With the interest in “value oncology” and cost containment, a report appeared in the December 2014 Journal of Clinical Oncology that analyzed the impact of the Medicare Prescription Drug Act of 2003 (MMA) on chemotherapy administration in an environment of diminishing reimbursement to physicians.
Prior to the passage of the MMA, oncologists were compensated at 95% of the average wholesale price of a drug. The government accounting office found that the larger medical oncology practices could form “buyers groups” and purchase drugs at lower prices allowing them to pocket the difference. A 2003 New York Times article decried the practice as a “Chemotherapy Concession” and Medicare responded. The MMA of 2003 changed the policy so that chemotherapy drugs were reimbursed at the national average sale price plus 6%. It was hoped that this would result in cost savings.
Practices were divided into Fee-For-Service and Integrated-Health-Networks, the latter largely HMOs and the Veterans' Administration. It was expected that integrated networks would be less affected since their physicians are salaried and an 11% disparity between the two groups was noted for MMA agents. However, a number of interesting, unexpected and instructive trends emerged.
First, contrary to expectations, the overall use of chemotherapy actually increased following the passage of the MMA.
Second, the cost of cancer care continued to increase unabated following the passage of the MMA.
Finally, changes in drug use appeared to be disease-specific. Colorectal and small cell lung cancer patients saw a decline in the use of MMA affected drugs while non-small lung cancer showed an increase for both fee-for-service and integrated networks. With the overall use of MMA drugs in lung cancer increasing by 1.6 fold, the same drug use increase in the integrated (salaried) groups was 6.3 fold higher.
Among the findings the authors note “reimbursement after MMA passage appears to have had less impact on prescribing patterns in fee for service than the introduction of new drugs and clinical evidence.” This gives the lie to the idea that practicing oncologists are driven by self-gain, a popular narrative in the current political environment.
The authors did find that passage of MMA “resulted in consolidations and acquisitions of practices by hospitals, many of which were able to purchase chemotherapy drugs at discounted rates through the federal 340B* program. Although the full impact of these changes is not known, the shift of chemotherapy from community practices to hospital outpatient settings is associated with higher total costs.”
Community fee-for-service oncologists represent a qualified, yet under-appreciated resource for patients. While their academic brethren bask in the limelight, it is private practitioners who must make sense of the complex and overly dose-intensive treatment schedules handed down to them by ivory tower investigators. We now come to learn that while fee-for-service doctors have been forced to consolidate, join hospital systems, or retire, the cost of cancer care has actually climbed by 66% since the passage of MMA.
It would appear that this experiment has failed. Costs were not contained and drug use was not curtailed. What other bright ideas can we expect from policymakers who seem intent on bending medical care to their wishes at the expense of doctors and their patients?
*The 340 B program was originally created by the Federal government to allow charitable hospitals to save money on expensive drugs by allowing them to purchase them at deep discounts. Over time a growing number of “not-for-profit” hospitals demanded the same consideration. Subsequent analyses have found that the majority of the hospitals that now take advantage of 340B actually provide less charity care than the national average. Hospitals that charge full fee for drug administration can then pocket the difference.