In Cancer Care, It Appears that More Is Less

With the interest in “value oncology” and cost containment, a report appeared in the December 2014 Journal of Clinical Oncology that analyzed the impact of the Medicare Prescription Drug Act of 2003 (MMA) on chemotherapy administration in an environment of diminishing reimbursement to physicians.

Prior to the passage of the MMA, oncologists were compensated at 95% of the average wholesale price of a drug. The government accounting office found that the larger medical oncology practices could form “buyers groups” and purchase drugs at lower prices allowing them to pocket the difference. A 2003 New York Times article decried the practice as a “Chemotherapy Concession” and Medicare responded. The MMA of 2003 changed the policy so that chemotherapy drugs were reimbursed at the national average sale price plus 6%. It was hoped that this would result in cost savings.

Practices were divided into Fee-For-Service and Integrated-Health-Networks, the latter largely HMOs and the Veterans’ Administration. It was expected that integrated networks would be less affected since their physicians are salaried and an 11% disparity between the two groups was noted for MMA agents. However, a number of interesting, unexpected and instructive trends emerged.

First, contrary to expectations, the overall use of chemotherapy actually increased following the passage of the MMA.

Second, the cost of cancer care continued to increase unabated following the passage of the MMA.

Finally, changes in drug use appeared to be disease-specific. Colorectal and small cell lung cancer patients saw a decline in the use of MMA affected drugs while non-small lung cancer showed an increase for both fee-for-service and integrated networks. With the overall use of MMA drugs in lung cancer increasing by 1.6 fold, the same drug use increase in the integrated (salaried) groups was 6.3 fold higher.

Among the findings the authors note “reimbursement after MMA passage appears to have had less impact on prescribing patterns in fee for service than the introduction of new drugs and clinical evidence.” This gives the lie to the idea that practicing oncologists are driven by self-gain, a popular narrative in the current political environment.

The authors did find that passage of MMA “resulted in consolidations and acquisitions of practices by hospitals, many of which were able to purchase chemotherapy drugs at discounted rates through the federal 340B* program. Although the full impact of these changes is not known, the shift of chemotherapy from community practices to hospital outpatient settings is associated with higher total costs.”

Community fee-for-service oncologists represent a qualified, yet under-appreciated resource for patients. While their academic brethren bask in the limelight, it is private practitioners who must make sense of the complex and overly dose-intensive treatment schedules handed down to them by ivory tower investigators. We now come to learn that while fee-for-service doctors have been forced to consolidate, join hospital systems, or retire, the cost of cancer care has actually climbed by 66% since the passage of MMA.

It would appear that this experiment has failed. Costs were not contained and drug use was not curtailed. What other bright ideas can we expect from policymakers who seem intent on bending medical care to their wishes at the expense of doctors and their patients?

 

*The 340 B program was originally created by the Federal government to allow charitable hospitals to save money on expensive drugs by allowing them to purchase them at deep discounts. Over time a growing number of “not-for-profit” hospitals demanded the same consideration. Subsequent analyses have found that the majority of the hospitals that now take advantage of 340B actually provide less charity care than the national average. Hospitals that charge full fee for drug administration can then pocket the difference.

About Dr. Robert A. Nagourney
Dr. Nagourney received his undergraduate degree in chemistry from Boston University and his doctor of medicine at McGill University in Montreal, where he was a University Scholar. After a residency in internal medicine at the University of California, Irvine, he went on to complete fellowship training in medical oncology at Georgetown University, as well as in hematology at the Scripps Institute in La Jolla. During his fellowship at Georgetown University, Dr. Nagourney confronted aggressive malignancies for which the standard therapies remained mostly ineffective. No matter what he did, all of his patients died. While he found this “standard of care” to be unacceptable, it inspired him to return to the laboratory where he eventually developed “personalized cancer therapy.” In 1986, Dr. Nagourney, along with colleague Larry Weisenthal, MD, PhD, received a Phase I grant from a federally funded program and launched Oncotech, Inc. They began conducting experiments to prove that human tumors resistant to chemotherapeutics could be re-sensitized by pre-incubation with calcium channel blockers, glutathione depletors and protein kinase C inhibitors. The original research was a success. Oncotech grew with financial backing from investors who ultimately changed the direction of the company’s research. The changes proved untenable to Dr. Nagourney and in 1991, he left the company he co-founded. He then returned to the laboratory, and developed the Ex-vivo Analysis - Programmed Cell Death ® (EVA-PCD) test to identify the treatments that would induce programmed cell death, or “apoptosis.” He soon took a position as Director of Experimental Therapeutics at the Cancer Institute of Long Beach Memorial Medical Center. His primary research project during this time was chronic lymphocytic leukemia. He remained in this position until the basic research program funding was cut, at which time he founded Rational Therapeutics in 1995. It is here where the EVA-PCD test is used to identity the drug, combinations of drugs or targeted therapies that will kill a patient's tumor - thus providing patients with truly personalized cancer treatment plans. With the desire to change how cancer care is delivered, he became Medical Director of the Todd Cancer Institute at Long Beach Memorial in 2003. In 2008, he returned to Rational Therapeutics full time to rededicate his time and expertise to expand the research opportunities available through the laboratory. He is a frequently invited lecturer for numerous professional organizations and universities, and has served as a reviewer and on the editorial boards of several journals including Clinical Cancer Research, British Journal of Cancer, Gynecologic Oncology, Cancer Research and the Journal of Medicinal Food.

2 Responses to In Cancer Care, It Appears that More Is Less

  1. gpawelski says:

    Five years ago I wrote about this in cancerfocus.org about a Harvard University news release from Joseph Newhouse, a professor of health policy and management at Harvard.

    Cuts in Medicare payments to doctors who administer outpatient chemotherapy drugs actually led to an increase in treatment rates among Medicare recipients, he found in a study.

    “This sort of dynamic runs contrary to what most people would expect, but economists often encounter this sort of thing,” Newhouse said in the Harvard news release.

    Oncologists could purchase chemotherapy drugs directly from pharmaceutical companies for far below the suggested cost and then bill the patient’s insurer the full suggested cost, sometimes making more than a 20 percent profit, according to background information in the news release.

    But under the Medicare Modernization Act (MMA), Medicare no longer automatically paid what physicians billed. Instead, Medicare calculated the average amount that physicians typically pay for each chemotherapy drug and reimbursed no more than 6 percent above this average cost.

    When the payment cuts were introduced, critics said patient care would suffer, the study authors noted.

    In his study, Newhouse and colleagues analyzed Medicare claims for 222,478 beneficiaries diagnosed with lung cancer between 2003 and 2005. On average, chemotherapy treatment within one month of diagnosis increased 2.4 percent after the new rules took effect, from 16.5 percent to 18.9 percent.

    In addition, the use of more costly chemotherapy drugs increased, while the use of less-expensive drugs declined, the researchers found.

    The study, published online June 17, 2010 appeared in the July print issue of the journal Health Affairs.

    “Physicians don’t always respond to incentives the way most people expect, but in this case they do respond in a way that makes sense to economists. It seems logical on the one hand that when you pay less, you get less. However, in this case, since a high proportion of an oncologist’s income depends on prescribing, paying less per drug results in more drugs,” study first author Mireille Jacobson, of the non-profit RAND Corp., said in the news release.

    SOURCE: Harvard University, news release, June 17, 2010

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