melanoma practice options, january 2012

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Improving Patient Care Through Increased Practice Efficiency

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AUGUST 2009

IN THIS ISSUE

INNOVATIONS

3 | STRATEGYPractices Prepare for Increased Scrutiny

6 | PRACTICE MANAGEMENTBenchmarked Data on Efficiency Offer Insight

9 | HEALTH POLICYOncologists Are Reluctant to Enroll inGovernment-Run Medication Acquisition Program

12 | REIMBURSEMENTCancer Care Pay for Performance Raises Questions

14 | COMMENTARYOncologists Are Becoming More Politically Savvy

Oncologists, oncology nurses, and oncology practice administrators know all toowell the high cost of cancer care. And they know that many therapies benefit onlya few patients. Recognizing the value of research, oncologists also know that soon

there will be ways to diagnose cancers at an early, curable stage and to develop optimaltherapies for each individual patient.

A new report from the Institute of Medicine shows that biomarkers (which are biolog-ical features, such as proteins or biochemicals that identify the presence of disease or mea-sure the effects of treatments) will do just what oncologists envision: provide them withsignificant tools to help treat cancer patients. Tests that could show which drugs wouldwork best for an individual would reduce costs and improve health outcomes, the reportsays. But today, only a few cancer biomarkers have been validated to justify their use.What’s more, the IOM report says, “significant challenges have slowed progress in thisfield, including a patchwork of standards for clinical use of cancer biomarkers and unclearregulatory authority.”

Continued on Page 2

CONTRIBUTING FACULTY

Dean Gesme, MD

Michael Bihari, MD

Report Calls for Coordinated Cancer ResearchBy Richard L. Reece, MD, editor-in-chief

Page 6

field,includingapatchworkofstandardsforclinicaluseofcancerbiomarkersandunclearregulatoryauthority.”

JANUARY 2012

9798_Source1 MPO_8_09 IMPO_8-1/2 x 11_Bleed 5/2/12 4:55 PM

Neil Baum, MDUrologistNew Orleans

Daniel BeckhamPresidentThe Beckham Co.Physician and Hospital ConsultantsWhitefish Bay,Wis.

ThomasM. Gorey, JDPresident and CEOPolicy Planning AssociatesCrystal Lake, Ill.

Michael B. Guthrie, MD, MBAExecutive Vice PresidentPremier, Inc. andPremier Practice ManagementSan Diego

Harold B. Kaiser, MDAllergy & Asthma Specialists, PAMinneapolis

Nathan KaufmanPresidentThe Kaufman GroupDivision of SuperiorConsultant Co. Inc.Physician and Hospital ConsultantsSan Diego

Paul H. Keckley, PhDExecutive DirectorVanderbilt Center forEvidence-based MedicineNashville

Peter R. Kongstvedt, MDPartnerCap Gemini Ernst & YoungVienna, Va.

JohnW.McDanielPresident and CEOPeak Performance Physicians, LLCNew Orleans

Lee Newcomer, MD, MHASenior Vice President, OncologyUnitedHealthcareMinneapolis

James G. Nuckolls, MDMedical DirectorCarilion Healthcare Corp.Roanoke, Va.

Bernard Rineberg, MDPhysician ConsultantBAR Health StrategiesNew Brunswick, N.J.

JamesM. Schibanoff, MDEditor in chiefMilliman Care GuidelinesMilliman USASan Diego

Jacque Sokolov, MDChairmanSokolov, Sokolov, BurgessScottsdale, Ariz.

This newsletter is a samplepublishedbyPremierHealthcare Resource, Inc.,Morristown,N.J. Not for distribution.

©Copyright strictly reserved.This newslettermaynotbe reproduced inwhole or inpartwithout thewrittenpermissionof PremierHealthcare Resource, Inc.The advice andopinions in this publication arenot necessarily thoseof the editor, advisory board, publishingstaff, or the viewsof PremierHealthcare Resource, Inc., but instead are exclusively theopinions of the authors. Readers are urged toseek individual counsel andadvice for their uniqueexperiences.

EditorJosephBurns508/[email protected]

Associate EditorRevDiCerto

ArtDirectorMeridith Feldman

PublisherPremierHealthcare Resource, Inc.150Washington St.Morristown, NJ 07960

973/682-9003; Fax: 973/[email protected]

INNOVATIONS

ADVISORY BOARD

The report, Cancer Biomarkers: ThePromises and Challenges of ImprovingDetection and Treatment, is available fromthe National Academies Press (atwww.nap.edu). The IOM recommends thata single federal agency should coordinateand oversee a more organized approach tothe discovery of these cancer indicators andthe development of such novel technologies.

Writing in The New York Times, HaroldVarmus, MD, president of the MemorialSloan-Kettering Cancer Center and formerdirector of the National Institutes of Health,said controversies about detecting, manag-ing, and even curing these and other cancerscould be resolved with combinations ofmolecular markers that could helpresearchers and oncologists forecast howtumors will behave.

Companies involved in developing phar-maceuticals and diagnostic tools should joinwith federal agencies to create an interna-tional research consortium, the report says.These partners could generate and share sci-entific data to leverage each other’s knowl-edge. Federal agencies could validate resultsand store patients’ cells and tissues for futurestudies, the report adds.

The United States has invested wisely incancer research, Varmus said. “While wehave succeeded in curing or controlling onlya few advanced cancers, there is reason tobelieve that a new era of gene-basedapproaches to many cancers is at hand—especially if we have the political will tomaintain the investment,” he added.�

STAFF

Continued from Page 1

More information on physicianpractice strategies is available atwww.MelanomaOptions.com

Editor-in-Chief Richard L. Reece, MD

2 Practice Options

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Practice Options 3

During the past few years, severalorganizations have begun todefine quality of cancer care

and to establish a set of measurementtools to assess the process and out-comes of care. Some of these initiativeshave focused on data collection andmeasurement and have resulted in theidentification of significant variationsin how cancer care is delivered.

Current projects that healthplans, Medicare, and other organiza-tions have developed are partially aresponse to the report, Ensuring theQuality of Cancer Care, published bythe National Cancer Policy Board(NCPB) of the Institute of Medicine.Published in 1999, the report conclud-ed that, “for many Americans withcancer, there is a wide gulf betweenwhat could be construed as the idealand the reality of their experiencewith cancer care.”

Developing Core MeasuresTo address these issues, the NCPB andother leading oncology-related organi-zations have several recommendationsincluding the systematic use of evi-dence-based guidelines for cancer pre-vention, diagnosis, treatment, and pal-liative care; the development of a coreset of measures to monitor the qualityof care; and, the establishment of a can-cer data system to provide qualitybenchmarks.

The result of these efforts is thatoncology practices are likely to faceincreased scrutiny from health plansand Medicare. Not only will oncolo-gists need to review their clinical prac-tices and office systems, but also theywill need to develop ways to becomemore involved in helping to define theparameters used to evaluate the carethey provide.

Dawn Holcombe, senior vice presi-dent of payer relations and quality pro-grams for Supportive OncologyServices, Inc., and executive director ofthe Connecticut OncologyAssociation, in South Windsor, saysoncology practices are facing a chal-lenging future and have a steep learn-ing curve if they are going to survive. Inthe coming years, more oncologists willbe involved in payment-for-qualityprograms as health plans seekincreased value for what they spend oncancer care. “Oncologists do providequality care, but they must now define

STRATEGY

Practices Prepare for Increased ScrutinyBy Michael Bihari, MD

Dawn Holcombe, senior vice president of payer relations andquality programs for Supportive Oncology Services, Inc.,and executive director of the Connecticut Oncology

Association, in South Windsor, has several suggestions for oncol-ogy practices on how to survive in this new world of increasingscrutiny.Holcombe suggests that practices prove and value every

aspect of the care continuum, including testing, treatment, symp-tom management, coaching, counseling, and patient education.They also should seek to reduce variations in clinical practice and

in operations.What’s more, practices should collaborate with andbe available to health plan medical directors as needed.Of course, practices should seek to integrate electronic medical

record systems with their practice management systems and usedata from the practice to compare the numbers with availablebenchmarks.It is critically important, Holcombe concludes, that practices

stay informed about what’s happening in oncology care so thatphysicians will not be blindsided by rapid changes.

—MB

Continued on page 4

HERE’S HOW ONCOLOGISTS CAN DEMONSTRATE VALUE

MichaelBihari,MD, is a writer, editor, andhealth care consultant in Falmouth, Mass.


STRATEGY

the value of their services both inter-nally and externally,” Holcombeexplains.

The QOPIFor all practices not currently involvedin quality measurement, Holcombeasserts that groups may want to partici-pate in the Quality Oncology PracticeInitiative (QOPI) program of theAmerican Society of Clinical Oncology(ASCO). Initiated as a pilot program in2002, QOPI is a practice-centered sys-tem of quality self-assessment andimprovement based on retrospectivechart reviews. After the programprovedfeasible in 23 pilot practices, QOPI wasopened for all ASCO members last year.

Focusing on the processes of care,QOPI quality measures are consensus-based, derived from published stan-dards and guidelines, or adapted fromASCO’s National Initiative on CancerCare Quality (NICCQ). Practice staffcollect QOPI-required patient datatwice annually and enter the data via asecureASCOWeb interface.At the closeof each data collection period, theQOPIsystem generates a report for each prac-tice, including results for each qualitymeasure. These data allow practices tocompare their results against the aggre-gate. The reports also show changes inresults over time.

ASCO work groups keep the QOPImeasures current, develop additionalmeasures, and build online resources tohelp practices improve quality. As ofJanuary 2006, oncologists can satisfy theAmerican Board of Internal Medicine(ABIM) Maintenance of Certificationrequirement for self-evaluation of prac-tice performance by participating inQOPI, the only oncology-specific pro-gram the ABIM has approved.

Some oncology practices will find itchallenging to implement QOPI, main-ly because they lack the requisite infor-mation technology such as integratedelectronic medical records, Holcombesays. Many offices do not have the abili-ty to track the parameters they need toeither define or prove the value of theirservices.

Practices seeking to meet the QOPIand other initiatives will need to do aself-assessment to define their qualitygoals and to question and evaluate theirservices to better define their value con-tinually, Holcombe says. “Performancemeasurements are being defined byorganizations, and oncologists mightnot know where they stand,” she adds.More transparency is needed and oncol-ogists must be willing to be part of theprocess, she explains.

To define value, oncologists must rec-ognize, catalogue, and measure servicesthat are not necessarily reimbursed (andtherefore not measured) by third-partypayers. “These activities not only provevalue both internally and externally, butalso practices can use them to identifymarketing activities,” Holcombe says.Among the parameters to measure,Holcombe suggests the following:• Patient mix by type of cancer and in-office use of guidelines agreed upon bypractice oncologists

• Documentation of symptom manage-ment, coaching, counseling, andpatient education

• Reason for and resolution of incomingand outgoing phone calls

• Avoided emergency room visits andhospitalizations

• Hospital admissions and readmissionscounted, reason identified, and follow-up care documented

• Documentation of conversationsabout end of life, hospice, and pallia-tive care

• Patient satisfaction and compliancewith regimens and treatment

• Tracking compliance with oral pre-scriptions.In addition, Holcombe suggests look-

ing for variation in care within the prac-tice, understanding why there is vari-ance, and finding ways to reduce it.

Documentation RequiredIn March, the FDA issued an advisoryoutlining new safety information abouterythropoiesis-stimulating agents(ESA), including a new black boxwarning advising physicians to moni-tor hemoglobin levels and adjust doses

4 Practice Options

Continued from page 3

Several organizations are evaluatingapproaches to measuring quality.Mostly, these groups have focused

on adherence to generally acceptedpractice guidelines.

Cancer Quality Alliance. Founded in2005 by the National Coalition ofCancer Survivorship (NCCS) and theAmerican Society of Clinical Oncology,the alliance is developing a blueprint todefine optimal cancer care (includingprevention, detection, diagnosis, treat-ment, post treatment, recurrence, andend-of-life care); establish mechanismsto collect, review, and catalogue cancerquality measures; and foster the dis-semination and use of cancer-relatedquality measures and tools.

National Quality Forum. With fund-ing from the National Cancer Instituteand other federal agencies, theNational Quality Forum, a nonprofitmembership organization inWashington, D.C., is in the secondphase of a quality initiative:Standardizing Quality Measures forCancer Care. The scope of this projectincludes endorsing evidence-basedstandards for quality improvement.

AQA. Formally known as theAmbulatory Care Quality Alliance, AQAapproved a set of four oncology physi-cian performance measurements inJanuary that focus on breast and coloncancer.

Medicare. The federal Centers forMedicare & Medicaid Services initiated avoluntary demonstration project in 2006to determine how and whether oncologypractices follow well established evi-dence-based practice guidelines. Office-based oncologists and hematologistsreceived $23 in conjunction with certainoffice visits for patients with specifiedcancer diagnoses when they reported onthe primary focus of the visit, current dis-ease state, and the extent to which man-agement of the patient adhered to rele-vant clinical guidelines. —MB

ORGANIZATIONSDEVELOPING QUALITYINITIATIVES


Practice Options

of ESA to maintain the lowest hemo-globin level needed to avoid bloodtransfusions, not to exceed 12 g/dL. Ina related study, UnitedHealth foundthat approximately 30% of its membersusing ESA exceeded the recommendedhemoglobin level and the plan nowrequires appropriate documentationbefore approving payment for ESA,Newcomer says.

In an article, “Lymph NodeEvaluation and Survival after CurativeResection of Colon Cancer: SystematicReview,” in the Journal of the NationalCancer Institute, George Chang of theDepartment of Surgical Oncology atThe University of Texas M. D.Anderson Cancer Center, in Houston,and colleagues (JNCI 2007 99(6):433-441), wrote, “Adequate lymph nodeevaluation for cancer involvement isimportant for prognosis and treatmentof patients with colon cancer. Thenumber of lymph nodes evaluated maybe a measure of quality in colon cancercare and appears to be inadequate inmost patients treated for colon cancer.”

High-Quality ProvidersRelevant to this finding, and based onthe recommendations of several cancerexperts, Newcomer says UnitedHealth

asked more than 1,500 surgeons in foururban areas to document five cases inwhich at least 12 lymph nodes wereincluded in the surgical specimen.Those surgeons who demonstrateadherence to this standard will be des-ignated as providers of high-qualitycare within the UnitedHealth network,he adds.

Newcomer believes better standard-ization of care is needed within eachpractice. A review of UnitedHealth’sclaims data for pancreatic cancer foundhigh rates of variation, Newcomer says.“Although there are only two drugscommonly used to treat the condition,our data revealed 188 different regi-mens,” he explains. “Somany variationsincrease error rates. When a patientvisits an oncology office, all physiciansin the practice should be using a stan-dard set of orders.”

Interestingly, an analysis of the firstround of QOPI data from last yearidentified variability not only betweenpractices but between physicians in thesame practice. In an article, “PhysiciansGuided by First-Round Data fromQOPI,” Richard Levine, MD, an oncol-ogist with Space Coast MedicalAssociates in Titusville, Fla., reportedthat he found that the six physicians in

his practice didn’t ask about pain asoften as might be clinically beneficial.As a result, the group instituted mea-sures to remind physicians to ask allpatients about pain at each visit, Levinereported.

Looking ForwardPublished in the Journal of OncologyPractice in September, the article alsoreported on an analysis of end-of-lifecare. The article reported that the doc-umentation of level of pain at either ofthe last two visits for terminally illpatients ranged from never to always.These early findings from QOPIdemonstrate that by providing feed-back, quality of care in oncology prac-tices can be measured and improved.

In the coming years, demand foroncology services is expected toincrease significantly, driven by theaging of the population, the age-sensi-tive nature of cancer, an increase incancer survivors, and a projected rela-tive decrease in oncologists.

Such an increase in demand willheighten the need for oncologists totake a leadership position in definingquality cancer care and developingappropriate measurements and indica-tors, experts say.�

Lee N. Newcomer, MD, director of oncology services atUnitedHealth Group, in Minneapolis, agrees that the QualityOncology Practice Initiative (QOPI) program of the American

Society of Clinical Oncology (ASCO) may be a good place foroncology practices to start their quality measurement efforts. Headds, however, that implementing QOPI takes a significant effortand not all practices have the resources.“At a minimum, oncologists should begin to standardize the

care they offer in their practices especially for the treatment ofbreast, colon, and lung cancer,” Newcomer says. He is concernedthat variation within a practice may lead to increased error rates.“Promoting quality of care is integral to UnitedHealth’s mis-

sion,” Newcomer says. Recently, UnitedHealth implemented sever-al quality initiatives using published, evidence-based measures for

breast cancer, colorectal cancer, and appropriate use of erythro-poiesis-stimulating agents. UnitedHealth has documented a clearchange in utilization based on several of these initiatives, he adds.For the breast cancer initiative, UnitedHealth performed a

chart audit to find out how many women with breast cancer whowere being treated with trastuzumab had documented HER2expression. According to the study, 4% of the charts had norecord of HER2 expression testing and 8% had low expressionrecorded. Based on these findings, UnitedHealth now requiresoncologists to document HER2 testing before approving treat-ment with trastuzumab. As part of QOPI for 2007, ASCO hasincluded a set of measures related to trastuzumab administrationfor HER2Neu positive patients with breast cancer.

—MB

IMPROVING QUALITY MAY REQUIRE MORE RESOURCES

5


6 Practice Options

As a result of the reimbursementchanges that came under theMedicare Prescription Drug

Improvement and Modernization Act(MMA) of 2003, oncologists have beencarefully examining how they managetheir businesses in an effort to enhanceefficiency and profitability. One wayphysicians can manage the business ofmedicine is to match data on their ownpractices to that of other similar prac-tices. Among the organizations thatcollect and publish such data are theMedical Group ManagementAssociation in Englewood, Colo., andAmerican Express in New York.

The first Onmark Office-BasedOncology Business BenchmarkingSurvey, sponsored by Onmark, anational group purchasing organiza-tion, and its parent company, OTN, canhelp oncologists evaluate their ownpractice management performanceaccording to various indicators andthen compare their measurements withaggregated data.

Filling a NeedThe survey fills an unmet need in theoncology community. Previous bench-marking surveys specific to this spe-cialty were last conducted by theMedical Group ManagementAssociation and its Assembly ofOncology and HematologyAdministrators in 2002, before theMMA took effect. The American

Express survey was last produced in2005 and was not specific to oncology.

“Medical practice efficiency is criti-cal in today’s health care environment,”says John Akscin, vice president of gov-ernment relations and customer ser-vice for OTN. Onmark and OTN are inSouth San Francisco. “Many oncolo-gists wonder how they compare to theircolleagues with regard to their opera-

PRACTICE MANAGEMENT

Benchmarked Data on Efficiency Offer Insight

One finding from the Onmark Office-Based OncologyBusiness Benchmarking Survey that oncologists can use toimprove their practices involves hiring midlevel providers,

such as nurse practitioners (NPs) and physician assistants (PAs).The survey results show that on average, respondents employed0.5 midlevel providers per full time equivalent (FTE) physician.Practices in the 75th percentile, however, were closer to a one-to-one ratio of physicians to mid-level practitioners.“Over the last three to five years, oncologists have begun

incorporating midlevel providers into their practices, while otherspecialties have used NPs and PAs for longer,” says John Akscin,vice president of government relations and customer service forOTN, the company that did the survey. “The goal is to allowoncologists to optimize their time and clinical expertise by seeingas many new patients as possible, while allowing other clinicians

to handle the routine follow-up care for existing patients.”The survey data also showed that each full time physician saw

an average of 300 new patients per year, which is one indicatorof physician productivity. Interestingly, an analysis of the effect ofmidlevel provider employment on physician productivity indicatedthat practices without midlevel providers saw an average of 283new patients per physician per year. In contrast, practices thatemploy midlevel providers saw an average of 342 new patientsper physician per year.“That represents about a 20% increase in physician productiv-

ity,” Akscin says. “This analysis indicates that, depending on prac-tice circumstances, employing midlevel providers can meaningful-ly improve oncology practice efficiency and, therefore, businesssuccess.”

—DJN

NPS, PAS HELP OPTIMIZE PATIENT CARE


tional practices and financial perfor-mance, but they need a good source ofdetailed information regarding theoffice-based oncology environment,”he adds. “Our primary objective inconducting the survey was to providemeaningful, reliable benchmarkingdata that would allow communityoncologists to understand their busi-ness performance in light of thechanges experienced under MMA. Thesurvey measurements allow oncolo-gists to identify outliers and ask whythese outliers exist.”

Akscin has 26 years’ experience as ahealth care administrator, including 13years as the CEO of a comprehensivecancer treatment facility, and recog-nizes that oncologists have been partic-ularly hard-hit by changes in reim-bursement.

Cutting AR DaysOne important survey result related toaccounts receivable (AR) days. “TheAR days for all the respondents onaverage was 39,” Akscin reports. “Bestpractices were at about 23 days, whilethe less successful performers were atabout 45 days,” he says.

Practices should count the day theservice is provided asthe first day in thereceivables cycle,Akscin advises.“Ideally, practices sendthe day’s claims to theinsurance companiesat the end of that day,”he adds. “But otherpractices may send outall claims on Friday,which means that theyhave already lost four days’ time on ser-vices provided on Monday.”

Oncologists can look at their ownAR days and consider whether thedelay in payment is excessive comparedwith their colleagues. “The survey dataallow oncologists to see if their AR daysare above average,” Akscin states.“Then they can analyze the reasonswhy. Is the practice not sending out itsbills promptly? Is the billing staff not

vigilant in following up on delayed pay-ments? The answers to these questionswill then prompt the development oftargeted solutions.”

Outlier ManagementSimply being an outlier doesn’t neces-sarily mean a practice should makechanges in operations. “There could bemany reasons why an oncology prac-tice’s AR days are high, for example,”Akscin explains. “The important thingis to determine whether high AR daysare a result of unique practice circum-stances, or whether the billing processshould be tightened up. This is true forall the other indicators as well.”

Chemotherapy administration rev-enue per chair is another importantfinancial benchmark. “If you have anasset, you want to know if that asset isbeing used to its maximum capacity,”Akscin explains. Practices may findthat their chemotherapy administra-tion revenue per chair is low comparedwith the average, prompting the devel-opment of strategies to improve sched-uling or draw new patients to the prac-tice.

The analysts calculated both thenumber of chemotherapy treatment

chairs per FTE physician and the num-ber of chemotherapy treatment chairsper FTE chemotherapy nurse. “Thefirst is a planning metric, while the sec-ond is a staffing metric,” Akscin pointsout. “From a planning standpoint, ifoncologists are planning to open asatellite office or expand the capacity oftheir current location, they need toknow how many chemotherapy chairsthey need to serve their patients.

“The data show that practices havean average of 5.6 chairs per physician,”

he continues. “So, if twooncologists will be locatedin a new office, the prac-tice can assume that itwill need 11 chairs.Furthermore, accordingto the survey, one nursehandles an average of 3.8infusion chairs, so threenurses will need to behired for the practice.

Operational Data“The benchmarks were defined basedon questions oncologists have beenasking OTN and Onmark over the pastfew years as they have sought toimprove their operational efficiencyand financial performance,” Akscinsays. “These questions include: Am Ibusy enough to hire another oncolo-gist? If I build a new office location,how many chemotherapy infusion

The operational benchmarks provid-ed in the Onmark BenchmarkingSurvey report include:

• Number of new patients per full timeequivalent (FTE) physician per year

• Number of established patient visitsper FTE physician per year

• Number of mid-level providers (nursepractitioners, physician assistants) perFTE physician

• Impact of mid-level providers ononcologist productivity

• FTE staff per FTE physician• Infusion patients per chair per day• Infusion patients per nurse per day• Infusion chairs per FTE nurse• Infusion chairs per FTE medicaloncologist

• FTE nurses per FTE physician.Source: Onmark Office-Based OncologyBusiness Benchmarking Survey, Onmark,South San Francisco, Calif., 2006.

OPERATIONALBENCHMARKS

Practice Options

Continued on page 8

Oncology practices without midlevelproviders saw an average of 283 new

patients per physician per year. But prac-tices that employ midlevel providers saw anaverage of 342 new patients per physician

per year, the survey results show.

7


8 Practice Options

PRACTICE MANAGEMENT

chairs will I need? How many nurseswill I need to hire? We tracked thetypes of questions that were most rele-vant to community oncologists andgathered data that could help answerthose questions.”

About 75% of participants reportedthat it took them between 30 and 60minutes to complete the survey. “Wedidn’t ask respondents for the bench-marks,” he says. “Rather, we asked themfor the raw data, which can be collectedmuch more quickly and easily.” Analyststhen calculated each benchmark at the25th, 50th, and 75th percentiles.

“We defined benchmarks that wouldbe meaningful, practical, and useful inguiding decision making geared tomaximizing an oncology practice’soperational efficiency,” Akscinexplains.

“Unlike many physician specialties,hematology/oncology is very proce-dure-intensive,” Akscin explains.“Between 80% and 85% of cancerpatients undergoing chemotherapytoday are receiving that chemotherapyin an oncologist’s office.” Many oncolo-gists consider the reductions in reim-bursement under MMA to be an inad-equate reflection of the time involvedin delivering patient care.

At the same time oncologists are see-ing practice costs rise. Physicians areexperiencing accelerated growth inprofessional liability insurance, infor-mation technology, and the cost ofimplementing regulations such as theHealth Insurance Portability andAccountability Act (HIPAA), expertssay.

Decreasing ProfitabilityThe Onmark survey reflects thesetrends. In fact, 62% of the Onmark sur-vey respondents said their practiceswere less profitable in 2007 than theywere in 2006.

“Oncologists need to look at theirbusiness operations and financial per-formance in order tomake adjustmentsthat will ensure their continued sur-vival,” Akscin says. “The Onmarkbenchmarking survey provides them

with important information that willhelp oncologists and oncology practicemanagers assess the health of theirpractices and determine what indica-tors need to be improved.”

Benchmarking is also importanttoday because public and private payersare comparing each physician’s practicepatterns to those of a designated peergroup. Physicians may even receivereports from payers regarding their uti-lization of health care services.Therefore, physicians who can collectand manage their own benchmarkingdata have the opportunity to examinetheir practices and make adjustments.

The 2008 Onmark survey was basedon data collected in 2007, and was con-ducted by Oncology Metrics, LLC, anoncology practicemanagement consult-ing firm in Fort Worth, Texas. Onmarksaid 178 oncology practices nationwideparticipated in the survey. There was nocost to participate, and each practicereceived a copy of the survey results sothey could compare their performanceagainst that of other respondents.

The Web-based survey included 34questions that allowed analysts to cal-culate 10 operational and 11 financialbenchmarks by which oncology prac-tice efficiency could be measured andanalyzed. The operational benchmarkresults were published in the January2009 issue of ASCO’s Journal ofOncology Practice, and the financialresults will be published in the Aprilissue of Community Oncology.

Financial AnalysisThe financial benchmarks are designedto reveal important metrics to oncolo-gists. “These benchmarks provideoncologists with a snapshot of thehealth of their practices from a purelybusiness standpoint,” Akscin states.“For example, AR days is a key bench-mark that must be defined specificallyfor oncology practices because AR daystend to run a bit higher in oncologythan they do in other specialties.”

The benchmarking survey can helponcologists develop a better under-standing of their business and consider

where improvements can be made.“The survey does not provide answers,”Akscin says. “Rather, it prompts ques-tions.”

Onmark plans to conduct the bench-marking survey annually and is cur-rently working on the 2009 survey. “It iscertainly useful to have benchmarksand strive to achieve them,” Akscinsays. “However, it is so much more use-ful to have a series of benchmarks overtime so that data can be trended.

“As oncologists make changes intheir businesses to improve operationalefficiency and financial management,we want them to be able to track howthey have improved each year in bothan absolute sense as well as relative tothe cohort of survey participants,” heconcludes.�—Reported and written by Deborah J.Neveleff, in North Potomac, Md.

Continued from page 7

The financial benchmarks providedin the Onmark BenchmarkingSurvey report include:

• Profitability in 2007 compared to2006

• Days in accounts receivable (AR days)• Payer mix• Percentage of Medicare patientswithout secondary insurance

• Revenue mix (percentage breakdownby category)

• Practice expenses (percentage break-down by category)

• Drug costs as a percentage of totalcosts

• Drug margin as a percentage of drugcosts

• Cost of drugs per FTE medical oncolo-gist

• Chemotherapy administration revenueper chair

• Chemotherapy administration revenueper FTE nurse.

Source: Onmark Office-Based OncologyBusiness Benchmarking Survey, Onmark,South San Francisco, Calif., 2006.

FINANCIALBENCHMARKS


Practice Options

One particularly complex aspectof the Medicare PrescriptionDrug Improvement and

Modernization Act of2003 is the CompetitiveAcquisition Program(CAP). The program isfor oncologists and otherphysicians who buyMedicare Part B drugsand biologicals not paidfor on a cost or prospec-tive payment systembasis.

Designed to givephysicians a choice inhow they acquire med-ications, the program lets them buyand bill for drugs under the averagesales price (ASP) systemor obtain thesedrugs from BioScrip Inc., the sole ven-dor that the federal Centers forMedicare & Medicaid Services (CMS)designated. Noridian AdministrativeServices is the program’s designated

carrier and is responsible for vendorenrollment, processing CAP drugclaims, answering inquiries, andresolving disputes.

CAP has not been widely adoptedamong oncologists. Of approximately2,400 physicians currently enrolled inCAP, only about 200 are oncologists.

Technical DifficultiesThis low enrollment is due to severalfactors. “Unfortunately, there weredelays, timing problems, and other

glitches in the implementation process,”says Nicholas J. Opalich, managingpartner of Strategica Health Partners,LLC, a health care consulting firm in

Chagrin Falls, Ohio.“The first election peri-od was scheduled fromMay 8 to June 2. Butshipments began on July1, meaning that the firstshipment coincidedinconveniently with aholiday weekend. Also,audio conferences con-ducted by CMS andBioScrip were sched-uled during oncology

specialty meetings, when most oncolo-gists could not participate.Furthermore, CMS and Noridian ini-tially faced technical difficulties inaccepting physician applications online,assigning physician and practice identi-fication numbers, and loading informa-tion onto disks to send to BioScrip.”

Then, CMS opened a second election

HEALTH POLICY

Oncologists Are Reluctant to Enroll inGovernment-Run Medication Acquisition Program

Frequent patient health statuschanges mean oncologists need greatflexibility in chemotherapy regimens,

but the Competitive AcquisitionProgram’s rules were rather rigid and

thus do not allow the requisiteflexibility, experts say.

As part of his testimony to the Subcommittee on Health ofthe House Committee on Ways and Means, RichardFriedman, executive chairman of BioScrip, listed the top

five barriers to effective CAP implementation. They are:1. Lack of on-site inventory. Under CAP, physicians must order

patient-specific drugs in advance, making it difficult to adjusttreatment as needed.

2. The requirement to ship to the location where the drug isadministered. Many practices work in satellite locations thatare open only a day or two each week, and physicians find itdifficult to receive shipments at these locations conveniently.

3. Burdensome claims processing. Claims submitted by physi-cians for the administration fee must be submitted within 14

days from drug administration and must include extensiveinformation. More information means more paperwork and insome cases the need for a unique physician identifier number,a step that is incompatible with current billing systems.

4. Beneficiary co-pay collection. Under CAP, BioScrip is responsi-ble for collecting the 20% copayments on Part B drugs and bio-logicals from patients. Normally physicians collect such copay-ments and they worry that patients who cannot afford thecopayment will be unable to obtain the necessary medications.

5. Limited physician election period. BioScrip believes that theshort CAP election periods do not allow sufficient time to edu-cate and enroll eligible physicians.

—DJN

PROGRAM VENDOR IDENTIFIES BARRIERS

Continued on page 10

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10 Practice Options

HEALTH POLICY

Continued from page 9period from June 3 to June 30 and saidshipments would begin on Aug. 1.Shifting dates and multiple electionperiods may have confused or con-cerned physicians, says Opalich.Yet another issue might have been

BioScrip’s lack of name recognitionamong cancer specialists. “WhileBioScrip has had a strong and wellestablished track record as a specialtypharmacy, the company was relativelyunknown among oncologists at the timeof CAP inception,” says Opalich. Sincethe program started, however, BioScriphas to be an effective pharmacy, he adds.Overall, the need for

education and outreachregarding CAP continues.“Certainly, there will beconfusion surrounding theimplementation of anynew program,” saysOpalich. “It is likely thatmany physicians requireadditional education aboutthe details of CAP.”Aside from implemen-

tation issues, many physi-cians still have real ques-tions about CAP. In particular, oncolo-gists have expressed concern about thelack of flexibility in chemotherapy regi-mens, since drugs must be ordered inadvance and for a particular patient.

Tangible Concerns“It is extremely difficult, if not impossi-ble, to conceive of treating oncologypatients by prescription,” says Dawn

Holcombe, senior vice president of payerrelations and quality programs forSupportive Oncology Services, Inc., andexecutive director of the ConnecticutOncology Association, in SouthWindsor. “Because of frequent patienthealth status changes and the toxicity ofthe treatments, oncologists need toensure total flexibility in chemotherapyregimens at the time of the patient visit.”Opalich agrees that such problems are

a concern. “But beforeusing this as a rea-son to avoid CAP, oncologists shoulddetermine whether regimen changesoccur frequently or infrequently in their

practices,” he adds.Large, sophisticated practices might

have to make unplanned changes indrug regimens about 30% to 35% of thetime, Opalich says. “But in smaller prac-tices, drug regimens may change unex-pectedly only about 10% to 15% of thetime,” he adds. “Large practices will like-ly not be interested in CAP anyway, butsmall practicesmight find that the bene-

fits of CAP are such that they can changetheir operational protocols to accommo-date immediate drug regimen changes.”If oncologists enrolled in CAP need

to change a drug regimen, they cantake a drug from inventory and use abilling modifier under the “furnishedas written” provision of the CAP rules,then request that BioScrip replace theinventory.

Planned AdjustmentsCMS is considering adjustments thatwill make the program more attractiveand encourage more physicians to

enroll. As part of histestimony to theSubcommittee onHealth of the HouseCommittee on Waysand Means last year,Richard Friedman,executive chairman ofBioScrip, listed the topbarriers to effectiveCAP implementation.These include a lack ofon-site inventory, arequirement to ship to

the location where the drug is adminis-tered, and burdensome claims process-ing, among other problems.Friedman offered solutions to each

of these problems. For example, withpre-payment from Medicare, BioScripcould provide an adequate drug inven-tory to stock physician offices withdrugs to meet unanticipated patientneeds, he said. Physicians could be

“Ultimately, oncologists must assesswhether they can continue to afford to treatpatients covered by Medicare. In fact, someoncologists are sending patients who needchemotherapy to the hospital rather than

treating them in their offices.”Nicholas Opalich, consultant

PHYSICIANS MAY CONSIDER NEW PRACTICE MODELS

One common strategy oncologists use when reimbursementdeclines sharply is to seek increased efficiency by mergingwith other oncology groups.

“Consolidation is a common strategy in a health care environ-ment in which tightening reimbursement and escalating practicecosts have become the norm,” says consultant Nicholas Opalich.“Merging practices will allow oncologists to enjoy enhancednegotiating leverage and greater purchasing power.”

In addition, specialty pharmacies that recognize the problemsoncologists face may develop private programs to serve oncolo-gists, Opalich comments. “These companies are currently respon-sible for getting the drugs to physicians under the buy-and-billmodel,” he adds. “They may develop a model whereby they canfill weekly orders for oncologists and bill the patients andMedicare for the drugs, such that oncologists will no longer haveto maintain an expensive inventory.” —DJN


Practice Option

allowed to select the drug shippinglocation, rather than being forced toaccept delivery at the administrationsite, he added. CMS could simplify thephysician billing process by allowingphysicians to continue billing for theadministration fee but not requireinclusion of the identifier, he said. Theco-pay collection process could bemade more flexible, potentially allow-ing for cost-sharing support. Finally, anopen enrollment period for physicianswould allow more time for educationand would encourage physicians toenroll.

CMS’s response to these suggestionshas been mixed. “CMS has notresponded to the issues regarding ben-eficiary co-payment collection,” saysOpalich. “CMS did indicate, however,that legislation would be required to

alter the claims processing mecha-nisms, to address the lack of on-siteinventory, and to remove restrictionson shipping locations that were legislat-ed by the MMA.”

Some legislative changes havealready begun. To ameliorate some ofthe burden of claims processing, theTax Relief Health Care Act of 2006(TRHCA) removed the match require-ment whereby the physician’s order hadto be matched with BioScrip’s drugshipping documentation before pay-ment. This requirement had been putin place to ensure that payments weremade only for drugs or biologicals thatwere actually administered to benefi-ciaries. The legislation now providesfor a post-payment review to preventfraud and abuse. The legislation tookeffect on April 1.

CMS declined to allow open enroll-ment for CAP, Opalich notes, but didannounce that the latest election periodwould be reopened from May 1 to June15 to allow for more time to educatephysicians, address their concerns, andanswer their questions.

Survival StrategiesEven if adjustments make CAP moreattractive, oncology practices mustpursue strategies now to ensure theircontinued viability given tighteningMedicare reimbursement.

“Practices that are primarilyMedicare-based are hurt more thanpractices that treat a high number ofpatients with commercial coverage,”says Elan Rubinstein, principal with EBRubinstein Associates consultants inOak Park, Calif. “However, cancer is adisease that is often age-related; there-fore, all oncology practices are affectedby tightening Medicare reimburse-ment.”

Physician fee schedule changesresulted in a decline in oncologist ser-vice reimbursement. “CMS did nothold Medicare payments to all special-ties constant,” Holcombe explains.“CMS held the conversion rate con-stant, but changes in the relative valueunit values ended up reducing net pay-ments to oncologists.”

Opalich agrees, saying, “Oncologistsare definitely feeling the ill effects ofMMA provisions. Their professionalfees have been cut, and reimbursementbased on the average sales prices plus6% is marginal at best. Ultimately,oncologists must assess whether theycan continue to afford to treat patientscovered by Medicare. In fact, someoncologists are sending patients whoneed chemotherapy to the hospitalrather than treating them in theiroffices.”

In the meantime, CMS has discon-tinued its demonstration programs thatreimbursed oncologists for trackingchemotherapy side effects. �—Reported and written by Deborah J.Neveleff, in North Potomac, Md.

Addressing the problems they have with reimbursement levels, oncology prac-tices have been pursuing various strategies to remain financially viable.“Oncologists have improved their understanding of their business opera-

tions,” says Dawn Holcombe, executive director of the Connecticut OncologyAssociation, in South Windsor. “Historically, oncologists have concentrated on treat-ing patients without much emphasis on practice management. Now, their focus onthe business is much stronger.“Oncologists are starting to more accurately define what constitutes a good con-

tract,” Holcombe observes. “Some private payers are starting to emulate Medicare’sreimbursement changes. Therefore, in addition to taking a hit on their Medicare busi-ness, oncologists are facing reimbursement declines on the commercial side as well.Oncologists are finding themselves explaining to private payers the consequences ofMedicare reimbursement policies so that these policies are not blindly emulated.” Inaddition, practices are considering expanding into cancer centers and adding ser-vices such as radiology where such activities are allowed, she adds.Another strategy involves developing other revenue sources. “Some oncologists

are thinking about creating infusion suites and then approaching managed carecompanies for contracts,” says Elan Rubinstein, a consultant in Oak Park, Calif.“However, a 6% margin may not make this strategy viable.”Some practices are developing in-office pharmacies, but this strategy is not

typically a strong revenue source. “The only segment of community oncologistswho would even remotely qualify for developing a dispensing pharmacy wouldbe practices that have 10 or more oncologists,” comments consultant NicholasOpalich. “The health care market already has a well developed specialtypharmacy network. So, physicians would have to consider whether an in-officepharmacy would be reasonable.” —DJN

PRACTICES SEEK MOREEFFICIENT OPERATIONS

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12 Practice Options

As pay for performance (P4P)programs become more wide-spread among all specialists,

oncologists may soon get a chance toparticipate in these programs. Whilethe practice of paying more to primarycare and other physicians for meetingcertain guidelines is becoming popular,health plans have been slow to offerP4P programs to oncologists.

“Pay for performance is a great idea,absolutely the right direction, and Ithink it is going to happen,” saysHarvey D. Bichkoff, CEO of CaliforniaCancer Care in Greenbrae, Calif. “Buttreatment decisions in this disciplineare often very complicated. Simplyusing claims, administrative, and phar-maceutical data won’t work for us. Payfor performance is a good idea in med-icine and it may turn out to be a goodidea in oncology. But we have a longway to go before data collection is ade-quate for gathering the highly variableinformation that can constitute qualitycare in oncology.”

P4P programs are popular amonghealth plans because current reim-bursement models aren’t working.“Right now there are three ways we paydoctors: fee for service, capitation, andsalary, and they are all bad,” saysLeonard Schaeffer, MD, former chair-

man of WellPoint Inc., one ofthe nation’s largest managedcare organizations. Heretired last year.

Improving Outcomes“Pay for performance canimprove quality, improvevalue in what we pay for, andencourage the adoption ofinformation technology andelectronic medical records,”says Schaffer.

Wellpoint is developingprograms that will paybonuses to network physi-cians who demonstrateimproved clinical outcomes,the use of evidence-based medical pro-cedures, improved formulary compli-ance, the implementation of informa-tion technology, and high levels ofpatient satisfaction. Wellpoint has notyet implemented a P4P program foroncologists or other specialists, eventhough Schaeffer believes many of thesame criteria used for primary carephysicians (PCPs) can be applied tospecialists.

Some treatment decisions in oncolo-gy may someday be applicable to mea-surement for pay-for-performanceincentives, say Bichkoff and others,

such as percentage of hospice referralsand compliance with chemotherapyand imaging guidelines. But becausetreatment decisions for individual can-cer patients are complex, current datacollection systems are not sophisticatedenough to capture and report the nec-essary nuances accurately in oncologypractices, Bichkoff adds.

Reviewing Criteria“With other specialties, there are sim-ple measures that can track success inmanaging disease, such as blood sugarlevels for diabetes,” says Dawn

REIMBURSEMENT

Cancer Care Pay for Performance Raises Questions

While traditional data may not work in oncology, such data arebeing used for pay for performance (P4P) programs for primarycare physicians (PCPs). By year’s end, more than 600,000Medicare recipients will be in test programs that pay doctors andhospitals bonuses for achieving better results such as raising thenumber of patients with diabetes whose blood sugar is undercontrol.Dawn Holcombe, FACMPE, MBA, ACHE, executive director of

the Connecticut Oncology Association in South Windsor, is cau-tious, however, when discussing the success of P4P programs for

physicians who care for patients with certain chronic conditions.“Success in P4P programs in other diseases may lead to a falsesense of security,” she says. “It would be easy to say, ‘Been there,done that, can now replicate it in oncology.’ But the complexityof actually trying to assemble even the most basic data is whatstymies most P4P programs in oncology. In addition, efforts toimpose decision making that come from outside the physician-patient oncology team raise obstacles and can have an adverseeffect on quality of care.”

—MS

P4P HAS LIMITED APPLICABILITY IN ONCOLOGY


Practice Options

Holcombe, FACMPE, MBA, ACHE,executive director of the ConnecticutOncology Association in SouthWindsor. “Oncology is far more com-plex, with many variables, and eachtreatment is as individual as the personreceiving it. What we don’t want aretracking mechanisms imposed byMedicare or others that attempt to eval-uate care based on simplistic criteria.There’s too much variability in cancertreatment for such programs to besuccessful.”

Patients with cancer present in one ofseveral clinical stages. Stage diagnosis isbased on a wide number of variables,sometimes reflecting family history,age, co-morbidities, and disease pro-gression. Clinical decisions, includingtype, duration, and amount of treat-ment, therefore, are highly individual-ized, says Holcombe. “The currentrecordkeeping isn’t sophisticatedenough to accurately reflect a measure-ment of stage, and they can’t measurehow guidelines are tied to individualindicators.”

Such variability does not meanoncology guidelines are not useful.Some oncology groups use data oninternal compliance with treatmentguidelines to establish quality creden-tials, and those practices may serve todemonstrate how an oncology P4Pprogram might work. Few, if any,oncology practices use a bonus systemfor compliance and few maintain puni-tive systems to encourage compliance,Holcombe says.

“Oncology is such a complex disci-pline that second-guessing oncologistssimply doesn’t work,” Holcombeexplains. “Guidelines that help keeponcologists informed about optionscan be very helpful.” But bonuses andpunitive reimbursement are difficult toapply in cancer care, she adds.

The federal Centers for Medicare &Medicaid Services (CMS) learnedthrough its chemotherapy demonstra-tion projects in 2005 and 2006 thattreating cancer patients is too individu-alized for bonus or punitive reimburse-ment systems to be effective. CMS paid

small bonuses ($130 in 2005 and $28last year) to oncologists for treatingpatients’ adverse reactions tochemotherapy.

Holcombe and others say the twoprojects were not true P4P programsbecause they failed to provide appro-priate guidance and the payments wereinadequate to serve as true incentives.“They failed to ask when symptomswould occur, in an appropriate time-frame,” Holcombe explains. “So, theyfailed to reflect the quality of actualcare. In style and methodology, theprojects were not consistent with med-ical reality and failed to provide theappropriate guidelines.”

Compliance with GuidelinesOne practice that uses a sophisticatedprogram to monitor guidelines compli-ance is the Kansas City Cancer Center(KCCC) in Lee’s Summit, Mo.Oncologists in the practice developed aset of guidelines that measure adher-ence to chemotherapy and imaging uti-lization standards, says John Hennessy,the center’s executive director.

The practice needed its own guide-lines because the information healthplans use for P4P programs forPCPs (such as claims, administrative,and prescription data) fail to reflectthe work of oncologists to adhere totwo goals of the KCCC guidelines:treatment effectiveness and drugtolerability.

Treatment effectiveness can varywidely among patients depending onmany factors, including the stage of thepatient’s cancer. And some patientssimply can’t tolerate some medications.“That means that patients sometimesmust be administered more expensivecare,” Hennessey explains. “A retro-spective review of claims records won’treflect that consideration. It is very dif-ficult to achieve a longitudinal under-standing of what constitutes qualitycare in oncology through the use of tra-ditional data.”

Ideally, medical centers and hospitalsshould introduce computerized physi-

cian order entry (CPOE) systems thatuse clinical decision-making guidelinesand protocols, Hennessey explains.While such systems are expensive, theuse of CPOE linked with clinical deci-sion-making tools will help avoid a sig-nificant obstacle to introducing suc-cessful P4P programs for oncologists:the lack of sophisticated data.Currently, the most sophisticated datacome from electronic medical records(EMRs), but even these data are inade-quate for use with P4P in oncology.

“EMRs are basically designed toreport retrospective data to healthplans,” Hennessey says. “That missesthe boat in oncology.”�—Reported and written byMartin Sipkoff, inGettysburg, Pa.

The American Medical Association(AMA) opposes pay for perfor-mance (P4P) programs that create

exclusive networks or that demandphysicians make large investments ininformation technology to improvereporting capabilities.When developingP4P programs, payers should adopt anumber of key principles, the AMA says:physician participation must be volun-tary, sponsors should give doctors theoption of participation and not punishthem if they don’t, and programsshould not benefit large practices oversmaller ones or favor those practiceswith greater information technology.Also, P4P programs should provide

physicians with tools to facilitate partic-ipation in any P4P program they pro-pose, minimizing financial and techno-logical barriers to physician participa-tion. In addition, the AMA wants toavoid P4P programs that require physi-cian practices to purchase health plan-specific information technology.

—MS

AMA DEFINESPHYSICIAN PARTICIPATIONIN P4P

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Oncologists are becoming moresophisticated in theirapproach to political realities

involving reimbursement for cancercare, says Dean Gesme, MD, an oncol-ogist with Minnesota OncologyHematology, PA, a 40-physician groupin Minneapolis. The factor that has fos-tered this new level of sophistication isthe Medicare Prescription DrugImprovement and Modernization Actof 2003.

Since the act became law, oncologistshave learned about its implications andhow it has affected Medicare reim-bursement. The law reduced theamount oncologists are paid for certainservices, and these reductions were dif-ficult for many oncology practices. As aresult, some oncologists (and somecancer patients as well) have learnedhow to get the attention of federalhealth officials and members of con-gress about Medicare reimbursement.

“Many oncologists have invited their

representatives in Congress andCongressional staff members to visittheir practices so that they can witnessfirst-hand what is involved in oncologycare,” Gesme explains. “We also haveseen patients become activists in aneffort to elucidate the complexity ofcancer care.” Gesme served as the chairof the Clinical Practice Committee atthe American Society of ClinicalOncology (ASCO) from 2003 to 2004,and also served as the chair of theNational Coalition for CancerSurvivorship (NCCS) from 1999 to2003.

Informing the Debate“But also, we now see a greater sophis-tication and understanding among themedical oncology community, includ-ing physicians, nurses, and office staff,about the flaws inherent in the reim-bursement system that need to beaddressed,” he adds. “In 2003, the spe-cialty had a small cadre of very well

informed medical oncologists whowere instructive in Washington. Butmost oncologists across the countrydidn’t understand the legislative andregulatory factors affecting oncologycare.

“Whining, complaining, and makingthreats and accusations are not con-structive methods in the world of poli-tics,” Gesme continues. “Over the lastfew years, oncologists have becomemore sophisticated as a profession inour approach to working for change.Hopefully, that sophistication will helpus be more effective.

“Over the last few years, we haveseen the effects of the MMA legislationunfold in both anticipated and unantic-ipated ways,” he says. “Probably themost significant effect on medicaloncologists has been the dramaticchange in the payment formula fordrugs that oncologists purchase andadminister to Medicare patients. Bychanging the basis of the reimburse-ment formula from average wholesale

14 Practice Option

COMMENTARY

Oncologists Are Becoming More Politically SavvyBy Richard L. Reece, MD

Oncologists are particularly concerned about changes inMedicare reimbursement policy because private healthplans typically follow Medicare’s lead and reduce reim-

bursement levels as well. Also, if the federal Centers for Medicare& Medicaid Services (CMS) place restrictions on which drugsoncologists can administer and which combinations they can use,then health plans follow suit on these rules too.“It certainly can become a burden when plans place such lim-

its,” says Dean Gesme, MD, an oncologist with MinnesotaOncology Hematology, PA, a 40-physician group in Minneapolis.“Each individual health plan may want to create its own rulebookgoverning how it believes optimal care or best practices shouldbe provided. Professional organizations such as ASCO and theNational Comprehensive Cancer Network (NCCN) have done anexcellent job at setting guidelines for cancer care that we hopemany payers will adopt. If they did adopt these guidelines, it

would provide some clarity and continuity of care and increasethe overall quality of care as well.“Unfortunately, though, this is still an unsettled issue,” he con-

tinues. “For example, different payers have different requirementsfor the use of growth factors. For the community oncologist, thatobviously creates more bureaucracy, which creates more over-head, which generates higher costs. And, because finances are sotight, any time we are spending more resources on complyingwith bureaucratic rules and regulations, we are probably spend-ing less on other aspects of our practice, which generally affectspatient care.”Despite these challenges, Gesme remains hopeful about the

future of oncology care. “I’m optimistic regarding the clinicalaspects of cancer care because we are constantly developing newand better therapies that will ultimately improve outcomes for ourpatients,” he says. —RLR

WILL HEALTH PLANS FOLLOW CMS’ LEAD?

s


price (AWP) to average sales price(ASP), the Medicare program savedbillions of dollars at the expense ofmedical oncologists. The MMA didcontain some provisions to return asmall portion of those savings in theform of more realistic reimbursementfor drug administration and other ser-vices. This amount, however, was just afraction of the total savings resultingfrom the change to ASP.

Unintended Consequences“Many of us involved in professionaloncology organizations had hoped thatwe would be able to persuade Congressthat there should be a correction tosome of the flaws in ASP,” Gesme adds.“We are still working toward that end,but several major concerns remain.”

One of the issues that oncologistsbelieve is important involves how theASP is set. Revisions to the ASP arebased on changes in prices from themanufacturers, but it takes the federalgovernment several months beforechanges in prices are reflected in theASP. “In other words, for severalmonths following a drug price increase,physicians are still being reimbursed ata rate that reflects the older, lowerprice,” Gesme explains.

As with any health care legislation,the MMA had an unintended conse-quence that results from the way thefederal Centers for Medicare &Medicaid Services (CMS) applied pay-ment discounts from manufacturers intheASP formula. “That discount is typ-ically enjoyed by drug distributors, notthe vast majority of community med-ical oncologists,” Gesme says. As aresult, the effective reimbursement to

oncologists is ASP+4%, rather thanASP+6%.

“We are hoping that we can make achange in that policy,” he adds.

Inequities CitedAnother element of the legislation thathad an unintended consequenceinvolved the fees CMS pays for drugadministration. “For example, the drugadministration fees still do not coverthe real costs to a medical oncologypractice of administering drugs topatients,” Gesme says. “As a result, themoney earned on drug administrationfor non-Medicare patients is used inpart to offset the costs of Medicarepatient drug administration.”

The legislation also has resulted ininequities among certain oncologyprac-tices, Gesme believes. “For example,practices in areas that are rural or char-acterized by a preponderance ofMedicare patients have experienced amuch greater negative impact thanpractices in urban locations, where thepopulation tends to be younger and thusnot covered by Medicare,” he explains.

Declining reimbursement naturallyincreases stress in a job that is alreadystressful, in part because oncologistswant to provide high quality care.“Across the country, oncology practiceshave significantly reduced the numberof nurses and office staff per full-timeoncologist,” Gesme says. “While I’dlike to say those were extra, unneces-sary staff members, the fact is thatmany of those people were activelyengaged in delivering valued patientcare activities.”�—Edited by Deborah J. Neveleff, in NorthPotomac, Md.

When reimbursement declines,physicians in small groupstypically consolidate to

achieve economies of scale. TheMedicare Prescription DrugImprovement and Modernization Act of2003 (MMA) has helped to foster thistrend among oncologists, says DeanGesme, MD, an oncologist withMinnesota Oncology Hematology, PA,in Minneapolis.“Small oncology practices simply

have too much overhead and notenough capitalization to withstand thedifficult environment the MMA creat-ed,” he explains. “As a result, the spe-cialty is starting to see greater numbersof one- and two-physician practicesjoining larger organizations.“Just consider my case, for instance,”

Gesme continues. “I moved from a five-physician practice in Iowa to a largegroup in the Twin Cities. My formerpractice in Iowa is still doing well, butthat success is based largely on its abil-ity to diversify. Imaging is a service inwhich an oncology practice can earnenough reimbursement to offset someof its other costs, for example.“However, in Minneapolis, we have a

lower percentage of Medicare patients,and our practice has diversified well byoffering radiation services, laboratoryservices, and diagnostic X-ray services,”he adds. “But the future is not veryrosy, because the amount of reimburse-ment available for radiation therapyand diagnostic radiology is underattack as well. As reimbursementdeclines we will have to look for waysto further cut our costs.“In addition to greater financial sta-

bility, there are other benefits of prac-ticing in a larger group setting,” Gesmeadds. “In larger groups, oncologists canenjoy more time off and better callschedules, and these factors help usavoid burnout.

—RLR

DEEP CUTS FOSTERCONSOLIDATION

Practice Options

“Over the last few years, oncologists have becomemore sophisticated as a profession in our approachto working for change. Hopefully, that sophistica-tion will stand us in good stead, helping us to be

more effective over the long term.”Dean Gesme, MD, Minnesota Oncology Hematology, PA

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melanoma practice options, january 2012

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