The 111th Congress is gone but not forgotten, having passed into law the landmark Affordable Care Act of 2010. Although this legislation has several interesting appropriations for cancer research, a core principle of the bill is finding ways to reduce health-care spending, which gives the oncology community an uneasy sense of déjà vu: The Medicare Modernization Act of 2003 hammered oncology with deep cuts in reimbursement for Part B drugs, leaving many community infusion centers underwater. Oncology practices, especially smaller one- to three-person groups, have to wonder how much more change they can take.

Despite the 1-year "patch," the sustainable growth rate (SGR) is still the elephant in the room, a problem no one wants to tackle head-on. But Ted Okon, Executive Director of the Community Oncology Alliance (COA), explained that the problem runs deeper than the outdated SGR formula. "Studies have shown that the United States has the best cancer care delivery system in the world, meaningfully higher survival than Canada or Western Europe. But without attention from this Congress, we're at risk of having that system dismantled," said Mr. Okon.

Policymakers on the Hill tend to focus on expensive chemotherapies, but Mr. Okon referenced the COA Components of Care Study, which looked at oncology practice expenses as they relate to Medicare. "Looking at 2009 data, we found that if you take the drugs out of the equation, Medicare reimburses only 57% of the costs for administering chemotherapy. It gives a picture of how low Medicare payment is for oncology services, and it's getting worse on the drug side as well."

Unfinished Business

Considering Medicare pay cuts, community practices that rely too heavily on the agency for their revenue cannot survive. Consequently, private payers have become the lifeblood of community oncology. However, customary prompt pay discounts (financing terms between manufacturers and distributors that artificially lower Medicare Part B drug reimbursement) have placed many community practices in jeopardy.

Companion bipartisan bills-S. 1221 and H.R. 1392-that eliminate prompt pay discounts from the calculation of the average sales price (which is the basis for Medicare reimbursement rates for community clinics), were introduced but came up short in last year's Congressional battle over a health-care bill. Major cancer groups are gearing up their lobbying efforts for 2011's legislative calendar.

Matthew Farber, MA, Director of Provider Economics and Public Policy at the Association of Community Cancer Centers (ACCC), told The ASCO Post, "ACCC has been part of a coalition advocating on the Hill for removal of the prompt pay discount. But there's a lot of work to do, especially with the newer members of Congress." He cautioned that given last year's bloody reform battle, stand-alone health-care bills have an uphill battle. "Attaching prompt pay to another vehicle, perhaps a spending bill, will be our best shot at getting the prompt pay bills passed," added Mr. Farber.

Comparative Effectiveness Research Gaining Ground

Another initiative getting careful scrutiny from the oncology community is the comparative effectiveness research (CER) program, authorized by the Affordable Care Act, and funded and managed by the new Patient-Centered Outcomes Research Institute. In short, comparative effectiveness research uses pragmatic trials to determine which treatment works best, for whom, and under what circumstances.

Are High-priced Cancer Drugs in Line for CER Scrutiny?

The FDA does not require comparative effectiveness data to approve a new drug, although some foreign regulatory authorities do. Given the high cost of newer biologics, some in the oncology community are concerned that comparative effectiveness research might narrow their treatment options. Steven Pearson, MD, MSc, Founder of the Institute for Clinical and Economic Review, remarked, "Ultimately, comparative effectiveness research information will be available to patients, doctors, and payers to be used in ways to improve outcomes and reduce costs, not through the blind rationing and up-down decision-making that some spend too much time worrying about."

Incentive for Less Care

Another cost-saving proposal in the new health-care reform bill is the Medicare Shared Savings Program, designated to encourage the formation of accountable care organizations (ACOs).  The Centers for Medicare & Medicaid Services defines ACOs as organizations of health-care providers accountable for the quality, cost, and overall care of its beneficiaries. Although enhancing quality is the purported underpinning of these organizations, the real driver behind this initiative is reducing medical costs. Accountable care organizations lower costs, in part, by setting a cost benchmark and sharing profits when the amount is below the benchmark.

How ACOs play out in the complex world of oncology, without limiting care, remains to be seen. Alan M. Garber, MD, PhD, Henry J. Kaiser Jr. Professor of Economics at Stanford University, threw the ball back into the comparative effectiveness research court. "For ACOs to deliver better outcomes at lower costs, they really need to know what works. I see comparative effectiveness research as a method to provide the information that all the participants in an accountable care organizations need. One can institute changes in payment, as proposed in ACOs. However, without an instrument like comparative effectiveness research, you can reduce costs, but I would feel uncomfortable about the possibility that patients would be deprived of essential services."

The oncology landscape was impacted in 2003 with the passage of the Medicare Modernization Act. Switching Medicare Part B reimbursement from average wholesale price to average sales price + 6% reduced drug payments to untenable levels. Moreover, rising costs of running infusion centers have largely gone uncompensated, due, in part, to a lack of knowledge of practice expenses.  As a result, community oncology practices are trending toward consolidation as they seek alternative business models to survive. The question oncology needs to ask moving forward is will community practices be able to survive in this new era of change. ■