Chemotherapy

[Guest]

There is a silver lining with the passage of The Medicare Prescription Drug and Modernization Act (H.R.1). There is a 10 - 15 percent reduction in the money an oncologist is reimbursed for purchasing and administering chemotherapy drugs. Medicare reimbursed doctors well enough for chemotherapy drugs that made up for low reimbursements on the services associated with administering those drugs to patients, but at a cost of incentivizing treatment rather than counsel, and treating with certain "deal of the month" drugs.

The new measure lowers reimbursement rates for cancer treatments administered in a community setting, such as a doctor's office, so patients may have to go to a cancer center hospital setting. That may not be a bad idea. A cancer hospital setting is the proper place for cancer care. The ideal would be if patients received chemotherapy at some treatment center which wasn't involved in the decision to treat or not to treat and in which the oncologist didn't have a financial interest.

Congressional targeting of cancer clinics goes back about two years to investigations on Capitol Hill that revealed oncologists obtained cancer-fighting drugs at bargain-basement prices but then received Medicare reimbursements five times the amount they paid. The Medicare legislation attempts to address the imbalance by taking away from the oncologist's drug reimbursement and adding to their office expense. The cancer related provisions in the bill contain significant cuts to cancer drug reimbursement over the next 10 years, thanks to patient advocacy groups, individual oncologists and patients and their loved-ones.

A letter (truncated below) from one of my Pennsylvania U.S. Senators in regards to my concerns about the Chemotherapy Drug Concession.

"A growing body of evidence indicates that the AWP (average wholeseale price) methodology has resulted in Medicare significantly overpaying for covered medications. AWP overstates what certain health providers typically pay for these medications. Physicians typically receive deep competitive discounts which reduce the actual amount they pay for the drugs. These discounts do not, however, lower the published prices of drugs, which are used to determine the AWP.

A study by the General Accounting Office (GAO) found that physicians are able to purchase cancer medications and other Medicare-covered drugs at prices significantly below AWP. The GAO found that the average difference between a covered drug's reported AWP and its widely available discount price - referred to as "the spread" by medical professionals - ranged from 13 percent to 34 percent. Two drugs were identified as having spreads of 65 percent and 85 percent.

Such inflated payment amounts not only place additional strain on the finances of the Medicare program, but also directly affect beneficiaries by inflating their required 20 percent copay. In addition, analysts have suggested that the varying spreads for different types of physician-administered medications create a conflict of interest which could affect the treatment decisions of some health care providers.

Specific to your concerns, H.R. 1 aims to reduce AWP overpayments while at the same time increasing the practice expense reimbursements for affected physicians. Fro 2004, H.R. 1 reduces provider reimbursement for most physician-administered drugs to 85 percent of AWP. In 2005, oncologists and other physicians will be paid for administered medications at 6 percent above a new price index called the average sales price (ASP). ASP will be calculated on a quarterly basis from manufacturers' sales data, exempting sales to select state and federal agencies. ASP will take into account such factors as volume discounts, prompt payment discounts, "free" products available only after another purchase and non-Medicaid rebates.

If the Health and Human Services (HHS) Secretary determines that a manufacturer has misrepresented their sales data to inflate ASP, the Secretary can then fine the manufacturer by $10,000 for each price discrepancy and for each day the false reporting occurred.

Beginning in 2006, affected physicians can also elect to receive necessary medications through a competitive bidding program. Competitive acquisition regions will be established throughout the United States and physicians who choose this option will be able to annually select an approved contractor in their region who will deliver covered medications. The HHS Secretary would be able to exclude specific drugs and biologicals from the competitive bidding program where a determination is made that the inclusion of a medication would not result in significant savings, or if the inclusion is likely to harm patients' access to the drug or biological.

Under this program, the contractor would be responsible for submitting claims to Medicare and collecting the beneficiary copays. This voluntary program is intended to reduce physicians' administrative, storage and inventory costs, as well as to lessen physician liability since the physician would not assume the title of required medications under this system.

In order to compensate for the decreased revenue to cancer clinics and other facilities from the new payment methodologies, H.R. 1 increases Medicare practice expense reimbursements for drug administration. With respect to cancer care, H.R. 1 will use survery data submitted by oncologists to increase Medicare payments for physician services by approximately $150 million per year. This legislation will also adjust payments to compensate for higher oncology nurse salaries and will establish special transitional payments in 2004 and 2005.

The Congressional Budget Office (CBO) estimates that these enhanced practice expense payments will increase Medicare reimbursements for oncologists' services by $500 million in 2004. When considered with the revenue effects of replacing current AWP methodology, H.R. 1 will result in oncologists receiving a net increase of $100 million in 2004."

An editorial from Dr. Larry Weisenthal, one of the first medical oncologists to call attention to this issue at a Medicare Reimbursement Executive Committee meeting held in Baltimore on December 8, 1999, states:

"The previous system (which remains in effect until 2005, when the new chemotherapy reimbursement structure phases in) basically paid oncologists for being retail pharmacists. The lion's share of all payment provided was in the form of reimbursement for the drugs, themselves, at reimbursement levels which bore little and often no relationship whatsoever to the actual cost of the drugs. There were instances where Medicare would reimburse the oncologists ten-fold or more greater than the actual cost to the oncologists of the drugs. I indicated in my testimony to the Medicare Executive Committee 4 years ago, that this created an incentive to choose the drugs with the highest "spread" between cost and reimbursement. It furthermore created a huge incentive to write a chemotherapy prescription, rather than taking time to explain to the patient that chemotherapy in general may not be all that helpful. These conflicts of interest have always been a part of Medicare; for example a surgeon gets paid much more for performing surgery than for counselling against surgery. But the Medicare chemotherapy reimbursement schedule was particularly egregious, with respect to offering incentives to good doctors to prescribe bad treatments.

An additional problem with the present reimbursement system is the strong disincentive for the oncologist to use cell culture drug resistance testing (CCDRT or "chemosensitivity testing") in drug selection. If the oncologist does not order CCDRT, then he/she is "free" to select from a half dozen or more different forms of chemotherapy, all reasonable and justifiable options, based on the existing literature relating to empically-chosen therapy. But CCDRT takes away some of the "freedom to choose," by putting drugs into different "sensitive" and "resistant" categories, with markedly different likelihoods of providing clinical benefit.

Early reactions to the provisions of the new law have included predictable howls of protest from the oncology community, including dire warnings/threats that treatment facilities will be closed and that patients may not in the future receive optimum therapy. Yet the provisions of the bill are hardly draconian to the oncologist.

° The new law provides reimbursement at a level of 120% of the "true" nationwide average cost of the drug OR 100% of the actual cost of the drug to the oncologist, whichever is greater.

° The new law protects oncologists from failure to receive patient-responsibility co-pays or other patient-related bad debt.

° The new law provides payment to the oncologist for supervisory responsibilities relating to drug administration.

° The new law provides payment for all required drug administration expenses, including nurses' and other employees' salaries and indirect costs.

° The new law provides payment for related services, such as nutritional counselling and psychosocial support.

In short, the implication that oncologists will lose money by administering chemotherapy is completely unfounded. Rather, what will happen is that oncologists will be paid and reimbursed for providing medical services and will not receive the excessive level of windfall compensation (out of line with other medical subspecialties) from operating a retail pharmacy concession. According to the Congressional Budget Office, there will be a $4.2 billion reduction in payments for the drugs themselves over ten years, with a corresponding $3 billion increase in reimbursements for actual chemotherapy administration expenses. Thus, there will be a $1.2 billion cut in total reimbursement over 10 years. But this simply reflects correction of the previously-existing $420 million per year overpayment for drug costs and the previously-existing $300 million per year underpayment for costs of administration.

The new system still has major flaws, in that it continues to provide incentives to administer chemotherapy, in the same way that surgeons have a financial incentive to recommend surgery. Additionally, it is a certainty that there will be large differences between the profit margins of administering different drugs, providing continuing incentives to base drug selection on profit margin. However, the new system is clearly an improvement from the standpoint of cancer patients, taxpayers, and advocates of basing drug selection on individual tumor biology, rather than on a least common denominator approach which invites conflict-of-interest medical decision-making."

[Guest]

Neil Love, M.D. reports in a survey of breast cancer oncologists based in academic medical centers and community based, private practice oncologists. The academic center-based oncologists do not derive personal profit from the administration of infusion chemotherapy, the community-based oncologists do derive personal profit from infusion chemotherapy, while deriving no profit from prescribing oral-dosed chemotherapy.

The results of the survey show that for first line chemotherapy of metastatic breast cancer, 84-88% of the academic center-based oncologists prescribed an oral dose drug (capecitabine), while only 13% perscribed infusion drugs, and none of them prescribed the expensive, highly remunerative drug docetaxel.

In contrast, among the community-based oncologists, only 18% prescribed the oral dose drug (capecitabine), while 75% prescribed infusion drugs, and 29% prescribed the expensive, highly remunerative drug docetaxel. The existence of this profit motive in drug selection has been one of the major factors working against the individualization of cancer chemotherapy based on testing the cancer biology.

This is not to imply that the academic centere-based oncologists are without their fair share of collective guilt. They were misguided in not recognizing that they were trying to mate notoriously heterogeneous diseases into one-size-fits-all treatments. They devoted 100% of their clinical trials resources into trying to identify the best treatment for the average patient, in the face of evidence that this approach was non-productive. However, such unsuccessful experiments will never be viewed as such by the thousands of people whose careers are supported by these experiments.

Henderson, et al, entered 3,100 breast cancer patients in a prospective, randomized study to compare cyclophosphamide/doxorubicin alone versus cyclophosphamide/doxorubicin plus Taxol (in the adjuvant, pre-metastatic setting). The results were microscopically positive, at best, and cannot begin to justify the enormous financial and human resources expended (while making no effort at all to test and improve methods to individualize treatment).

But these results changed the face of the adjuvant chemotherapy of breast cancer. Cyclophosphamide+Doxorubicin+Taxol became standard of care. Taxol recently went off patent. Now the thrust is to identify on-patent therapy which is microscopically better in clinical trials of one-size-fits-all treatment. Already, the community-based oncologists are migrating to Cyclophosphamide+Doxorubicin+Docetaxel (expensive/remunerative) so what was the purpose of doing that 3,100 patient prospective, randomized Henderson study?

http://patternsofcare.com/2005/1/editor.htm


[quote] There is a silver lining with the passage of The Medicare Prescription Drug and Modernization Act (H. R... [/quote]