medicare Part A, Medicaid, or Supplemental Security Income. The number of new enrollees rose for each until 2014 brought 324 new DSH enrollees and 1222 non-DSH and other specialized clinics.
  • The report found that new enrollees—those arriving in 2010 or later—accounted for 23% of Medicare Part B outpatient drug spending in 2013.
  • Medicare spending in 2013 on oncology drugs in 340B hospitals outpaced that of non-340B hospitals—$3.064 billion vs $2.672 billion—even though overall hospital revenues are higher among the non-340B hospitals: $1.968 trillion vs $1.411 trillion for 340B.
  • The gap in spending per beneficiary in Medicare Part B fee-for-service for oncology drugs between 340B hospitals and community oncology practices is large and growing: in 2010, 340B hospitals spent $1722 per patient per day while community practices spent $1226. In 2013, the per-patient, per-day figure had grown to $1920 for 340B hospitals but barely budged for community practices, to $1266, at a time when the cost of cancer drugs is soaring.

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.


  1. Vandervelde A. 340B growth and the impact on the oncology marketplace. Community Oncology Alliance website. Published and accessed September 15, 2015.
  2. Dangi-Garimella, S. New 340B draft guidance may increase bureaucracy. AJMC website. Published August 31, 2015. Accessed September 15, 2015.
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