Payment Reform

A new ASCO survey of U.S. oncology practices shows the automatic two percent budget cut to Medicare chemotherapy drug reimbursement under sequestration is already having a significant impact on care for people with cancer just one month after the federal funding reduction went into effect.

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In a letter to Reps. Joe Heck (R-Nev.) and Allyson Schwartz (D-Pa.), co-sponsors of the Medicare Physician Payment Innovation Act, ASCO applauds the legislation for proposing to repeal the sustainable growth rate and reform the Medicare reimbursement system. The bill also averts scheduled reimbursement cuts for 2014, expands testing of new payment models and provides options for physicians to transition to new payment models.

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The House Ways and Means and Energy and Commerce Committees recently requested feedback from ASCO and other medical societies on its second draft of their sustainable growth rate reform proposal. ASCO’s response underscores the importance of physician leadership and testing in the areas of quality measurement and development of new payment models as part of SGR reform.

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The upcoming year will likely bring significant policy and practice challenges to the oncology community with possible dramatic changes in how Medicare reimburses oncologists for treating cancer patients. ASCO is actively working to ensure that the oncology community shapes alternative payment options that provide fair reimbursement for oncologists and ensure high-quality care for patients.

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The first three installments of ASCO’s new payment reform series provide context and background on the growing call for reform of the Medicare physician payment system. Rising healthcare costs, along with misaligned payment formulas, have triggered an unprecedented national dialogue on the need to change the way Medicare reimburses physicians for patient care. Congress, the Administration and the oncology community are seriously examining options for restructuring care delivery and reimbursement to ensure higher-quality and more cost-efficient patient-centered care.

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Most injectable oncology drugs are characterized as “physician-administered drugs” and are reimbursed under the medical benefit—as opposed to the pharmacy benefit—in many insurance plans. Under Medicare, these drugs are also known as “Part B” drugs, as they are covered by the Medicare Part B benefit, which pays for certain doctors' services, outpatient care, medical supplies, and preventive services. When providing chemotherapy as a service under Part B Medicare, physicians purchase the drugs, manage inventory, administer drugs in-office, and submit claims to Medicare and Medigap insurers for reimbursement of the drug and certain associated administrative costs, such as copay collections. This process is commonly termed “buy and bill.”

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The Final Rule to implement the Physician Payment Sunshine Act—Section 6002 of the Patient Protection and Affordable Care Act (released on February 1)—will make information publicly available about payments or transfers of value to physicians and teaching hospitals (“covered recipients”) from applicable manufacturers and group purchasing organizations (GPOs). The Centers for Medicare & Medicaid Services (CMS) will publish the information on a public website.

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Amid the many federal budget issues challenging all of medicine today, none is thornier, perhaps, than the sustainable growth rate (SGR) formula that perennially threatens Medicare patients’ access to critical health care and the viability of physician practices across the United States. In oncology, the turbulence and uncertainty caused by this issue has been acute.

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