Medicare Cuts Lead Cancer Clinics to Turn Away Patients

Roxanne Nelson

April 05, 2013

The federal budget cuts that went into effect April 1 are already beginning to take their toll on cancer patients. Cancer clinics across the United States have begun turning away Medicare patients, according to a report published April 3 in the Washington Post.

Oncologists are blaming the federal cuts and say that they cannot treat patients with expensive drugs and stay financially solvent.

In fact, one practice has made the decision to eliminate one third of their 16,000 Medicare patients, according to the report. "If we treated the patients receiving the most expensive drugs, we'd be out of business in 6 months to a year," said Jeffrey Vacirca, MD, chief executive of North Shore Hematology Oncology Associates in New York. "The drugs we're going to lose money on we're not going to administer right now," he explained.

The automatic across-the-board budget cuts, known as sequestration, have slashed Medicare payments to physicians by 2%. The reduction does not apply to the Medicare allowed charge for a given service, but it does apply to the 80% share that the government pays to a physician, as previously reported by Medscape Medical News.

Leaders of organized medicine have spoken out against the 2% Medicare cut, noting that even this seemingly small decrease can harm fragile medical practices, especially in light of rising expenses. They have warned that physicians might decide to see fewer Medicare patients to keep their practices afloat.

Unintended Consequences

Although the sequestration cuts were not a surprise, "everyone was under the belief that saner heads would prevail," said Ted Okon, MD, executive director of the Community Oncology Alliance (COA).

Healthcare reform was supposed to boost efficiency, increase coordination between patients and providers, and cut costs, Dr. Okon told Medscape Medical News. However, "it is having the exact opposite effect."

It is more expensive for Medicare when patients are treated at a hospital, he noted. "It is self-defeating."

Especially Detrimental to Cancer Patients

Medicare cuts are especially detrimental to cancer patients because of the way treatment is covered in the outpatient setting, according to a joint statement issued by the COA, the American Society of Clinical Oncology (ASCO), the International Oncology Network (a division of AmerisourceBergen), and the US Oncology Network.

Community cancer clinics are reimbursed on the basis of the average sales price (ASP) of the chemotherapeutic agent plus 6% for administrative costs, the statement explains. However, even before the current cuts, this payment scheme failed to adequately reimburse community cancer clinics for the total costs of essential therapies. The ASP formula produces ASP values that are below the actual prices clinics pay in the marketplace, it notes.

According to the statement, oncologists are being put in an untenable position. It would be one thing for community-based oncologists to absorb the 2% Medicare cuts being applied to physician and provider services, "but it is entirely another for the sequester cut to apply to the market-priced underlying drug costs paid by practices."

The sequester cuts apply to payments for Part B drugs and the 6% administrative fee. After patient copayments are taken into account, reimbursement will be cut to ASP plus 4.3%. This is effectively a 28% cut, and not a 2% cut, for payments intended to compensate for the significant operating expenses of procuring, storing, preparing, and handling Part B drugs, the statement points out.

It also notes that a recent survey indicated that the sequester cut will force 72% of cancer clinics to deny new Medicare patients or send all Medicare patients to the hospital for treatment.

 
No one with cancer should be forced out of their own doctor's office ASCO
 

"This potential crisis underscores that Medicare's system of reimbursement for cancer care is deeply flawed," according to a statement issued by ASCO. "We need payment approaches that maintain patient access and focus on supporting high-quality, high-value and patient-centered care. ASCO is examining a range of specific payment models that can meet this need and provide fair reimbursement for the critical services that oncologists provide to their patients."

"No one with cancer should be forced out of their own doctor's office" at such a difficult and precarious time, the ASCO statement notes. The society is urging Congress and the Administration "to take immediate action to reverse these cuts to reimbursement for life-saving cancer drugs — cuts that may, in the long run, cost the government more."

Immediate Action Needed

There are a number of ways the Administration and Congress can act to avoid these cuts. For example, the Centers for Medicare & Medicaid Services has the authority to exempt cancer drugs from the sequester cut or to apply the 2% sequester cut only to the 6% administrative fees. In addition, Congress can pass H.R.800, which is legislation designed to help sustain community cancer care by aligning Medicare drug reimbursement with actual costs.

However this matter is addressed, the organizations warn, it must be done immediately to preserve patient access to community cancer care.

 
Now we are sliding backward.... Sequestration is the last straw Dr. Ted Okon, COA
 

"In the past 40 years, cancer care has evolved into one of the most efficient systems in the world by allowing patients to be treated in the community," said Dr. Okon. "Now we are sliding backward. Shortfalls have led to a consolidation in terms of cancer care, and the sequestration is the last straw."

The organizations that issued the joint statement have sent letters to Health and Human Services and all members of the Senate and the House of Representatives. Responses have come from a number of members of Congress, and all have been positive, explained Dr. Okon. "That is encouraging, but we haven't heard anything yet from the Administration."

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