Medicare cuts threaten access to oncology care

March 20, 2006

Oncology care faces two cliffs, said Lee Schwartzberg, M.D., board member of the Community Oncology Alliance (COA): a planned $400 million to $500 million in Medicare cuts and severe payment cuts announced by private insurers. An access-to-treatment crisis was averted primarily by the addition of $400 million in funding through the implementation of a Centers for Medicare & Medicaid Services oncology demonstration project at the end of 2004. Schwartzberg, also a medical oncologist in private practice at The West Clinic in Memphis, addressed a plenary session on the Medicare Modernization Act (MMA) at the First Annual Oncology World Congress, held recently in New York City.

Oncology care faces two cliffs, said Lee Schwartzberg, M.D., board member of the Community Oncology Alliance (COA): a planned $400 million to $500 million in Medicare cuts and severe payment cuts announced by private insurers. An access-to-treatment crisis was averted primarily by the addition of $400 million in funding through the implementation of a Centers for Medicare & Medicaid Services oncology demonstration project at the end of 2004. Schwartzberg, also a medical oncologist in private practice at The West Clinic in Memphis, addressed a plenary session on the Medicare Modernization Act (MMA) at the First Annual Oncology World Congress, held recently in New York City.

Schwartzberg contended that the analysis was flawed because GAO used estimated CMS reimbursement rates. He went on to say that an update of the GAO analysis using actual reimbursement rates revealed underpayment by $85 million for the top 16 cancer drugs and $113 million for all cancer drugs. He added that the updated GAO analysis using actual second-quarter 2005 rates showed six of the top 16 drugs were reimbursed by CMS at less than cost.

COA feels the basic problems with the ASP-based drug reimbursement system are that patient bad debt further increases the impact of CMS reimbursement reductions, and that community oncology clinics must subsidize Medicare for several months to cover any drug price increases, said Schwartzberg. In addition, important components of cancer care are not covered by Medicare, including direct drug costs, Schwartzberg said. Direct drug costs include storage, pharmacy services, inventory, and waste disposal. He mentioned that the Medicare Payment Advisory Commission estimates that these issues comprise 27% of total direct drug costs, and that drug acquisition costs comprise the other 73%.

Schwartzberg said that the consequences of this access-to-care crisis are already happening. Oncologists are forced to treat patients with equipotent and equitoxic, but more expensive, drugs or to send patients to the more expensive hospital setting.

The proposed Competitive Acquisition Program (CAP) vendor bidding process is not the answer to problems with drug reimbursement, Schwartzberg added. He stated that the time-tested group purchasing organization system in place has produced the best drug prices for Medicare. In fact, CAP will actually increase drug costs for Medicare because of new "middleman" expenses, such as shipping, administration, management, and waste.

COA feels that CMS must take the following steps to protect access to high-quality cancer care: The agency must immediately increase reimbursement for all cancer and cancer-related drugs; the definition of ASP must be modified to exclude prompt-pay discounts; CMS must create a pharmacy facilities fee to cover increasing drug storage, inventory, and waste disposal costs; the agency must factor bad debt into its assessment of cancer care costs; and CMS must extend the oncology demonstration project into an ongoing quality initiative for the assessment and management of cancer and treatment-related symptoms.

More information about COA is available on the organization's Web site at http://www.communityoncology.org/. In addition, Cary A. Presant, M.D., a member of the Oncology World Congress Advisory Board, urged oncology pharmacists to participate in the Association of Community Cancer Centers' Oncology Pharmacy Education Network (OPEN). The OPEN Web site is located at http://www.accc-cancer.org/OPEN/open_main.asp.

THE AUTHOR is a clinical writer based in New Jersey.