Oncologists Incensed Over CMS Proposal for Part B Drugs

Roxanne Nelson, BSN, RN

March 10, 2016

The Centers for Medicare and Medicaid Services (CMS) has proposed a new two-phase model to test whether alternative drug payment designs would lead to a reduction in Medicare expenditures while preserving or enhancing the quality of care provided to Medicare beneficiaries.

Reactions to the proposal, however, have been swift and stinging. Several cancer organizations and the pharmaceutical industry have condemned the measure, and they have not minced words about it.

Referring to part of the proposal that would modify drug reimbursement on the basis of zip codes in certain regions of the United States, Allen S. Lichter, MD, chief executive officer of the American Society of Clinical Oncology (ASCO), said that it is "inappropriate for CMS to manipulate choice of treatment for cancer patients using heavy-handed reimbursement techniques."

In a statement, he added that physicians "did not create the problem of drug pricing, and its solution should not be on their backs."

Soon after the CMS issued the proposal, Ted Okon, executive director of the Community Oncology Alliance (COA), tweeted that the pilot project "is the most contrived, absurd experiment on cancer care I have seen.

"We're talking about a cancer 'moonshot' and a fight against cancer," he told Medscape Medical News. "So I thought this country was at war with cancer, not cancer care."

I thought this country was at war with cancer, not cancer care. Ted Okon, executive director of the COA

The Association of Community Cancer Centers (ACCC) also voiced strong opposition to the new model.

"The agency has put forward a convoluted plan that will place undue burden on both patients and providers and significantly hamper providers' ability to provide critical cancer care services in their communities," the ACCC said in a statement.

"On both policy and process, CMS missed the mark with this proposal," the ACCC added. "The agency sought no stakeholder input and is providing little turnaround time before implementation of such a sweeping, misguided change in Medicare reimbursement."

The Pharmaceutical Research and Manufacturers of America (PhRMA) was also less than impressed with the new plan.

Allyson Funk, a spokesperson for the PhRMA, said in a statement that "proposing sweeping changes to Medicare Part B drug reimbursement without thoughtful consideration and stakeholder input is not the right approach and puts Medicare patients who rely on these medicines at risk."

Two Phases for Part B

The CMS proposal affects Part B drugs only. These are pharmaceuticals administered in physician offices and hospital outpatient departments and include cancer chemotherapies.

The first phase, which has received the bulk of attention, involves reducing what the CMS believes is an economic incentive to order a higher-priced drug when a less expensive one might work just as well, or better.

That incentive exists now because the Medicare Part B program pays providers the average sales price (ASP) of the drug, plus an extra 6% to cover handling and administration. That 6% margin translates into higher revenue as the price of a drug increases.

Under the proposed reimbursement model, Medicare Part B would pay the ASP an add-on of only 2.5% and a flat fee of $16.80 per drug per day, regardless of its price.

The second phase would implement value-based purchasing tools similar to those employed by commercial healthcare plans, pharmacy benefit managers, hospitals, and other entities that manage healthcare benefits and drug utilization.

At a news conference, Patrick Conway, MD, the chief medical officer at the CMS and its deputy administrator for innovation and quality, commented that this new proposal could be "liberating" for many oncologists, who routinely administer chemotherapy drugs in their offices.

"We've heard from oncologists who feel pressure from their health systems to pick higher-cost drugs when they're not appropriate for their patients," he said at the briefing.

Ongoing Blows to Community Care

However, the COA's Ted Okon believes that the opposite is true. "This is disconcerting, because we have been waiting for CMMI [Center for Medicare and Medicaid Innovation] for over 2 years to launch a new oncology model that's about quality and also cost," he told Medscape Medical News.

"Not only is this an experiment in senior cancer care, but it would be the end of community oncologists," Okon emphasized.

It would be the end of community oncologists. Ted Okon

The model calls for cutting the ASP to 2.5%, but that really is not accurate, he noted. "If you read the fine print, the ASP will be closer to zero — something like 0.5% — because they are going to include the sequester cut, which goes on top of it."

He pointed out that the CMS has already made major cuts to Medicare Part B drug reimbursement that have effectively lowered payment for cancer drugs to ASP plus 2%. These cuts have had a devastating effect on community oncology practice.

This is evidenced by the consolidation of the cancer care delivery system into the more expensive hospital setting, Okon said.

During the past 10 years or so, 1338 oncology clinics have been affected, most notably with 288 treatment facilities closing and 469 practices (typically having multiple treatment facilities) merging into or becoming affiliated with hospitals.

A study of Medicare data found that 87% of chemotherapy was administered in community cancer clinics in 2005, but by the end of 2011 (the last year for which the full Medicare data file is available), that percentage had declined to 67%.

The COA also has data from a study now in progress showing that in 2014, this had fallen to 54%, with 46% administered in hospital outpatient departments.

"This is all about cost and not about quality of care," he said. "And cost is going to go up, as care in the hospital is more expensive than in the community."

Burden on Practices

Steven D'Amato, BCOP, immediate past president of the ACCC, agreed. "This is a convoluted model," he said in an interview. "It doesn't take into account the realities of cancer care in the community setting."

With the current ASP plus the sequester cuts, "we are already losing money on pharmaceutical agents," D'Amato said. "This plan would put such a burden on oncology practices, from a financial and administrative side, that it would be almost impossible to service Medicare patients effectively."

As far as the assumption that community oncologists practice medicine solely by financial incentive, D'Amato pointed out that in his group — New England Cancer Specialists — the physicians do not know the cost of drugs.

"Our physicians pick the best treatment for the patient, based on the evidence," he told Medscape Medical News. "We have a financial specialist who discusses cost issues with patients and who makes referrals to drug assistance programs and other ways to help patients with cost."

In addition, there is the Oncology Care Model, which was rolled out by the CMMI and advanced by the Affordable Care Act. Under the Oncology Care Model, doctors would be paid for their care of cancer patients. The initiative will include 24-hour access to healthcare providers for patients who are undergoing treatment, and it puts an emphasis on coordinated, person-centered care that is aimed at rewarding the value of care, rather than the volume.

"Our practice has been involved in alternative payment reform models during the past 2 years, and we have applied for the Oncology Care Model," D'Amato said. "But this model encourages physicians to use pathways to treat their patients, which is in conflict with what CMS is proposing with their new model.

"It doesn't even make sense on how they are going to attach this new reimbursement model on top of Oncology Care Model practices, which are struggling to put this infrastructure in place — it's putting such a burden on practices that they won't be able to function," he added.

Low Key on Value

For phase 2, which has largely been ignored in reactions to the new model, the CMS proposes implementation of value-based purchasing in "conjunction with the phase 1 variation of the ASP add-on payment amount for drugs paid under Part B."

The agency notes that in the private sector, there are tools that have been used for years with positive results, and it believes that some of these successful approaches may be adaptable to Part B.

But the CMS appears to be a little vague about their plan for improving value. "I saw nothing in there about value-based methodology or how they propose to improve value by simply cutting drug costs," said D'Amato.

Defining value is a highly complex endeavor, he noted. "It looks at patient outcomes, quality of care — it is multifaceted and comprehensive."

According to the CMS, the model will be broadened in 2017 through the implementation of various pricing strategies that are now used in the private sector in selected geographic areas and that encompass certain zip codes of providers and patients.

These measures include discounting or eliminating patient cost sharing, giving clinicians feedback on their prescribing decisions, and basing a drug's price on its clinical effectiveness regarding different indications.

The CMS will compare the new model with the status quo in other geographic areas for 5 years.

Overall, this proposal needs to go back to the stakeholders, D'Amato contended. "The AAAC and other groups are in favor of payment reform, but there needs to be more rational discussion on how we can control drug prices."

There needs to be more rational discussion on how we can control drug prices. Steven D'Amato, past president of the ACCC

"We need to all come to the table, and stakeholders need to work with CMS to come to more rational ways of doing this," he added.

ASCO has joined other organizations in signing two letters urging the CMS to reconsider this proposal.

One letter, with more than 60 signatories from the oncology community, was sent to Andy Slavitt, acting administrator at the CMS. The other letter, sent on behalf nearly 100 signatories from the healthcare provider and patient advocate communities, was sent to Sylvia Mathews Burwell, secretary of the US Department of Health and Human Services.

In addition, the COA has issued its own letter to both Andy Slavitt and Sylvia Burwell.


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