Chief Innovations Officer, Professor, and Vice President of Cancer Services

		John Theurer Cancer Center at Hackensack University Medical Center

President, Regional Cancer Care Associates, LLC

There is a growing chorus that seems to be debating separate issues—340B drug pricing, the sequester, site of service differential, etc. But the debate revolves around a singular issue&mdash;where should cancer care be delivered? It is an uncontested fact that delivery of state of the art oncology care is getting significantly more complex and expensive. Also, without question, the practice of oncology is currently migrating from the office (private practice/community) to the hospital (ie, oncologist as employee) setting. Is this good for patients? Is this good for oncologists? Is this good for payers? In the long run is this good for hospitals?

Before I attempt to address each of these questions let’s review some facts and current activities aimed to address the issue. Oncology drug reimbursement was not created by oncologists. In 2004, the Medicare Modernization Act capped payments to oncologists at 6% above the average wholesale price (ASP) to cover the risk and expense of purchasing, keeping in inventory, administering, discarding, and billing for chemotherapy, supports agents, and biologics. Over the past several years the cost of some agents increased substantially and the cost to administer the agents also increased. Evaluation and management code reimbursement during this time period has ranged from being flat to negative when taking inflation into account. On March 1, 2013, Medicare applied a 2% absolute cut to reimbursement because of the sequester.

Thus, drug reimbursement dropped from 6% above ASP to approximately 4%. For some practices this cut resulted in an inability to acquire, store, and deliver some drugs without taking an economic loss.

As a consequence, and initiated in some cases by the ability of hospitals to purchase drugs at a reduced cost due to 340B pricing, many oncologist are leaving office-based private practice and taking employment by hospitals. Recent independent analysis, however, has shown that this shift is actually increasing the overall cost of cancer care, while increasing the copayment responsibility of already financially strapped patients due to the cost of cancer care and in many cases an inability to work while on therapy.

In part, as a response to avoid displacing patients with cancer from their community oncology office, the United States House of Representatives introduced a bill (HR 1416) entitled, “The Cancer Protection Act of 2013.” The bill, sponsored by Representative Renee Ellmers (R-NC), is intended to restore reimbursement for physician administered drugs and biologics under Medicare Part B to pre-sequester levels. It is believed that HR 1416 will also stem the tide of physicians leaving the practice of community oncology in the private setting.

So let me return to the questions posed above. How could it be good for patients to have to receive their care from a practicing oncologist who is under economic pressure with drugs that might be indicated for that patient, but can only be delivered at an economic loss to the oncologist? Equally, if that oncologist is forced to leave his private practice and join a hospital, how is that good for the patient or the payer if the cost to deliver drugs is greater and the copayments are higher than they would have been in the oncologist’s office—even accounting for eliminating the sequester?

Is it really beneficial for an oncologist to leave a private practice community based model, not because he wanted to, but because he had to? What will be the work ethic and professional satisfaction? Finally, as hospitals acquire more oncology practices and consolidate services, they will face future reimbursement cuts and probably not be able to deliver oncology care at the cost basis of a community oncologist—so in fact may suffer losses over time.

It would seem logical to reflect strategically for a moment. Keeping community oncology viable would seem rational for all parties listed above. There is clearly a role for hospital-based oncology, particularly for research and complex care (ie, bone marrow transplant). However, dismantling community based oncology through adverse reimbursement, and taking away patient choice and a lower, and many times, more convenient cost basis site of care, would seem irrational. Then again…..never let the facts get in the way of a good story.

Articles

There is a growing chorus that seems to be debating separate issues-340B drug pricing, the sequester, site of service differential, etc. But the debate revolves around a singular issue-where should cancer care be delivered? 

Where Should Cancer Care Be Delivered and Why?

In ever-growing body of research confirms what many oncologists have long suspected: the stresses of their profession produce an alarming rate of burnout.

These findings bode ill, not only for the nearly half of all oncologists who suffer symptoms of the condition, but also for cancer victims. Studies show that burnout increases medical errors and shortens patient lives. Worse, it may spur enough early retirements to exacerbate a looming shortage of cancer specialists.

Some employers have begun to experiment with anti-burnout initiatives, but it’s far too early to say what specific top-down policies, if any, can reduce the burnout problem in a cost-effective way.

There are, however, approaches that individual professionals can use to help themselves now while research teams refine their understanding of what causes burnout and what mitigates it.

“The bad news is that a serious problem exists. The good news is that we’re finally taking it seriously. We’re doing more research and, perhaps more importantly, we’re finally paying attention to the research and thinking about how to address burnout,” said Anthony L. Back, MD, a University of Washington oncology professor who is one of the most cited authors on doctor burnout.

Burnout among oncologists in particular has attracted renewed attention of late, thanks to a large survey and analysis that appeared earlier this year in the 

A research team led by Mayo Clinic professor Tait D. Shanafelt, MD, repeatedly asked 2298 oncologists (whose demographics mirrored those of the profession as a whole) to complete a 60-question survey. More than a third of them (1117) eventually answered all the questions, and nearly half (1490) provided some response.

In some ways, satisfaction levels appeared high. More than 80% of all responders said that if they could start life over and choose any career, they’d choose oncology all over again.

In other ways, however, the picture looked bleak. The survey answers provided by 484 oncologists (44.7% of those who answered the relevant questions) indicated some degree of burnout on the emotional exhaustion and/or the depersonalization domains of the Maslach Burnout Inventory, a widely used questionnaire that provides a standardized measurement of burnout.

Among those who study burnout, those dispiriting numbers came as no surprise. Prior surveys of both individual specialties and physicians as a whole have made similar findings.

Indeed, a 2-year-old national study based on 7288 surveys concluded that a virtually identical percentage of the nation’s total pool of doctors (46%) was suffering from at least some symptoms of burnout.

 A sub-analysis of that study, which was also led by Shanafelt, actually suggested that oncologists suffered significantly less burnout than other doctors, but the tiny number of oncologists in the study limited the strength of that finding.

Such high burnout rates pose numerous problems for both doctors and their patients.

Even mild cases of burnout can make people miserable, and severe cases often lead to serious health issues that range from anxiety or depression to alcoholism or even to suicide.

Burnout also reduces productivity and increases error rates. One study of surgeons in the United States found a very strong correlation between survey answers that indicated burnout and admissions of significant mistakes in the prior 3 months.

Every additional point that a surgeon scored on a 33-point scale measuring patient depersonalization (one of the 3 big components of burnout) was associated with an 11% increase in errors reported. Every additional point on a 54-point scale of emotional exhaustion was associated with a 5% increase in errors reported. A longitudinal study of residents found a similar correlation between burnout and/or distress and errors, and that study noted that the burnout preceded the errors.

Doctor burnout may also lead to—or at least worsen&mdash;future shortages of cancer specialists. The American Society of Clinical Oncology predicts that, if current trends continue, demand for oncologists will grow 42% by 2025 but supply will grow by only 28%.

The result, according to the organization, will be a shortage of nearly 1500 oncologists.

If burnout rates lead to an unexpectedly high number of early retirements, that shortage could be far worse than predicted, and studies consistently show that burnout does lead people to retire early or, in some cases, to switch careers while they are still young.

General research into burnout among all types of American workers suggests that at least part of the problem for oncologists lies not in the specifics of medical work but simply in the increasingly stressful nature of modern life.

 Burnout has been on the rise among nearly every subset of Americans in the past decade.

Still, doctors seem more likely to suffer from the symptoms of burnout than American workers as a whole. A probability-based sample of 3,442 US adults that was used as comparison for the physician surveys found that only 27.8% of American workers showed symptoms of burnout and only 23.2% of them (vs 40.2% of doctors) expressed dissatisfaction with work-life balance.

The burnout rate among doctors appears particularly unusual when doctors are compared with other highly educated Americans. The general population sample found that burnout rates are 20% lower than average for people with bachelor’s degrees, 29% lower than average for people with master’s degrees, and 36% lower than average for people with doctorates other than MDs or DOs. Being well educated does decrease your chances of burnout—unless you are a medical doctor. Medical doctors are among the only highly educated professionals who have a greater than average chance of experiencing burnout.

Some (or much) of the reason for high doctor burnout rates may well lie in the type of person who becomes a physician.

“The difficulty of getting into medical school ensures that most doctors are people who naturally drive themselves very hard and demand excellence from themselves and everyone around them,” said another major researcher in the field, Henry M. Kuerer, MD, PhD, FACS. “People like that accomplish a lot, but they can burn out in nearly any environment because they’re perfectionists and life is frustratingly imperfect.”

Shanafelt and his research team looked for other potential causes of burnout among cancer specialists in the oncologist survey data and found many factors that correlated significantly with problems among the sample as a whole.

Younger doctors suffered burnout more than older ones, women suffered it more than men, single doctors suffered it more than married ones, and childless doctors suffered it more than colleagues with kids.

Burnout rates also increased along with total hours worked, time spent with patients, and total weekly patient numbers. As for compensation, salaried doctors suffered less burnout than those who received salary and productivity bonuses, who, in turn, suffered less burnout than doctors with no base salary.

But when the researchers split most of the total group into 2 sub-groups—oncologists in academic practice and those in private practice&mdash;they found that the overall correlations would often intensify for one group and disappear for the other.

For example, the overall analysis showed a significant correlation between childlessness and burnout. The split analysis, however, showed a massive correlation in private practice—where childless oncologists were 55% more likely to suffer burnout&mdash;but no correlation whatever in academic practice.

The correlation between burnout and gender worked the other way. Women in academic practice were 65% more likely to burn out than comparable men, but women in private practice were no more likely to burn out than men.

Overall, oncologists in academic practice were significantly less likely to show signs of burnout than those in private practice, but the only factors that correlated strongly with burnout for both groups independently were youth and time spent seeing patients.

Each additional year of age consistently reduced burnout risk by 4% to 5%. A 50-year-old oncologist was thus 40% to 50% less likely to suffer burnout than a 40-year-old who, in turn, was 40% to 50% less likely to experience burnout than a 30-year-old.

Time spent seeing patients also correlated strongly with burnout. Each additional hour spent with patients per week increased the risk of burnout by 2% to 4%. Thus, all other things being equal, an oncologist who spent 35 hours a week with patients would be up to 40% more likely to suffer burnout than one who saw them for just 25 hours per week.

These findings struck the study team as potentially problematic as there is obviously no solution to a purely demographic risk factor such as age and no easy solution to overwork.

“The strong, incremental relationship between time devoted to patient care and burnout is concerning, especially given the projected shortage in the supply of oncologists during the coming decades,” the authors wrote.

“Reducing clinical work hours or the volume of patients seen may be a strategy to decrease burnout for individual oncologists but at the societal level could exacerbate the projected oncologist workforce shortage.”

Burnout has, in recent years, attracted a growing amount of attention from both researchers and a wide range of employers.

Studies have found a number of factors that consistently lessen burnout among workers, factors such as giving workers some control over when they put in their hours or how they accomplish their assigned tasks.

Unfortunately, many of these abstract techniques have proved difficult to implement in many professional settings and appear particularly ill suited to the world of medicine.

A software company might be able to give programmers the flexibility to decide, on the spur of the moment, to take a morning off and make the time up later. A hospital, on the other hand, might have trouble explaining that policy to patients whose doctors missed appointments.

Providing doctors more control over the work they do looks even more difficult. Indeed, the trend across the profession is pushing doctors in the opposite direction, toward checklists and guidelines designed to standardize both diagnosis and treatment.

“Giving people a sense of control over their work environments is probably the most powerful institutional solution to burnout, but it will be challenging to do in a meaningful way,” said Back, the University of Washington professor.

“How can you give doctors a sense of control while insisting on constraints that govern time, treatment choice, and documentation requirements? I don’t know, but we need to do it,” said Back, who noted that electronic records may be a particular problem. “I’m hearing from doctors that the electronic medical record creates substantial new work that feels more like busy work than patient care.”

Still, there is some hope for systematic improvement. Some small studies suggest that health care organizations can reduce doctor burnout by systematically looking for its signs and intervening when those signs arise.

And many such organizations are experimenting, sometimes formally, often informally, with efforts to reduce stress levels among medical professionals. Some are subsidizing healthier foods. Others are building gyms. Still others are bringing in experts in meditation or yoga or other disciplines designed to stimulate mindfulness.

Studies examining such tactics have yet to determine which, if any, will consistently prove themselves to be cost-effective tools for combating burnout across an entire organization. The underlying ideas, however, have proved effective in helping individuals combat burnout.

Indeed, for all the difficulties of overcoming burnout in the aggregate, the problem often proves manageable for individuals. Better still, the most effective strategies are often reasonably easy and highly enjoyable.

The first step requires people to periodically ask themselves whether they’re happy, and, if the answer is “no,” to look for the 3 signs of burnout: a low sense of personal accomplishment, a great feeling of emotional exhaustion, and a tendency to depersonalize patients.

Those who spot burnout should then begin testing common countermeasures to see what works. “The first thing to do is make sure you’re taking good care of yourself: sleeping enough, eating well, making time for some sort of exercise— but not some exercise you hate, an exercise you really enjoy,” said Kuerer, who is a professor of surgical oncology at MD Anderson Cancer Center.

“The next step is to force yourself to schedule plenty of activities you find rewarding. Spend quality time with your friends and family… There are plenty of times when overcoming burnout takes real work, often with professional help, but in a surprising number of cases, the entire key to restoring joy in your professional life is to lead a richer life outside of work.”

			Shanafelt TD, Gradishar WJ, Kosty M, Satele D, Chew H, Horn L, et al. Burnout and career satisfaction among US oncologists. J Clin Oncol. 2014;32(7):678—686.

			Shanafelt TD, Boone S, Tan L, Dyrbye LN, Sotile W, Satele D, et al. Burnout and satisfaction with work-life balance among US physicians relative to the general US population. Arch Intern Med. 2012;172(18):1377—1385.

			Shanafelt TD1, Balch CM, Dyrbye L, Bechamps G, Russell T, Satele D, et al. Special report: suicidal ideation among American surgeons. Arch Surg. 2011;146(1):54—62.

			Oreskovich MR, Kaups KL, Balch CM, Hanks JB, Satele D, Sloan J, et al. Prevalence of alcohol use disorders among American surgeons. Arch Surg. 2012;147(2):168—174.

			Shanafelt TD, Balch CM, Bechamps G, Russell T, Dyrbye L, Satele D, et al. Burnout and medical errors among American surgeons. Ann Surg. 2010;251(6):995-1000.

			West CP, Tan AD, Habermann TM, Sloan JA, Shanafelt TD. Association of resident fatigue and distress with perceived medical errors. JAMA. 2009;302(12):1294—1300.

			American Society of Clinical Oncology. The state of cancer care in America, 2014: a report by the American Society of Clinical Oncology. J Oncol Pract. 2014;10(2):119—142.

			Sharma A, Sharp DM, Walker LG, Monson JR. Stress and burnout in colorectal and vascular surgical consultants working in the UK National Health Service. Psychooncology. 2008;17(6):570—576.

			Shanafelt T, Sloan J, Satele D, Balch C. Why do surgeons consider leaving practice? J Am Coll Surg. 2011;212(3):421—422.

			Jayson S. Burnout up among employees. USA Today. Oct 24, 2012. http://www.usatoday.com/story/news/ nation/2012/10/23/stress-burnout-employees/1651897/.

			Shanafelt TD1, Boone S, Tan L, Dyrbye LN, Sotile W, Satele D, et al. Burnout and satisfaction with work-life balance among US physicians relative to the general US population. Arch Intern Med. 2012;172(18):1377—1385.

			Dunn PM1, Arnetz BB, Christensen JF, Homer L. Meeting the imperative to improve physician well-being: assessment of an innovative program. J Gen Intern Med. 2007;22(11):1544—1552.

Oncologists Warned-Don't Take Burnout Lightly

In 2012, the federal Centers for Medicare and Medicaid Innovation (CMMI) sought to support oncologists in addressing what CMMI considered to be among the failings in cancer care— namely, fragmented care, suboptimal outcomes, high costs, and patient dissatisffaction. To remedy these weaknesses, CMMI awarded $19.8 million to Innovative Oncology Business Solutions (IOBS), Inc, in Albuquerque, NM. Barbara L. McAneny, MD, an oncologist, is the CEO and chief medical officer for IOBS, the company she launched to manage the Community Oncology Medical Home (COME HOME) program.

Board certified in internal medicine, oncology, and hematology, McAneny is a founding member of New Mexico Oncology Hematology Consultants and a former president and CEO of New Mexico Cancer Center, one of the state’s largest oncology practices.

The practice has a staff of 208, including 10 medical oncologists, 3 radiation oncologists, 1 hospitalist, 2 internists and a retired emergency department physician. We asked her to explain what outcomes the COME HOME program expects to deliver.

Congratulations on the CMMI grant, under which you and oncologists in 7 practices in 6 states are testing the COME HOME concept. CMMI has set some rather high goals for the program, saying it expects the savings after 3 years will total $33.5 million. Can you discuss the outcomes you’ve seen so far?

Yes. To date, we have implemented the triage pathways in all 7 practices. And, we have developed and are implementing our own diagnostic and therapeutic pathways. Even though it’s early to get patient outcomes, we’re beginning to see hospitalization rates from a couple of practices drop by as much as 30 percent. So that is excellent.

Are we on track to save what CMMI projects?

Yes. We don’t know that yet. One of the difficulties we’ve faced is getting data from the federal Centers for Medicare & Medicaid Services (CMS). That data lag well behind the years when CMS collects the data. We’re starting to get files from 2012 and early 2013. Therefore, we are unable to compare real-time data with those from other practices. Ultimately, we want to compare what Medicare spent for cancer care in the past and what we are spending now.

 While hospitalizations are down, do you know if imaging in emergency department visits are down as well, both of which are costly? McAneny: Yes, both of those components are very costly and those numbers do not include the costs of imaging in the emergency department (ED). Often when a cancer patient goes to the ED, the physicians almost automatically order images. Then if the patient needs imaging of a tumor, insurers may deny it because the patient just had one in the emergency department. So, that’s not helpful.

 Is that situation indicative of the need for medical homes if oncologists can coordinate care more efficiently?

 Exactly. That’s one reason we do so much patient education. We’ve discovered that in some practices, patients don’t want to bother the doctors. They would rather sit home and feel miserable than call us. So we tell them, “Please, bother us! We want to know how you’re doing.” That’s one lesson we learned early: we need better patient education.

Another reason patients don’t come in is that they want to avoid making another co-payment. These are a barrier to care because these patients are in Medicare Advantage plans and they have deductibles and coinsurance. We can’t waive those payments because we are required by law to collect that money. Yet a number of people go bankrupt from the high costs and most of them are insured. So, they don’t come to the office when they should but if it gets to be 10 pm and they still feel bad, then they may need to go to the emergency department. Unfortunately, the co-payments and deductibles are even higher there, and that’s what we’re trying to avoid. When patients are very co-payment sensitive, it means the system isn’t working.

Before applying for the CMMI grant, did you do any research to know what you could accomplish for patients and what you might save?

We didn’t do research exactly. We just took what I had developed in my own practice. Ever since we started the practice in 2002, we’ve been trying to figure out how to deliver highly efficient care. Patients are trying to navigate the system without any assistance because typically an oncologist will tell a patient to get some imaging done or meet with a surgeon and then can call to schedule an appointment. Then the patient has to figure out how to schedule a scan and get prior authorization from the insurance company. That delays treatment for maybe 2 months, and the patient gets discouraged and the tumor gets worse.

We found that cancer patients cannot cope with that system. So we schedule everything for them and give them a list of appointments to follow. And we give them the name of someone on our staff and a phone number to call if they have questions. Now they get to know the people on our staff and everything they need outside of our office gets done.

Did you also extend your office hours so that patients could come in if necessary rather than go to the hospital?

Yes, we did. For example, originally we had patients going to the hospital on weekends to get their Neupogen injections because we weren’t open on weekends. But then the patients would say they had to wait several hours for an injection that takes 10 minutes to administer, and the copayment was 3 times higher. As we know, everything is more expensive in the hospital.

So we started doing a shot clinic. For that, we would ask patients if they had any fever in the past 24 hours. If they had, we’d see them for antibiotics. We started doing this all the time, even on Saturdays, Sundays, and holidays. Our patients are poor people. They can’t afford those co-payments. And they can’t afford the transportation. Plus, going to the hospital is hard on people. Our shot clinic worked well enough so that we were saving a significant amount of money. And because we have a good electronic health record system, we could show how much money we were saving compared with national averages for hospitalizations and ED visits. We saw we could deliver better care and that’s what led us to apply for the CMMI grant. The award allowed us to expand what we do from just the shot clinic to after-hours and weekend clinics. We have a retired ED physician covering those Saturday and Sunday clinics.

 Did you have to transform your practice to make sure you covered these additional hours?

 We had to switch our practice mentality from ‘We’re busy all day and don’t want another patient coming in because we’re slammed’ to ‘How do I get this patient what he or she needs when needed, which is often right now, meaning today?’ We developed same-day appointments and the grant allowed us to expand our hours into the evening and to expand what we do on weekends. The grant does not pay for anything that is billable to Medicare but it helps us stay open until 8 pm every night.

Now if we see 6 patients between 5 and 8 pm, there’s not enough payment in the Evaluation & Management (E&M) codes to pay for the staff and the infrastructure needed to see 6 patients. But if those 6 patients called the office, got a recording and were told to go the ED, then the costs would be much higher than what CMS pays for 6 E&M codes. If patients call the office after hours, they’re sick. When they do, the recording in most offices says, ‘If this is an emergency, call 911.’ So now 6 patients are going by ambulance to the ED or getting admitted. But because we stay open later, we’ve saved the system a huge amount of money.

The problem is that those savings go to the payers and not to us. So, we’re tracking the numbers through Medicare claims data so we can show these savings at the end of the program.

 Did you have to revise your triage system so that patients wouldn’t automatically go to the ED?

Yes, we did. There’s no more recording at all. Instead, we have phone operators and triage nurses who follow the triage protocols that I wrote. If a patient calls and says any version of, “I’m sick,” then the phone operators ask 4 questions to determine that patient’s level of sickness. If it’s very serious, they have a nurse talk with the patient immediately. If the problem is not life threatening, the triage nurse calls the patient back within 2 hours. Because the triage nurses have the power of the schedule, the patients get right in with us.

 That sounds like the kind of initiative health insurers would want to use. Have any expressed interest in what you’re doing?

 Yes, health insurers are interested. But for now, they like being free riders. Among physicians at upper levels in insurance companies, however, a program like ours makes perfect sense. They recognize that the insurers need to share the savings with us. We’re creating those savings by being more efficient.

Unfortunately, the people involved in contracting and negotiations are still trying to get the lowest possible price from us. They don’t get that if they drive independent practices out of business, they will have to contract with hospital-based physicians and then pay much more for the same care. We hope to show that through the savings we’re generating, we can help insurers and Medicare save money. Then maybe they’ll invest more in delivering care efficiently.

In an interview with Oncology Business Management, Barbara L. McAneny, MD, explains how
the program will address fragmented care, suboptimal outcomes, high costs, and patient dissatisfaction.

COME HOME Program Set to Save $33.5M Over 3 Years

A federal program originally meant to require drug manufacturers to provide significant discounts for outpatient drugs is increasingly being used by hospitals to acquire private oncology practices. Critics claim that this unintended consequence of the program is threatening independent community oncology practices, especially in indigent neighborhoods.

Moreover, hospitals, community health centers, and clinics that participate in the federal 340B drug pricing program are coming under scrutiny from lawmakers and the pharmaceutical industry because of the rise in acquisitions.

Consequently, oncology advocacy groups are casting a wary eye because the additional revenue that hospitals save by participating could be used to acquire more community oncology practices.

A study from the Berkeley Research Group and funded by the Biotechnology Industry Organization (BIO) found that acquisitions of physician-based oncology practices by 340B-covered entities increased significantly from 2009 to 2012; preliminary data in 2013 indicate this trend continuing.

“I think that this is a concern for community oncology practices, at least for those who want to stay independent, because the financial pressures that exist in the community setting do not exist, at least as it relates to the drug cost, in the hospital setting,” said Aaron Vandervelde, a director at BRG and author of the study, “340B Covered Entity Acquisitions of Physician- based Oncology Practices.”

“That disparity in the cost structure creates an incentive for 340B hospitals to acquire oncologists, whether practices or individual physicians, and as 340B hospitals’ relative market share grows, it puts additional pressure on those community oncologists who have remained independent,” Vandervelde said.

The 340B program is a federal program that requires drug manufacturers to provide significant discounts for the purchase of outpatient drugs by eligible participants in the program.

Eligibility for the program is limited to specified covered entities that meet certain conditions laid out in the statute, including certain public and nonprofit hospitals that serve a disproportionate percentage of low-income patients, children’s hospitals, critical access hospitals, and federally qualified health centers and specialty clinics that receive federal grants to provide care for underserved medical communities. Physicians and physician groups do not qualify as covered entities and are not eligible to participate.

The primary finding of the study was that the volume of acquisitions increased significantly compared with prior time periods. Vandervelde also found that the acquisitions usually involved very large practices. “When we compared the volume of 340B chargebacks at the hospital prior to the acquisition, and then following the acquisition, the total chargebacks almost doubled after the acquisition,” said Vandervelde. “That suggests that the practices that were being acquired were very significant in size, as opposed to solo physician practices. “These were large multiphysician, and in some instances multisite, practices that were being acquired,” he said.

Typically, the effect of the acquisition was immediate, said Vandervelde. “There was a very steep increase in the curve of chargebacks between the first month prior to the acquisition and the 2 months following the acquisition, and then that curve flattened out because presumably 100% of all eligible purchases were now going through the 340B program,” said Vandervelde.

This finding was delineated using the database of the Office of Pharmacy Affairs, the government agency that administers the 340B program.

The third finding from the study indicates that a sizable majority of the physician-based sites were acquired in higher median income locations compared to where the hospital itself was located (see 

). “There is likely to be a percentage of commercially-insured patients in those higher median income geographies, which leads to greater drug product margins,” explained Vandervelde. “For example, if you purchased a practice that was located in a very low income area where a lot of the residents were on Medicaid, the Medicaid reimbursement amount would be much lower than [that for] a commercially insured reimbursement amount. That’s because the 340B program doesn’t affect reimbursement, it just affects costs, and you would have a lower product margin in that lower median income area,” Vandervelde said.

		Figure 1. Total Study Eligible 340B Chargebacks at Acquired Site by Difference in Median Income Between Acquired Site and Acquiring Covered Entity

		Note: 47 Acquired Sites are excluded from this analysis because they have the same median income as the Acquiring Covered Entity.

That sentiment was echoed by Brad Tallamy, policy director for the Alliance for Integrity and Reform of 340B (AIR 340B), a coalition of patient advocacy groups, clinical care providers, and biopharmaceutical innovators.

“We weren’t surprised that a lot of 340B hospitals are acquiring practices in wealthier areas. Patients in higher income communities usually have insurance and those payers will pay hospitals more than [will] a patient from a lower income community,” said Tallamy.

The BRG study also looked at the amount of charity care that was reported by 340B hospitals (see 

). “We compared the amount of the chargebacks and the amount of charity care reported by the hospitals in their hospital cost reports.

		Figure 2. Average Yearly Cost of Charity Care vs Study-Eligible 340B Chargebacks

		Note: Charity care cost calculated using the hospitals’ operating cost-to-charge ratio

We observed that for many of the hospitals included in the study the amount of the chargebacks actually exceeded the hospitals’ reported charity care cost on its most recently filed cost report,” Vandervelde said.

AIR 340B is dedicated to reforming and strengthening the 340B program to ensure it directly supports access to outpatient prescription medicines for uninsured indigent patients.

The group is proposing regulatory and legislative overhaul of the program to bring it back to its original intent.

“There are changes that should be made by Congress and the Health Resources and Services Administration (HRSA),” said Stephanie Silverman, a spokesperson for AIR 340B.

“We believe that the changes need to include a fresh and aggressive look at eligibility criteria, accountability, and transparency reforms,” she said. “In the absence of oversight, the 340B program is not operating as it was intended,” said Silverman. “We need to make sure through legislative and regulatory change that there’s a connection between the 340B benefit and the patient,” said Silverman. “In the aftermath of the ACA, the landscape of the patient community has changed, but there are medically underserved patients still out there, particularly in the hematology- oncology space,” she said

“For the practitioners, the current scenario creates an unleveled playing field. They can’t deliver the same care under the same economic terms as a hospital or hospital-owned practice, and when these practices disappear through hospital acquisition there’s less patient access,” Silverman stated.

When community providers merge with hospitals or go out of business because chemotherapy reimbursement is too low, “patients end up paying more—by receiving their treatment in a hospital, or traveling farther to get treatment,” she said. There are some advantages when community oncology practices merge with hospitals, though: oncologists who become frustrated with the administrative burdens of medical practice may just decide to become employees of a hospital and give up the autonomy of running a practice.

Sen. Charles Grassley (R-Iowa) has been critical of the program, going so far as requesting information from stakeholders including pharmaceutical trade groups to hospitals that were reportedly charging a mark-up on drugs purchased through the 340B program.

“Even if the 340B program allows this kind of upselling, that doesn’t make it right,” Grassley said in a statement. “It also isn’t right that we don’t know how hospitals are reinvesting 340B revenue. Nothing that I know of requires 340B hospitals to report how they use program savings and revenue. They could use the money for uninsured patients or they could use the money toward building a new wing.”

In a statement about the role of 340B, the American Hospital Association (AHA) said: “While the 340B program accounts for only 2% of the $325 billion annual drug purchases in the US, it provides enormous benefits to safety-net providers and the patients they serve. In fact, 340B hospitals account for 62% of all the uncompensated care provided in United States hospitals and benefit from annual drug savings of $1.6 billion to $3.2 billion per year.”

The AHA also made these points in support of the 340B program:

		The 340B program is essential to helping safety-net providers stretch limited resources to better serve their communities.

		The AHA opposes all efforts to scale back or significantly reduce the benefits of the 340B program.

		The AHA supports program integrity efforts to ensure this vital program remains available to safety-net providers and encourages HRSA to develop a process to help financially distressed providers meet new program integrity provisions.

The American Society of Clinical Oncology has kept a close watch on hospitals that participate in the 340B program and issued these 4 recommendations to Congress in April 2014:

		When considering 340B’s future, policy makers should focus on how to best meet the original intent of the program to provide resources and incentives to deliver high-quality care for uninsured, underinsured, and low-income patients.

		Policy makers should adopt policy changes that address the size and future growth of the 340B drug pricing program.

		Improve compliance and oversight by issuing guidance to clarify relevant definitions and provide funding for key oversight activities related to the program.

		Place special emphasis on understanding and responding to any adverse impacts that the 340B program may have on patient access to high-quality oncology care.

In May the US District Court for the District of Columbia struck down an HRSA regulation that governed some drug sales under 340B, saying the agency did not have the authority to issue the regulation.

“The court decision relates to orphan drugs in the context of 340B,” said Silverman. “The ruling raises questions about regulatory pathways— policy analysts have raised questions about the agency’s broader authority in rule making, and whether the agency has gone beyond its boundaries on the orphan drug side,” she said, noting AIR 340B is not a party to this case.

A posting on the agency’s website contends that the agency continues to stand by its interpretation described in the published final rule, which allows the 340B covered entities affected by the orphan drug exclusion to purchase orphan drugs at 340B prices when orphan drugs are used for any indication other than treating the rare disease or condition for which the drug received an orphan designation.

Oncology practices remain on guard, however.

The pressure to merge with hospitals remains. “It is important for community oncologists to understand the dynamic and to recognize that hospitals are certainly evaluating all of the options that are out there in terms of acquiring practices. Oncology practices, in particular, are an attractive option because of the difference in the drug cost,” said Vandervelde.

			Vandervelde A. 340B covered entity acquisitions of physician-based oncology practices. http://www.brgexpert. com/media/publication/449_340B Physician-based Oncology Practice Acquisitions.pdf. Published April 22, 2014.

			Grassley on Hospital Industry Report on Discount Drug Program. http://www.grassley.senate.gov/news/newsreleases/ grassley-hospital-industry-report-discount-drugprogram. Accessed on July 21, 2014.

A federal program originally meant to require drug manufacturers to provide significant discounts for outpatient drugs is increasingly being used by hospitals to acquire private oncology practices. 

August 2014 | Oncology Business News®

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