Managed Care - November 2008 - (Page 32)

Oncologists Plead For Fairer Drug Payments Once accused of milking the system, oncologists are now complaining that they are losing money on some drugs that they administer By John Carroll Contributing Editor here are some cancer victims George Kovach, MD, can’t treat anymore. It has nothing to do with how sick they are. Medicare’s reimbursement formula for cancer drugs, he says, is causing his group to lose money on some cases. That in turn is forcing oncologists in his group to start shifting some patients without Medigap insurance to the local hospital for treatment. “Some under reimbursed services we refer to the hospital outpatient infusion center,” says Kovach, an oncologist at the Genesis Medical Center. “We then refer some covered treatments to the infusion center to offset their loss. We’re not trying to cheat the hospital, but trade therapies for mutual benefit.” Congress came down hard on oncologists in the Medicare Modernization Act of 2004, limiting Medicare reimbursement to the average sale price (ASP) of cancer drugs administered in doctors offices, plus 6 percent. The doctors now say that when Medicare changed the formula, it engineered a new approach that is leaving many physicians in deep debt for the drugs they have to buy — a problem that has worsened as a string of pricey new biologics has become available. For Kovach, the game of patient shuffling is all part of the new bottom-line reality in managing cancer cases. Its impact is rippling right into physician groups’ negotiations with health plans, where some business-minded physicians are demanding higher rates to make up for the federal government’s lean-and-mean approach. Some doctors have begun putting up a stiff fight against health plans that try to follow Medicare’s lead. They have won over at least a few converts in the MCO world. At least anecdotally, doctors report that managed care companies are paying substantially more for cancer drugs precisely because the government pays so little. For oncology groups, meanwhile, the rhetoric over reimbursement has been ratcheted up to apocalyptic terms. “It will be Armageddon,” says Ted Okon, executive director of the Community Oncology Alliance, of the long-term impact of the current policy. “We’re trying to get legislation in to fix the broken aspects.” According to the oncologists, Medicare shifted from a reimbursement system that was rigged in their favor to one that was stacked heavily against them. Kovach, like other oncologists, says that the four-year-old government formula now artificially lowers his reimbursement because it figures in rebates that aren’t passed to the physician. “They [CMS] include rebates in the calculation of ASP. However, the rebates are not included in our purchase price, therefore increasing our cost above the published ASP price,” says Kovach. So his 6 percent markup becomes 3 percent or 4 percent for him. That’s what Kovach calls the first “government catch.” The second catch is when the manufacturer’s price increases 2 percent. It takes months for Medicare to catch up to the higher price. In the meantime that effectively means another 2 percent trim, slashing his margin even more. T Price pressure Since the new rules took effect, says Thomas Marsland, MD, an oncologist in Orange Park, Fla., he has lost about half of his income, as have the 30 other oncologists in his practice. New rules limiting the use of anemia drugs for cancer patients have added to the price pressure. Like Kovach, if the numbers don’t look as if they’re 32 MANAGED CARE / NOVEMBER 2008

Table of Contents Feed for the Digital Edition of Managed Care - November 2008

Managed Care - November 2008 Editor’s Memo Contents News and Commentary Legislation & Regulation Letters Medication Management Compensation Monitor Do It Yourself for Less Biomarkers Promise, but Do They Deliver? Oncologists Complain About Drug Payment Consider Blood Pressure Self-Monitoring Q&A: Keep Industry in the Game Formulary Files Plan Watch Tomorrow’s Medicine Outlook Respiratory Syncytial Virus Managed Care Considerations Contents Continuing Education Objectives RSV Disease in the Pediatric Population In the Trenches RSV Infection in the Adult Population Health Plan Medical Director Health Plan Pharmacy Director RSV Issues and Solutions Assessment/Evaluation/Certificate Request Post-Test

Managed Care - November 2008

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