In the Journals

Oncology community questions proposed changes to Medicare Part B reimbursement

Many experts have suggested that changes to reimbursement structures are needed to alleviate high drug costs and copays that burden patients with cancer.

However, little consensus has been reached as to which changes would be most effective.

In March, CMS proposed a change to the way oncologists are reimbursed for the drugs prescribed under Medicare Part B. A demonstration project to test the initiative is planned for this year. However, many practitioners and administrators have voiced concerns about the proposed alteration, with particular attention paid to the implications that the reimbursement changes would have for patients.

“Our concerns are about patients,” Ted Okon, MBA, executive director of the Community Oncology Alliance, told HemOnc Today. “This is a terrible experiment on patient care, because CMS is working from a hypothesis that oncologists are not prescribing and treating patients in their best interests. They are acting like oncologists are focused first and foremost on their own economic interests, and there is absolutely no proof of that.”

Currently, Medicare reimburses the average sales price of drugs administered by injection or infusion at a treatment center, plus a 6% fee to cover costs involved with administration.

Under the new proposal, Medicare would reimburse the average sales price of the drug, plus 2.5% and a flat fee of $16.80 per drug per day.

Concern for patients, practices

Mandatory participation in the demonstration project may have negative implications for patients and the way cancer care is delivered throughout the United States, some experts say.

“CMS is trying to use a financial stick in order to influence oncologists from using more expensive drugs, which are often newer therapies like immuno-oncology agents,” Okon said. “This is disconcerting from the patient perspective, because patients will have no ability to opt out because their doctors are compelled, which is different from every other type of research setting.”

Several oncology societies — including ASCO, ASH and the Community Oncology Alliance — have issued statements strongly criticizing the initiative.

“Although we agree that the current Medicare payment system is fundamentally flawed, ASCO opposes reforms that are not comprehensive and urges CMS to withdraw an experiment of this magnitude without first understanding its potential impact on patient care,” Julie M. Vose, MD, MBA, FASCO, immediate past president of ASCO, said in a statement from the society. “We are particularly alarmed at the proposal’s failure to describe patient protections, including mechanisms to avoid adverse consequences of mandating nationwide participation.

The changes may threaten the delivery of cancer care in communities.

“Make no mistake about it: These misguided CMS cuts to Part B drug reimbursement have resulted in the consolidation of the U.S. cancer care delivery system into the more expensive hospital setting,” Bruce J. Gould, MD, president of the Community Oncology Alliance, said in the organization’s statement. “From 2006 through 2014, COA tracked 544 community oncology practices, in almost all cases consisting of multiple clinic locations, that have merged or become affiliated with hospitals.”

These numbers would grow under the proposed changes, according to Okon.

“These changes will accelerate what is already a significant trend,” Okon said. “In 2004, 84% of chemotherapy was infused at independent, physician-run clinics. That number is now down to 54%. This will force more practices to send more patients to hospitals, and make more practices nonviable.”

The implications extend to academic practices, as well, according to Samuel M. Silver, MD, PhD, FASCO, professor of internal medicine and assistant dean of research at University of Michigan Medical School, as well as a HemOnc Today Editorial Board member.

Samuel M. Silver, MD, PhD, FASCO
Samuel M. Silver

“The whole demonstration process is likely not going to change individual treatment positions, but it will affect the stocking of certain drugs,” Silver said. “That is a problem for everybody. Hospitals and academic medical centers will find themselves eating the costs, while community doctors will find that they can’t do it, period.”

Silver also expressed apprehension about the geographic scope of the mandatory experimental period.

“Three-quarters of the country will be in the investigational arm, which is far larger than needed to study the effects of such a plan,” Silver said. “The size of the demonstration raises concerns about the true nature of the proposal. The level of innovation of the phase one part of this proposal is debatable, and even if it proves innovative, the large size of the investigational group makes it seem like a way to work around payment innovations mandated by statute rather than a demonstration project.”

In support of trying

Still, other experts believe the proposed changes help address the skyrocketing price of oncology drugs and the need for reform.

“The problem is something we cannot ignore,” Vinay Prasad, MD, MPH, assistant professor at Oregon Health and Science University, told HemOnc Today. “The price of our drugs is no longer sustainable — not by patients, not by their copays, and not by the amount of money we spend as a society.”

Vinay Prasad, MD, MPH
Vinay Prasad

Prasad said he is in favor of CMS carrying out the demonstration project.

“They are implementing these changes in a staggered fashion, which will allow us to see if they work as intended or have unintended consequences,” he said. “Maybe not all of them will work, but if even one or two start to bend this problem, that will be very valuable.”

Prasad and Sham Mailankody, MBBS, physician in the myeloma service at Memorial Sloan Kettering Cancer Center, published an editorial in JAMA outlining the potential upsides of the proposed changes, including a proposed change that would create risk sharing based on outcomes.

“Many drugs used in oncology offer limited benefits for a subset of patients but perhaps larger benefits for another group of patients,” Prasad and Mailankody wrote. “Linking pricing to outcomes incentivizes companies to find drugs that work for more patients or to encourage the use of drugs in subgroups known to achieve greater benefit.”

The backlash from professional societies might arise from a misunderstanding of what the reimbursement model will actually change, Prasad said.

“When you have two drugs whose performance is about the same, the current system clearly encourages the more expensive drug, even if it is not really better,” Prasad said. “The more reimbursement is directed toward a flat fee, the less incentive there is to prescribe the more expensive drug.”

Due to the volume of opinions expressed in the wake of the proposal, CMS instituted a public comment period, which ended on May 9. More than 800 individuals offered statements.

Further, the U.S. House Energy Subcommittee on Health convened a hearing on May 17 to discuss the demonstration project. The hearing featured surrogates from both sides of the debate, including doctors, patient advocates and representatives from professional societies.

The committee did not formally vote on endorsing any action regarding the bill; however, committee Chairman Joseph Pitts, R-Pa., extended the period during which committee members could submit written questions until May 31.

“We want to encourage oncologists to make good choices,” Prasad said. “In some cases, that may mean some reduction in income, but we don’t want those changes to be drastic. It has to be thoughtful. What is important right now is determining whether this works or not.” – by Cameron Kelsall

References:

Community Oncology Alliance Letter on Medicare Part B Drug Payment Model. Available at blog2.communityoncology.org/userfiles/76/COA_CMS_ASPExperimentLetter_3-9-16_FINALR.pdf. Accessed on May 19, 2016.

Mailankody S and Prasad V. JAMA. 2016;doi:10.1001/jama.2016.5998.

For more information:

Ted Okon, MBA, can be reached at tokon@coacancer.org.

Vinay Prasad, MD, MPH, can be reached at prasad@ohsu.edu.

Samuel M. Silver, MD, PhD, FASCO, can be reached at msilver@med.umich.edu.

Disclosure: Okon reports an employment role with the Community Oncology Alliance. Silver reports consultant roles with 3M, Amgen and Blue Care Network of Michigan. Prasad reports no relevant financial disclosures.

Many experts have suggested that changes to reimbursement structures are needed to alleviate high drug costs and copays that burden patients with cancer.

However, little consensus has been reached as to which changes would be most effective.

In March, CMS proposed a change to the way oncologists are reimbursed for the drugs prescribed under Medicare Part B. A demonstration project to test the initiative is planned for this year. However, many practitioners and administrators have voiced concerns about the proposed alteration, with particular attention paid to the implications that the reimbursement changes would have for patients.

“Our concerns are about patients,” Ted Okon, MBA, executive director of the Community Oncology Alliance, told HemOnc Today. “This is a terrible experiment on patient care, because CMS is working from a hypothesis that oncologists are not prescribing and treating patients in their best interests. They are acting like oncologists are focused first and foremost on their own economic interests, and there is absolutely no proof of that.”

Currently, Medicare reimburses the average sales price of drugs administered by injection or infusion at a treatment center, plus a 6% fee to cover costs involved with administration.

Under the new proposal, Medicare would reimburse the average sales price of the drug, plus 2.5% and a flat fee of $16.80 per drug per day.

Concern for patients, practices

Mandatory participation in the demonstration project may have negative implications for patients and the way cancer care is delivered throughout the United States, some experts say.

“CMS is trying to use a financial stick in order to influence oncologists from using more expensive drugs, which are often newer therapies like immuno-oncology agents,” Okon said. “This is disconcerting from the patient perspective, because patients will have no ability to opt out because their doctors are compelled, which is different from every other type of research setting.”

Several oncology societies — including ASCO, ASH and the Community Oncology Alliance — have issued statements strongly criticizing the initiative.

“Although we agree that the current Medicare payment system is fundamentally flawed, ASCO opposes reforms that are not comprehensive and urges CMS to withdraw an experiment of this magnitude without first understanding its potential impact on patient care,” Julie M. Vose, MD, MBA, FASCO, immediate past president of ASCO, said in a statement from the society. “We are particularly alarmed at the proposal’s failure to describe patient protections, including mechanisms to avoid adverse consequences of mandating nationwide participation.

The changes may threaten the delivery of cancer care in communities.

“Make no mistake about it: These misguided CMS cuts to Part B drug reimbursement have resulted in the consolidation of the U.S. cancer care delivery system into the more expensive hospital setting,” Bruce J. Gould, MD, president of the Community Oncology Alliance, said in the organization’s statement. “From 2006 through 2014, COA tracked 544 community oncology practices, in almost all cases consisting of multiple clinic locations, that have merged or become affiliated with hospitals.”

These numbers would grow under the proposed changes, according to Okon.

“These changes will accelerate what is already a significant trend,” Okon said. “In 2004, 84% of chemotherapy was infused at independent, physician-run clinics. That number is now down to 54%. This will force more practices to send more patients to hospitals, and make more practices nonviable.”

The implications extend to academic practices, as well, according to Samuel M. Silver, MD, PhD, FASCO, professor of internal medicine and assistant dean of research at University of Michigan Medical School, as well as a HemOnc Today Editorial Board member.

Samuel M. Silver, MD, PhD, FASCO
Samuel M. Silver

“The whole demonstration process is likely not going to change individual treatment positions, but it will affect the stocking of certain drugs,” Silver said. “That is a problem for everybody. Hospitals and academic medical centers will find themselves eating the costs, while community doctors will find that they can’t do it, period.”

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Silver also expressed apprehension about the geographic scope of the mandatory experimental period.

“Three-quarters of the country will be in the investigational arm, which is far larger than needed to study the effects of such a plan,” Silver said. “The size of the demonstration raises concerns about the true nature of the proposal. The level of innovation of the phase one part of this proposal is debatable, and even if it proves innovative, the large size of the investigational group makes it seem like a way to work around payment innovations mandated by statute rather than a demonstration project.”

In support of trying

Still, other experts believe the proposed changes help address the skyrocketing price of oncology drugs and the need for reform.

“The problem is something we cannot ignore,” Vinay Prasad, MD, MPH, assistant professor at Oregon Health and Science University, told HemOnc Today. “The price of our drugs is no longer sustainable — not by patients, not by their copays, and not by the amount of money we spend as a society.”

Vinay Prasad, MD, MPH
Vinay Prasad

Prasad said he is in favor of CMS carrying out the demonstration project.

“They are implementing these changes in a staggered fashion, which will allow us to see if they work as intended or have unintended consequences,” he said. “Maybe not all of them will work, but if even one or two start to bend this problem, that will be very valuable.”

Prasad and Sham Mailankody, MBBS, physician in the myeloma service at Memorial Sloan Kettering Cancer Center, published an editorial in JAMA outlining the potential upsides of the proposed changes, including a proposed change that would create risk sharing based on outcomes.

“Many drugs used in oncology offer limited benefits for a subset of patients but perhaps larger benefits for another group of patients,” Prasad and Mailankody wrote. “Linking pricing to outcomes incentivizes companies to find drugs that work for more patients or to encourage the use of drugs in subgroups known to achieve greater benefit.”

The backlash from professional societies might arise from a misunderstanding of what the reimbursement model will actually change, Prasad said.

“When you have two drugs whose performance is about the same, the current system clearly encourages the more expensive drug, even if it is not really better,” Prasad said. “The more reimbursement is directed toward a flat fee, the less incentive there is to prescribe the more expensive drug.”

Due to the volume of opinions expressed in the wake of the proposal, CMS instituted a public comment period, which ended on May 9. More than 800 individuals offered statements.

Further, the U.S. House Energy Subcommittee on Health convened a hearing on May 17 to discuss the demonstration project. The hearing featured surrogates from both sides of the debate, including doctors, patient advocates and representatives from professional societies.

The committee did not formally vote on endorsing any action regarding the bill; however, committee Chairman Joseph Pitts, R-Pa., extended the period during which committee members could submit written questions until May 31.

“We want to encourage oncologists to make good choices,” Prasad said. “In some cases, that may mean some reduction in income, but we don’t want those changes to be drastic. It has to be thoughtful. What is important right now is determining whether this works or not.” – by Cameron Kelsall

References:

Community Oncology Alliance Letter on Medicare Part B Drug Payment Model. Available at blog2.communityoncology.org/userfiles/76/COA_CMS_ASPExperimentLetter_3-9-16_FINALR.pdf. Accessed on May 19, 2016.

Mailankody S and Prasad V. JAMA. 2016;doi:10.1001/jama.2016.5998.

For more information:

Ted Okon, MBA, can be reached at tokon@coacancer.org.

Vinay Prasad, MD, MPH, can be reached at prasad@ohsu.edu.

Samuel M. Silver, MD, PhD, FASCO, can be reached at msilver@med.umich.edu.

Disclosure: Okon reports an employment role with the Community Oncology Alliance. Silver reports consultant roles with 3M, Amgen and Blue Care Network of Michigan. Prasad reports no relevant financial disclosures.