Community oncology and hematology practices have traditionally treated patients with more straightforward, uncomplicated types of cancer, while hospitals have administered care for more complex cases. Cancer care delivered at physician practices or in community clinics is often less expensive than care at hospitals. In a 2011 report, the Chicago-based actuarial firm Milliman calculated that per person annual Medicare costs for chemotherapy were $6,500 higher when care was delivered in a hospital.
But because of the sequestration's 2% cut to cancer drug payments—a cost that oncologists say they already barely break even on—many cancer clinics are debating whether it's economically feasible to continue to treat Medicare patients.
“We're a strong practice and we've weathered past changes, but we have a meeting scheduled, and we'll have to give the issue serious consideration,” said Dr. Mark Thompson, an oncologist with the Zangmeister Center, Columbus, Ohio. “We've tried to keep Medicare patients and in order to do that, we've done a lot of robbing Peter to pay Paul. But this may be the final straw.”
Medicare pays clinics for cancer drugs under Part B using a formula that adds 6% to the average sales price of a drug. The add-on is intended to cover overhead costs such as storage and administration. Cancer clinics and their trade association argue, though, that the actual payment is less due to a 1% to 2% discount given to distributors by drug manufacturers for timely payment.
But the sequester's cuts effectively reduce that payment formula to average sales price plus 4%, said Thompson, who also is the president of the Community Oncology Alliance, a trade group that represents cancer clinics.
“That puts us underwater for every drug that we buy and give to a Medicare patient,” said Thompson. “It's ludicrous and I think oncologists are about to draw a very deep line in the sand.”
Dr. Paul Fishkin, an oncologist and president of Illinois Cancer Care, a 17-physician practice based in Peoria, Ill., sharply criticized the drug payment cut but he said his practice, which serves many small, rural communities, will continue to see Medicare patients as long as it can.
“With the 2% service cut and this cut to chemotherapy drugs, it's going to be very challenging, but we'll do our best to continue to see patients quickly and efficiently,” Fishkin said. “The truth is we don't have anywhere to send a lot of these people. In many towns, if we don't do it, it won't get done because the nearest hospital is 30, 40 or 50 miles away.”
Ted Okon, the Community Oncology Alliance's executive director, contends that clinics such as Fishkin's, which plan to try to absorb the loss, are being put in an untenable position. The irony, he argues, is that the mounting pressure on clinics comes as the federal government implements the healthcare reform law, which aims to coordinate care and lower costs.
“This does exactly the reverse,” Okon said, adding that in-hospital cancer care is more expensive.
Dr. Sandra Swain, president of the American Society of Clinical Oncology, said the group will survey its 20,000 members this month to gauge how clinics are responding to the cuts and whether patients are losing access to care. Swain also said the ASCO was urging Congress and the Obama administration to reverse the cuts, which “may, in the long run, cost the government more.”
