The Lynx Group

Community Oncology Practices Trying to Keep Afloat

October 2013, Vol 4, No 8

Hollywood, FL—There are perplexing considerations for community oncology practices under sequestration, but adapting to future practice models poses even bigger questions, according to Leonard H. Natelson, Chief Executive Officer of Hematology/Oncology Associates of Rockland, NY. Mr Natelson has a good track record of improving the profitability of community oncology practices, and he shared his insights at the 3rd Annual Conference of the Association for Value-Based Cancer Care.

Sequestration has offered some pressing considerations for community oncology practices. Sequestration has cut reimbursement for evaluation and management and reimbursement for drugs, decreased the number of Medicare recipients seen in the practice, decreased the number of patients available for clinical trials, and demanded that practices manage their current patient load with fewer resources and staff.

The 2% slash in income from Medicare has had far-reaching effects, because Medicare beneficiaries account for approximately half the patient population of a typical community oncology practice. With less income to cover the same number of patients in a practice, oncologists have to cut their practice costs somewhere, and the question is, where?

Consider These Approaches

Mr Natelson offered some approaches for consideration for community oncology:

  • Review the buy-and-bill model and determine if there are other alternatives
  • Review rules to create an oncology medical home
  • Reach out to non-Medicare payers to renegotiate current contracts; get paid to provide data
  • Be collaborative and get involved; the problem extends beyond any one given practice
  • Get patients involved in the fight to save community oncology.

One of the biggest expenses to the oncology practice is drugs, and it may be worth considering alternatives to buy-and-bill, Mr Natelson said.

“I actually got away from buying and billing based on our contracts and on what I was getting reimbursed,” he said. “I was actually making 5%, not 6%, because you only get that if you do everything perfectly, which no practice does.”

Controlling waste is crucial. Nurses will document what they use, but not what they waste, and this amount cannot be recouped, Mr Natelson pointed out. “I had a nurse who twice gave Aranesp to a patient with a hemoglobin level above 10. Aranesp costs me $8500 each time I give it, so I just lost $1700,” he related.

In thinking of office expenses, oncologists and managers should consider the time it takes to make appeals to payers. Four hours of phone time for a nurse cost his practice $168 plus taxes and benefits. “You have to consider the indirect costs when determining the expense of making an appeal, and whether it makes sense,” Mr Natelson suggested.

Don’t Give Information and Services Away for Free

Mr Natelson advised practice managers and oncologists to initiate conversations with non-Medicare payers. Commercial payers want and need data, which he offers them, but he also asks them to pay for this information. He sees this as being collaborative and a means toward a mutual relationship in which payers may be more willing to consider higher reimbursements.

“You can also marry good patient care with your finances if you are thoughtful about what you do.” Mr Natelson suggested oncologists evaluate the services they offer—such as clinical trial enrollment, support groups, nutrition counseling, and so forth—and ask payers to pay for these things. “I need to keep patients out of the hospital. That’s what payers want me to do, too, but I can’t give away my services for free,” he said. “The biggest thing is figuring out how you work with the payers to get them to understand the value that you bring to oncology.”

Mr Natelson cautioned oncology practices to check out their practice on “Physician Compare”—the government’s effort to make practices transparent and informative to Medicare recipients. A pilot study showed, however, that much of the data are erroneous. “I go to Physician Compare, look at what CMS [Centers for Medicare & Medicaid Services] is putting up there, and if it’s wrong, go through the laborious task of getting the information corrected,” he said.

Mr Natelson predicted future challenges as a result of the Independent Payment Advisory Board—the 15-­member appointed panel who will decide what treatments can and cannot be given—and the expansion of the Medicaid population through the healthcare exchanges. “Our doctors will want to see everybody and treat everybody, whereas I will want to keep my doors open,” he said.

Community-versus Hospital-Based Oncology Models

Increasingly, community practice oncologists are questioning whether to maintain their status, join a larger organization, or affiliate with a 340B-eligible hospital.

Mr Natelson sees hospital employment as a loss of physician autonomy, and an expensive one at that. He has told his physicians, “It will cost at least $1 million to put back your infrastructure, and you will go at least 6 months without money from CMS, which is a 55% payer to the practice…unless you have $1.5 million at least, it’s difficult,” he said.

“My physicians make half a million dollars. If my hospital offers them $750,000, a 50% increase in their salary, they are going to say ‘yes.’ The problem is my physicians are 44 to 56 years old, so at the end of a 5-year agreement, when the hospital has obtained all their patients, those physicians are not going to get this kind of money,” Mr Natelson predicted.

A professional service agreement is another emerging option, under which the practice remains an entity but has arrangements with the local hospital for something the hospital wants—for instance, drug infusions—which is a money maker for the hospital.

“I think professional service agreements are going to be a little bit more flexible than hospital employment. I think that’s the right way to go. It keeps your practice together, and gives you the ability to get extra money from the hospitals, since the hospitals have 340B pricing,” Mr Natelson said.

“I think there will be some push back out to community oncology in the next 3 to 5 years, once CMS realizes how expensive it is to have practices move into the hospital. And when that pushback occurs and CMS restricts this 340B program, you will be there, so you don’t have to recreate the wheel,” he said.

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