The Lynx Group

The Crisis in Cancer Care

July 2011, Vol 2, No 4
Ted Okon, MBA
Executive Director
Community Oncology Alliance
Washington, DC

Q: In your presentation, you said that oncology is in crisis—what did you mean by that?
Mr Okon: When I say cancer care is in crisis, I mean that we have a perfect storm brewing. First, we have the graying of America, so we are going to have an increasing incidence of cancer. Second, we have a growing unhealthy population that is going to result in increased cases of cancer. Third, we have an oncologist population that is flat or declining in the face of increasing demand for cancer care. We have a situation that is going to produce a crisis, and we are not going to see when we hit it. Congress won’t be able to stimulate its way out of that.

Delivering cancer care is very complex: we are not going to be able to create oncologists overnight. So we have a real crisis brewing.

Q: Do you have suggestions for solving this crisis?
Mr Okon: The suggestions right now are unrealistic. What the government is doing reflects the reimbursement system changes for cancer care that were introduced in the 2003 Medicare Modernization Act (MMA). Medicare is 50% cancer care, which is the 800-pound gorilla in the room. Medicare influences everything on the private pay side as well. The reimbursement is just not realistic.

If we look at the increasing expenses of running a practice as measured by the MMA, the effective decline of reimbursement has been 47%. We cannot operate a business where we are seeing such steep declines.

We need to look at the reimbursement system differently. We should be paying oncologists for one of the most important things they do: treatment plans. We should be paying oncologists for cognitive services, such as treatment plans.

Oncologists are reimbursed in 3 ways. First, they are reimbursed for their evaluation and management, like all physicians. Second, they are reimbursed for administering chemotherapy drugs in the office, including for related services. Third, they are reimbursed for the drugs. All the other cognitive services, such as planning for treatment, follow-up care, and survivorship, are not reimbursed.

The reimbursement system flies in the face of value-based insurance design. If we want to create value in the system, that is where we have to focus the reimbursement, and it is not. If some things are not done now, and we let some aspects of healthcare reform go into play—for example, the Independent Payment Advisory Board, where there is just going to be wholesale and immediate cuts to Medicare when spending targets are exceeded—it will hit providers, and we are going to put a knife in cancer care.

Q: Why are so many cancer sites closing?
Mr Okon: We have had roughly 200 individual sites that have closed since 2008. In some cases, entire practices have closed. It has hit some rural and underserved areas hard, because it becomes extremely expensive to operate clinics in the face of this declining reimbursement. We are seeing a big escalation in practices that are being acquired on the hospital side. I do not mean to be disrespectful to hospitals, but we are going to end up decreasing competition. We are going to create mega-entities, and it is going to cost payers and patients more.

Many hospitals now have good outpatient centers. When that gets consolidated— and there are lots of hospitals that are in trouble—many hospitals are going to close. When the market consolidates down that far, it reduces alternatives. Therefore competition in the market is never healthy in terms of quality and value.

Q: Several states are talking about cutting Medicaid. Will it have a large impact on oncology practices?
Mr Okon: Typically an oncology practice will not have a large Medicaid population, but it is going to get bigger. There are going to be an additional 32 million to 34 million Americans covered by insurance in 2014, if the law is not declared unconstitutional by then, and that is going to increase the Medicaid population by 16 million individuals. As a result, there is going to be even more strain, because states are cutting Medicaid benefits for the individual. This is unrealistic, because fewer states are going to be able to afford to cover cancer care.

And the issue of dual-eligible persons with both Medicare and Medicaid is going to be a huge problem.

Q: Does sustainable growth rate (SGR) still have a negative effect on oncology practices?
Mr Okon: Yes, it has an inordinate adverse impact on oncology practices every time there is an SGR patch that results in held claims. SGR affects only the services, not the drugs. But when a service claim is held up, that service claim is tied to a drug. If we decouple those, we are going to run the risk of never getting paid for the drug. On average, an oncologist is responsible for $2.2 million to $2.5 million annually in terms of drugs administered, so they are essentially subsidizing Medicare when claims are held. The problem is that a medical practice has to operate as a business, or it will die. This involves business and strategic planning, but that planning cycle has been thrown out the window. The federal government is not held to the same laws. A practice has to worry about its cash flow and planning.

Medical practices that experience patch after patch on the SGR cannot efficiently operate and plan. We do not know what future reimbursement will look like.

When we have a potential 29.4% Medicare cut by the end of the year, how do practices plan and staff? It makes providers think of closing facilities. So, the SGR is a huge problem for all providers, but it inordinately impacts oncology, because of the magnitude of the capital outlay that oncology practices have to make in drug purchases and facilities.

Q: Does failure to sustain the growth rate ultimately drive up costs for everyone?
Mr Okon: Absolutely. It could have been fixed 5 to 6 years ago at approxi-mately $50 billion. Now it is well over $300 billion.

Q: Do oncologists get reimbursed for counseling patients on adherence?
Mr Okon: No, oncologists do not get reimbursed for counseling patients on the details, which can be extensive, associated with prescribing oral cancer drugs. Some payers mistakenly believe that they can deal with all of the details by contracting with a specialty pharmacy or other outside provider, but we have seen disaster in some cases. We have seen cases where an outside nurse will call a patient and ask why the patient is not taking his/her drug, when the reason is the oncologist just stopped the drug because of side effects. This disjointed communication is very confusing to the patient and can lead to inefficiencies and, at worse, bad patient outcomes.

A major problem is that with oral oncolytics practices receive absolutely no reimbursement for patient management and counseling. Rather than provide appropriate reimbursement and optimize the coordination of care, using an outside provider often leads to disjointed, inefficient care. This will be a growing problem with oral oncolytics because the drug pipeline is huge.

We have 100% adherence with intravenous drugs, because oncologists know if the patient came in and received chemotherapy treatment on site. Unless there was a mistake in giving the drug, we know the exact dose and when the patient received it.

In contrast, we have major issues with oral medications. There is the possibility of side effects, and we don’t even know if the patient is taking the drug. The oncologist does not know whether the drug did not work, or if the drug was not taken. The drug could have been so expensive that the patient cut it in half, as many patients do with their heart medications, or may not have even filled it in the first place. A practice trying to manage such a patient is not reimbursed for that.

Q: Do you support healthcare reform that can give nurses more responsibility in patient care?
Mr Okon: Absolutely, I support it. I think that oncology nurses are the real glue in any clinic. I think we should support practices using mid-level providers and physician assistants, because they are so critical. Nurse practitioners add a lot of value. I support increasing not only the population but also the education incentives of physician assistants, nurse practitioners, and oncology nurses. They are part of the oncology team, especially when we see the number of oncologists decreasing relative to demand. It is great to see practices that truly work as an integrated team

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