The upcoming release of a General Accounting Office report on Medicare drug reimbursement will either doom outpatient chemotherapy delivery or provide the framework for reshaping a system widely said to be flawed.
The study, due Oct. 11, was mandated by Congress last fall in response to a long series of failed attempts to change reimbursement methods for physician-administered drugs.
For some of these drugs, Medicare pays doctors 95% of the average wholesale price (AWP), self-reported by drug companies and published in price indices. In competing for market share, drug companies have allegedly over-reported AWP to allow doctors to profit from the "spread," or the difference between Medicare reimbursement and the actual cost charged to physicians for the drugs, according
to the government.
Physician groups, however, contend that the gain on the AWP spread offsets
losses from low government payments for drug administration and, particularly in
chemotherapy, for unrecognized cognitive services.
In October 2000, HCFA, now the Centers for Medicare and Medicaid Services (CMS),
had planned to lower reimbursements for 50 drugs, including 16 used in chemotherapy, according to a Department of Justice pricing scheme developed as part of a fraud investigation. Cuts would have taken place without increases in payments for drug administration and cognitive services. Medical groups cried foul, and CMS backed down.
But if the looming report recommends adopting the cuts while not raising drug administration payments, and CMS implements those changes, it will cause "the chemotherapy drug delivery system to collapse," says Lee Mortenson, the executive director of the Association of Community Cancer Centers.
Cary Presant, M.D., who practices with the three-physician California Cancer Medical Center in Los Angeles, says all cuts and no raises will hurt patient care.
"We could not meet the cost for administering drugs and keep infusion services available for Medicare patients," Presant says. "Our Medicare patients requiring infusion would be sent to hospitals. It's also likely that we'll have to downsize our infusion center and let nurses and medical technicians go. It cost over $1 million to get the infusion center started, and we need appropriate reimbursement to keep it running and continue to offer services."
"It will be much more difficult for patients to have access to care, and we apologize to our patients, but it is the responsibility of their carriers to ensure that reimbursement is adequate," Presant says. "My patients have to have service in a situation where I'm not paying the government to see them."
Kanan Hudhud, M.D., practices with the Frederick (Md.) Oncology Hematology Associates and says government cuts in reimbursements could impact patient quality and service and maybe even thin the ranks of the profession.
"I think it will be very difficult to offer the same quality of service that we have been giving to these cancer patients if the AWP is slashed," Hudhud says. "I think it will also mean for oncologists who are a little older--I don't think they'll put up with these changes and they'll retire. There's already a shortage of oncologists, so there'll be a challenge to deal with the increased volume for those who continue."
In the months since GAO was charged with the report, the oncology community has been working feverishly to make its position known. In May, the American Society of Clinical Oncology issued a white paper supporting drug price reductions only if accompanied by offsetting increases for cognitive services and drug administration, which the society says are underpaid by at least 75%.
Representatives from the society, ACCC and Houston-based US Oncology, a for-profit cancer treatment company, also have met with GAO staffers.
US Oncology gave GAO an analysis showing that in 2000 its combined Medicare reimbursement on drugs and drug administration was "near breakeven," according to Eric Berger, vice president of planning and public policy.
In a report released in January, however, the HHS' office of inspector general found that Medicare could save $1.6 billion a year if it reimbursed just 24 drugs using the lower prices on the Federal Supply Schedule rather than the higher AWP prices. The GAO study is part of a larger imbroglio surrounding the AWP that includes drug companies having their records subpoenaed and four urologists pleading guilty to receiving kickbacks.
The House Energy and Commerce Committee was scheduled to hear the issue in late September. Testimony from the GAO, inspector general's office, Centers for Medicare and Medicaid Services and ASCO was expected.