With the passage of yet another “doc fix” to the Medicare conversion factor in February 2012, Congress averted a threatened 27.4% cut in Medicare physician payments for the year. The solution is only temporary, and Congress will have to address the issue of Medicare payment formulas again at the end of 2012. In the meantime, though, there are several issues in the Centers for Medicare & Medicaid Services (CMS) 2012 fee schedule that are of concern to oncologists.

	“Although the conversion factor is always going to be a concern, there are also reductions looming for medical and radiation oncology due to the reductions in work RVUs [relative value units], malpractice RVUs, and practice expense [PE RVUs] numbers,” said Matthew Farber, director, Provider Economics and Public Policy at the Association of Community Cancer Centers.

	“Overall, if you look at the numbers that CMS put out, not counting the conversion factor, medical oncology will face a roughly 0% update, but will see a 2% reduction next year once CMS finishes the four-year transition of the practice expenses,” said Farber.

	“Radiation oncology and radiology will face a much larger reduction of 4% this year, and that will increase a few more percentage points next year.” Freestanding radiology and radiation clinics will face a 4% to 6% reduction.

	One of the potentially biggest issues for oncologists is the misvalued code list. In the past, if CMS felt there was a misplaced value that was either overpaying or underpaying for a service, it would ask the Relative Value Scale (RVS) Update Committee (RUC), a panel of physicians and others that reviews codes for CMS, to evaluate the data and the work value.

	Usually, the RUC reviews a select number of codes every four or five years. However, this year, the RUC is reviewing every code with more than a $10 million spend associated with it. A number of these codes affect oncology, including the most commonly used chemotherapy administration code, 96413. The concern is that the RUC will find that the work associated with administering chemotherapy is less than the amount currently reimbursed.

	“Any time you shine a light on something, you are concerned that the RUC will find that the work value has decreased, and therefore, it would reduce the work RVU, and the reimbursement would go down,” Farber said.

	RUC reviews do not always result in a reduction, however. The work RVUs could increase for many chemotherapy administration codes because oncologists face risk evaluation and mitigation strategy (REMS) issues, as well as drug shortages, which take time to manage.

	“Doctors, pharmacists, and other staff members are spending more time obtaining the drugs or being educated about the drugs, which is essentially unreimbursed time,” Farber said. “We would argue that extra work is being done, and it is not being captured by any of the reimbursement categories. If the RUC decides that we are correct, maybe it will associate some time due to REMS with these drug codes and give a higher RVU reimbursement, but we don’t know what will happen. I certainly don’t want to create any false hopes.”

	Some changes to the Medicare fee schedule are already in effect, such as changes to PE RVUs numbers. Until last year, CMS had been using data from 2000, even though the cost of doing business had increased substantially over the years. Starting in 2011, CMS began using 2006 data.

	In addition, 2012 is the third year of the four-year transition to the PE RVUs calculated using the Physician Practice Information Survey (PPIS) data. The 2012 PE RVUs are a 25%/75% blend of the previous PE RVUs and the new PE RVUs developed with the PPIS data. However, Congress mandated that the PPIS was not representative of oncology, Farber said, so different survey data were used to determine reimbursement for medical oncology. As a result, the reductions to medical oncology were not as steep as they would have been if oncology PE RVUs depended on PPIS.

	For the most part, evaluation and management (E/M) codes have been increased for 2012—another change in effect already. These codes are based on the time the physician spends with the patient, the amount of information being discussed, and the difficulty of that information: A primary care physician providing aspirin for a headache receives a different amount than an oncologist discussing a treatment plan or a change in treatment for someone with a tumor.

	“That oncology discussion would be a higher code, and the reimbursement would be higher. Many E/M codes are billed in primary care, but there are also quite a few in medical oncology,” Farber said, including the initial patient consultation, follow-up care, and treatment plans.

	Radiation oncology faces several decreases this year and next, according to Farber. Imaging is a crucial component of oncology. Oncologists use advanced imaging techniques to diagnose cancer, evaluate treatment, and stage tumors.

	A billing for advanced imaging contains two components, a professional component and a technical component. A couple of years ago, CMS reduced the payment for the technical side of serial studies done at the same time. For instance, if a patient needed a CT scan of the head and neck, the abdomen, and the pelvis areas, that would be three studies, and an office would bill for technical and professional services for three studies. CMS reduced the payment on the second and third study by 50% because there were efficiencies in technician time in doing all three studies at the same appointment.

	In the 2012 proposed rule, CMS also wanted to decrease the physician time by 50% for subsequent studies. Radiation oncologists argued that doctors spend the same time studying each image, and that there were fewer efficiencies in reviewing the tests than in administering them.

	“The person reviewing the test still has to look at the results, write a report, talk to the treating physician, provide a diagnosis, and compare the current test with previous studies,” Farber said. “CMS sort of listened.” In the final rule, the proposed reduction was changed from 50% to 25%”—another change now in effect.

					Relative level of time, skill, training, and intensity to provide a given medical service

					Practice expense RVUs, the business cost of maintaining a practice, including rent, equipment, supplies, and nonphysician staff costs

					Malpractice RVUs, payment for professional liability expenses

					Geographic adjustment made to payment based on practice location. There are 89 physician payment localities.

					A scaling factor used to convert geographically adjusted RVUs to a dollar payment amount.

					(Transitioned Non-Facility PE RVU x PE GPCI) +

					(Transitioned Facility PE RVU x PE GPCI) +

	The conversion factor is always the biggest concern of physicians every year, but since 2003, Congress has enacted yearly patches to prevent huge cuts to Medicare physician payments. For 2012, Congress passed a temporary delay in the scheduled cuts, which expires at the end of the year. Although the freeze is always welcome, most doctors wish Congress would just fix the problem.

	“With this brief reprieve from the massive 27% cut to Medicare payments, Congress now has to enact a real and fiscally responsible solution to this sorry cycle of scheduled cuts and short-term patches that compromises access to care for patients and drives up costs for taxpayers. Members of Congress need to use this time to work in a bipartisan manner to provide long-term stability for seniors, military families, and the physicians who care for them,” said Peter W. Carmel, MD, president of the American Medical Association (AMA), in a statement after Congress enacted a temporary delay in December 2011.

	There is bipartisan agreement that the problem needs a permanent fix, but it would be expensive. Because Congress has put off the cuts, the problem has compounded: What was just a 2% to 5% cut is now 27.4%. According to the Congressional Budget Office (CBO), the cost to freeze cuts for two years is $39 billion for 2012. Furthermore, a freeze in 2012 would increase the size of the next scheduled cut to physician payments to an estimated 32%.

	One solution, supported in a statement in late January by nearly 70 medical societies, including the American Society of Clinical Oncology and the AMA, is to eliminate the sustainable growth rate (SGR) formula that drives Medicare physician pay cuts. However, the CBO estimates that eliminating the SGR and freezing Medicare rates for a decade would cost approximately $300 billion over that time period. That estimate includes an increase in the premiums that traditional fee-for-service Medicare recipients pay; eliminating the premium increase brings the cost to $375 billion, according to the CBO. With this year’s “doc fix” now in place, however, it remains to be seen what changes—if any&mdash;Congress will make for 2013 and beyond.

Articles

There are several issues in the Centers for Medicare & Medicaid Services 2012 fee schedule that are of concern to oncologists.

The CMS Fee Schedule: Impact on Oncology

	The economics of running an oncology practice is forcing physicians to consider their options. Do they stay in private practice, join a large network or hospital, or become hospital employees? Each of the three oncologists interviewed by 

 for this story took a different path for their practices. Their choices were influenced not only by national trends in oncology, but also by local issues.

	“Oncologists are a pretty resourceful group,” said Thomas L. Whittaker, MD, FACP, president of the Association of Community Cancer Centers (ACCC).

	Whittaker’s group of 17 medical and radiation oncologists in Central Indiana was an independent practice that was part of a large oncology network. “We had this great national base, but we didn’t have a local partner.”

	That lack of a local partner became troublesome when the local hospitals began to see the practice as a competitor, rather than a collaborator. “We were squeezed out of all the local hospital systems, and it became an issue because our referrals and business were down,” he said.

	This scenario—a large hospital pressuring oncologists to be part of its system&mdash; is being played out across the country.

	“Because of all these local pressures, and the fact that health care was changing and the business environment was changing, we felt that we needed a local partner to survive.” They collaborated with Indiana University Health, a health system that is closely associated with the IU School of Medicine, he said, because of its reputation, research, and state-of-the-art facilities. “We felt that our practice patterns and our goal of evidence-based medicine were reflected by the same goals and care that is given at IU.”

	The practice, Central Indiana Cancer Centers, has a professional service arrangement (PSA), so that physicians are affiliated with the university and can take advantage of its business systems, but are not employees of IU.

	Dean H. Gesme, MD, FACP, FACPE, moved from a small Iowa practice six years ago. The practice did not have a strong business leader and eventually merged with a hospital.

	“They didn’t want to be burdened with having to deal with the business side of the equation,” he said. Some oncologists like the security of working in a hospital. Lifework balance is an important issue to many of today’s oncologists, and working for a hospital enables them to have more personal time. For instance, a hospital oncologist can take three months after the birth of a child without affecting the practice.

	“In private practice, it is hard to guarantee that type of rich benefit. In the hospital environment, it is standard. If you are not there, it is the vice president of Medical Affairs’ problem. In a small practice, it is very much your problem.”

	Gesme went to Minnesota Oncology, which is part of the US Oncology Network, a 60-physician practice. For a piece of the practice revenue, the network provides a building, electronic medical records, equipment, nurses, and administrative staff. “My office manager is a US Oncology employee, but on a day-to-day basis, she works with me. There may be some divided loyalties, but it works out incredibly well.”

	He said the advantage of being part of a large network is the ability to leverage pricing for drugs and other contracts. With the network taking care of the business side, Gesme and his partners can focus on the practice of medicine.

	In most instances, the groups work well together, and there are surprisingly few situations where the attitude is “us versus them.”

	“If we wanted them to put an extra $50,000 into something like electronic medical records, they would probably be willing to do that. If we say, ‘we need a $10 million cancer center with golden faucets and marble floors because we would really like that,’ they probably won’t go along with that request. We agree to do what is financially prudent, and medically and politically appropriate for our environment,” he said.

	Gesme said that the network provides more tools and better negotiating and purchasing power for his practice.

	In addition to the ASP + n formula, which seems to decrease every year, Jeffery C. Ward, MD, and his group in Edmonds, Washington, faced a business and operations tax on all of the drugs they purchased, which decreased their margins even more.

	They had joined a large oncology management network in 1995, but over time their nine-doctor medical oncology practice did not have the economies of scale or income stream diversification to make the partnership work. “We really didn’t fit into the national network’s vision for the future, and our incentives were no longer well aligned,” he said.

	“We would have had to meld our practice with a larger group, and then add radiation oncology and imaging in direct competition to our hospitals. We were never able to make that happen in our community, and neither did we want to. The hospitals already owned some medical oncology and all of the radiation oncology here.”

	Changing from a private practice to a hospital practice is not necessarily an overnight feat. Their cancer center was not a hospital-compliant facility, necessitating major remodeling or a new cancer center to make the ultimate transition. They struggled to keep their practice viable, before coming up with an interim solution— they became a nonprofit and are developing an affiliation with the Swedish Cancer Institute. Swedish is also a member of the new nonprofit, and is building a new cancer center and providing much of the business support on the practice’s way to full integration between the nonprofit and the Swedish Cancer Institute.

	“An arrangement like this requires a multi-year commitment and the foresight of the hospital,” Ward said. “We have a good partner whom we can trust.”

The economics of running an oncology practice is forcing physicians to consider whether they should stay in private practice, join a large network or hospital, or become hospital employees.

Three Case Studies Highlight the Changing World of Oncology Practice

Whether they are a part of a large cancer center in a metropolitan hospital or a small three-person practice in Montana, oncologists are all faced with the same challenge—delivering the best cancer care possible while reining in rising costs. One answer that many oncologists are looking at: cancer management systems.

	Cancer management systems go well beyond the electronic medical record (EMR), and are designed to maintain clinical quality while reducing costs. Many entities, including insurance companies, hospitals, oncology networks, and some oncology practices, are developing and/or using these models, which come in a variety of formats, including computer software and Web-based programs. The systems sometimes focus on one area, such as prescribed drugs, or provide guidance on all aspects of treatment via clinical pathways.

	By decreasing variability and increasing predictability, cancer management systems aim to provide consistent patient outcomes and decrease overall costs of care, not necessarily by choosing the lowest cost therapies, but by decreasing interventions, such as emergency room visits.

	“The challenge we face in health care in general, but in oncology in particular, is the rising costs of care,” said Kathy Lokay, chief executive officer of D3 Oncology Solutions, which offers the Via Oncology Pathways system to community and academic oncologists. “Payers are becoming aggressive in trying to get these costs under control.”

	“Several factors affect the drive to create new approaches to manage the cost and delivery of cancer care, including an increase in the employee cost share, which is shifting demand for better care for the money; employer expectations that comparative effectiveness research be included in benefit design; and a variation in care by geographic location,” said Amy Schroeder, RPh, of DK Pierce & Associates, a strategic consulting firm specializing in reimbursement issues. “Therefore, all stakeholders in health care are looking for ways to objectively confirm that cancer patient care is the best value, based on clinical outcomes and cost to the health care system.”

	However, many oncologists are unsure whether they should wait to see how or if reimbursement is restructured or whether they should embrace these programs now. “Taking a wait-and-see attitude might be a misstep,” said Schroeder, “because it might take the decision out of their hands.

	“Make the decision that is best for their organization before someone makes it for them,” she said. “Eventually, some other entity—a hospital, accountable care organization, or payer&mdash;could implement a system that may not be the collaborative approach” that oncologists seek.

	Many cancer management systems are based on clinical pathways. Although some physicians embrace these evidence-based treatment protocols, others derisively call them “cookbook” medicine, implying that pathways take the skill out of practicing medicine and remove the decisions about patient care from the doctor.

	The clinical pathways that form the basis of cancer management systems are generally designed by a committee of doctors who, based on a review of all the evidence, formulate a treatment algorithm for patients with a particular type of cancer. The pathways committee considers three issues: efficacy, safety, and cost, with efficacy being the first and most important consideration.

	Pathways are similar to treatment guidelines, and some doctors ask why bother with the expense of a pathways system when they can just read the guidelines. “The difference between guidelines and pathways is pretty dramatic,” said Lokay. “Guidelines do not try to drive care utilization. They tend to offer a multitude of choices for any patient, whereas a pathway says, ‘Among all those choices, can we all agree on a handful, which are really the best for these patients?’”

	Most pathways are designed to fit about 80% of patients, and a doctor is always free to go off pathway for the exceptions, she added.

	“Pathways doctors make better doctors,” said Lee N. Newcomer, MD, senior vice president, Oncology, Women’s Health and Genetics for United Healthcare. “Pathways are about doing what the evidence says is best for that patient, but they are never 100%. There will be some patients that have a medical reason why they could not use the drugs in a pathway, and going off the pathway for them is always acceptable. There will always be a huge need for physician knowledge. So, this does not diminish the role of the physician at all.”

	Instead, he said, pathways standardize treatment within a practice. For instance, “a pathways program helps the group select a regimen for a specific clinical condition. If you are in a large group practice, you could have several partners prescribing different regimens for the same type of patient. That causes confusion for the nursing staff and confusion for the staff handling the night calls. There is an advantage to becoming consistent in your approach as a medical practice. It reduces errors, and it helps with patient teaching because you are teaching the same thing.”

	“Cancer management is not so much a technology as an approach to care,” said Kjel Johnson, PharmD, senior vice president of strategy and business development at ICORE Healthcare/Magellan Pharmacy Solutions, which offers a pharmacy management program to insurance companies. In the case of oncology, it behooves insurers to encourage chemotherapy in the physician’s office because it is more cost effective and the doctor controls the patient’s care. His program helps support that aim.

	The challenge we face in health care in general, but in oncology in particular, is the rising costs of care.”

	There are many advantages to having a cancer management system in place, according to the sources interviewed for this article. The staff benefits because they become very familiar with certain regimens. Patients benefit because they are receiving the highest available care.

	The practice benefits in several ways. If a clinical pathways program is in place and the practice follows that program, it might receive an incentive from the payer, such as enhanced payments for evaluation and management, and shared savings. Cancer management systems can also help reduce variation in care, better control drug inventory, and document care to match clinical recommendations. Practices might be able to use these metrics when negotiating with payers.

		Four Steps to Choosing a Cancer Management System

			Do all the partners support the program?

			Are you going to create your own pathway or purchase an existing system?

			How long has the company been in business?

			Does the vendor know and understand the oncology field?

			What kind of support does the company provide?

			What kind of training does the vendor provide?

			Does the company sell your information to pharmaceutical or insurance companies?

			Talk to other oncologists who use the software.

			Test drive the actual program (demos can hide a multitude of sins).

			Make sure the program integrates with the practice’s EMRs.

			Does the practice have options if it feels the program does not meet its needs?

			Does the practice have input with the pathways committee?

			Is everyone in the office using the pathways program?

	Pathways may also help with the drug spend. If 80% of the breast cancer patients are receiving the same regimen, that increases the amount of any single drug that a practice buys, and being able to buy higher volumes might allow some pricing leverage when purchasing drugs.

	However, Newcomer said that saving money is not necessarily the main focus of these systems. “If you are treating patients consistently, you can start measuring your performance. When every HER2-, ER-positive breast cancer patient is being treated with the same regimen, then you start to have predictability about how much it is going to cost to treat that patient. You start to see fewer errors and complications because everyone is familiar with that one regimen,” Newcomer said. That information makes the practice more attractive to a hospital if the practice wants to merge, or to an accountable care organization that is looking for a cancer center to refer patients.

	United Healthcare is piloting a program with six community oncology practices to measure performance with pathways. Right now, practices that use pathways systems can measure whether doctors are following the pathway, but they don’t normally track complication rates, emergency room rates, and other costs.

	The six oncology practices either purchased a program or developed their own program; United Healthcare did not tell them which program to use. United Healthcare will gather information about the results of following the program in the hope of gaining a better understanding of how patients are responding to the pathways, and which pathways are the best practice.

	“Custom designing care for a lot of oncology doesn’t make sense to me because there is good evidence about what works and what doesn’t,” said Newcomer. “To ignore that evidence I think is not particularly good patient care. I always struggle with why someone would not want to use the best evidence when it tells us how to provide the best care.”

Oncologists are all faced with the same challenge-delivering the best cancer care possible while reining in rising costs and one answer that many oncologists are looking at is cancer management systems.

Cancer Management Systems: A Path Toward Better Patient Care

	With squeezing reimbursements and rising drug costs, it is imperative that practices today make sure they are reimbursed for the therapies physicians prescribe. Although it is no guarantee that they will be paid, many practices obtain prior approval from insurance companies before starting treatment—but even that now-common process is not without its problems, according to Patrick W. Cobb, MD, a partner in Frontier Cancer Centers and Blood Institute in Billings, Montana, and immediate past president and board member of the Community Oncology Alliance, a nonprofit organization that advocates for patients and providers in the community oncology setting.

	This step increases the practice’s operating costs and often delays treatment for patients, but with some treatment regimens costing more than $100,000, practices cannot afford to practice “on faith” that claims will be paid.

	“If you are in private practice, and you don’t get reimbursed for the drugs that you buy, you can go out of business very quickly,” Cobb said. “We do it for every patient to improve the chances that we will actually be paid. The margin for what we get paid for the drugs and what we pay for them is so tight that we cannot afford to miss any payments.”

	The extra step in the billing process meant that Frontier, a small community practice, had to hire a full-time person to obtain prior approval for their patients, which added to their practice expenses.

	“We have one employee dedicated to making sure that patients get assistance, and we get prior approval,” Cobb said. “Any time we start a regimen or change a regimen, we get prior approval.

	“There is no reimbursement for her position; it is just a cost we have to bear,” he said. Shrinking reimbursements make it hard to justify the salary and benefits expenditure, but without an insurance advocate fighting for the practice and patient, it’s more likely that insurance companies will deny claims for expensive drugs.

	Once a Frontier physician makes the diagnosis and develops a treatment plan, the insurance navigator goes through the electronic medical record and starts seeking approval. After the insurance company agrees to reimburse the regimen, the patient begins treatment.

	The patient is the real loser, because having to seek prior approval delays treatment regimens in a disease where earlier treatment is better.

	“Let’s say a patient has metastatic lung cancer and I’ve given him two cycles of chemotherapy. I do a CT scan, and the disease has progressed. I would want to change the therapy regimen. I would like to get started right away, but I cannot because the insurance company has not approved the new regimen,” Cobb said. “So, the patient has to come back a few days later to start the new drug after it’s approved.”

	The margin for what we get paid for the drugs and what we pay for them is so tight that we cannot afford to miss any payments.”

	The best way to make sure a treatment regimen is reimbursed is to practice evidence-based medicine, he said. “If you have a regimen that is recommended in NCCN [National Comprehensive Cancer Network] guidelines, that definitely helps, but still does not ensure payment.

	“If a physician wants to use a drug for which there is not a whole lot of data, then that is a problem. If you can’t support its use in that indication, it probably won’t get used,” he says.

	Drug shortages have complicated both treatment and payment. If the practice gets prior approval for a regimen and then cannot obtain the drug, the process has to begin all over again, which delays treatment yet again.

	“This is not good medicine, and it doesn’t help our patients,” Cobb said, but it’s the only way to remain financially viable without bankrupting the patient.

	Another complication is clinical trials. Although there is a real push to get people into clinical trials, not every insurance company supports them.

	“Some insurance companies realize the value of clinical trials, not only because it improves the general knowledge about treating cancer patients, but it saves them money because the drugs are provided by the pharmaceutical company,” he said.

	“Other insurance companies refuse to pay for any medical expenses if a patient is enrolled in a clinical trial. They don’t pay for doctor visits, routine labs, or any tests. A patient who is insured by one of those companies cannot be enrolled in a clinical trial,” Cobb said.

This issue depends on the state in which the physician practices: Some states require health insurance companies to pay for the routine patient care. In addition, provisions in the Patient Protection and Affordable Care Act also address this shortcoming. Beginning January 1, 2014, companies will have to cover costs for patients with a serious or life-threatening condition who choose to participate in a clinical trial.

	One area that is currently giving Cobb’s practice trouble is the use of drugs to prevent skeletal-related events in patients with bone metastases. Three products are FDA-approved for this indication: zoledronic acid (Zometa, Novartis Oncology), denosumab (Xgeva, Amgen), and pamidronate disodium (Aredia, Novartis Oncology). Each has advantages over the other for certain patients, but their costs vary.

	“We’ve had a lot of trouble with one of our insurers. So, even with medications that are absolutely indicated for use, we still get prior approval because different insurance companies have different payment policies.”

	Practices do not have much recourse if they are turned down. A practice can appeal the decision, but it will have to make sure to back up the appeal with data to justify the claim. Sometimes, an independent review panel will find in favor of the practice, Cobb said.

	“Part of the problem is that oncology progress is going along at a fairly rapid clip, and insurance companies have to put in policies and procedures, and they don’t always have the most up-to-date data. Now, once we give them data, some will generally go along with it, but appeals delay treatment.”

	Even with prior approval, there is no guarantee that the practice will be reimbursed, Cobb said. Insurers can still review the claim and refuse payment, he said, but prior approval increases the chances that claims will be paid.

Prior approval improves chances of being reimbursed, increases practice costs, and can delay treatment.

Reimbursement: The Good, The Bad, and The Ugly

	There are thousands of clinical studies in progress for hematologic malignancies, but many are in phase I or II trials, so it may be some time before the most promising compounds add new weapons to the hematology armamentarium, where they are sorely needed.

	More than 1 million people suffer from a hematologic malignancy in the United States, and every year another 148,000 men, women, and children are diagnosed with lymphoma, leukemia, or myeloma.

	“We are still relying principally on the same two drug types to treat acute myeloid leukemia (AML) that we used 40 years ago: cytarabine and an anthracycline antibiotic such as daunomycin,” said Marshall A. Lichtman, MD, professor in the departments of Medicine, Hematology/Oncology, and Biochemistry and Biophysics at the University of Rochester School of Medicine and Dentistry in New York. “This demonstrates the need for a broad and aggressive research program, new paradigms, and genius,” to find new therapies for these cancers.

	The approval of imatinib (Gleevec, Novartis) in 2001 was a giant leap forward in the treatment of malignancies in which the ABL gene is mutated, resulting in a mutant tyrosine kinase (TK). This mutation occurs in chronic myeloid leukemia (CML) and acute leukemias. Imatinib’s clinical and financial success, as well as the success of the second-generation nilotinib (Tasigna, Novartis) and dasatinib (Sprycel, Bristol-Myers Squibb), which target the mutant ABL TK to stop the proliferation of white cells in certain leukemias and permit restoration of normal blood cell production, encouraged pharmaceutical companies to invest in blood cancer research.

	It is difficult to pinpoint exactly how much money companies are spending on developing therapies for hematologic malignancies, but several large companies, including Pfizer, Genentech, Novartis, and Bristol-Myers Squibb, have dedicated parts of their research and development budgets to finding treatments for blood cancers.

	The National Cancer Institute (NCI) is also investing more than $425 million a year in hematologic malignancy research. The NCI reported that it earmarked another $81 million in FY2009-2010 in American Recovery and Reinvestment Act funds for blood cancer research.

	However, Lichtman is concerned that many of the products are variations on a theme—tinkering with existing chemicals rather than finding new targets. He is also concerned that this approach decreases the potential market for a drug and may not provide a good business plan for pharmaceutical companies. The latter concern is mitigated in part by the ability of academic institutions with federal support to bear some of the early investment costs of drug development.

	One example is tipifarnib (Zarnestra, Johnson & Johnson), a farnesyltransferase inhibitor being developed for older adults with newly diagnosed AML. “We have great difficulty treating older patients with cancer because they tend to have more resistant cancers, and they cannot tolerate harsh drug regimens for several reasons. Unfortunately, this time of life is when cancer incidence is greatest,” said Lichtman.

	“At first, tipifarnib didn’t do well because the percentage of remissions was low,” said Joseph A. Bertino, MD, professor of Medicine and Pharmacology, interim director of the Stem Cell Institute of New Jersey and The Cancer Institute of New Jersey, University of Medicine and Dentistry of New Jersey—Robert Wood Johnson Medical School.

	However, researchers learned that if the patient had a high RASGRP1 and a low APTX expression, they were most likely to benefit from tipifarnib-based therapies. “This just shows you how important it is to personalize some of the medicines that we are using,” Bertino said.

	Lichtman said that the partnership of academia, the federal government, and industry is essential to encourage the development of personalized medicine for these small subsets of patients. Among the research currently under way, investigators are looking at ways to improve responses to stem cell transplantation, cytotoxic drugs such as thalidomide derivatives, as well as products that target various pathways, including tyrosine kinase, Aurora kinase, RAS, CD30, ABL, and JAK.

	“There is a lot of research going on, and many drugs are in the pipeline,” Bertino said. “We await the results of phase II and phase III trials, and new drug combinations that include the use of these novel targeted therapies.”

	“We are making progress, but we have a long way to go,” said Lichtman.

	Research is paying off at least for some patients with leukemia. According to the NCI, mortality rates for the most common hematologic malignancy have decreased slightly over the last 20 years. The use of tyrosine kinase inhibitors (TKIs) has helped to increase five-year survival rates for many patients with CML.

	“Nilotinib and dasatinib look like they are causing a higher percentage of complete remissions than imatinib, and the survival looks better, so I think there will be a shift in the use of some of these newer inhibitors instead of imatinib,” Bertino said.

	Despite the success of these TKIs, however, some patients either experience treatment failure or develop resistance, and researchers are exploring compounds for patients who run out of treatment options. Ponatinib (Ariad) and bosutinib (Pfizer) may become options for refractory/resistant patients. Currently, there are no approved therapies after second-line treatment with dasatinib or nilotinib.

	The phase II PACE (Ponatinib Ph+ ALL and CML Evaluation) trial is investigating use of ponatinib, an oral pan-BCR ABL, third-generation TKI rationally designed to overcome the T315I mutation, for which currently approved TKIs are largely ineffective. PACE enrolled chronic patients with CML, regardless of disease phase, as well as patients with Philadelphia-positive acute lymphoblastic leukemia (Ph+ALL). All patients are represented by one of two categories: patients resistant or intolerant to previous TKI therapy; and patients with the T315I mutation. In patients with chronic-phase (CP) CML, interim data have demonstrated that treatment with ponatinib achieved a 47% major cytogenetic response rate. Robust responses have been observed so far in all patient cohorts.

	In another phase I/II study, bosutinib, an oral, Src/ ABL TKI, showed promise in Ph+ leukemia patients who developed resistance or intolerance to imatinib, dasatinib, and/or nilotinib.

	Pfizer has submitted new drug applications in both the United States and Europe for bosutinib to treat adult patients with previously treated Ph+ CML. The labeling includes patients who were resistant or intolerant to imatinib, dasatinib, or nilotinib.

	Another target that looks promising for patients who have developed resistance to imatinib are the Aurora kinase inhibitors (AKIs), said Lichtman, but they have had a rocky developmental road. Studies of 1 AKI, MK-0457 (tozasertib, Merck, Vertex) were suspended in 2007 after a clinical safety finding of QTc prolongation was observed. Studies are proceeding for patients who were already enrolled in the trials, but researchers are providing additional monitoring for QTc prolongation.

	MK-0457 is being studied in phase II trials in patients with treatment-resistant CML or Ph+ ALL. Companies are also looking at the AKIs in combination with other products, such as dasatinib, in the same group of patients. Another phase I trial is looking at patients with advanced leukemias.

	We are still relying principally on the same two drug types to treat acute myeloid leukemia (AML) that we used 40 years ago… This demonstrates the need for a broad and aggressive research program, new paradigms, and genius to find new therapies for these cancers.”

	Because outcomes are poor for children with ALL that is refractory to treatment or who relapse, several studies are looking at new options. The novel anti-CD22 immunotoxin moxetumomab pasudotox (previously known as CAT-8015 or HA22), was promising in phase I studies of children with relapsed or refractory ALL. One study showed complete remissions in 3 of 12 patients treated.

	A study from the Children’s Oncology Group had mixed results for re-induction therapy with epratuzumab in children with relapsed ALL. Although the children with early relapsed CD22-positive B-cell precursor ALL tolerated the two regimens (epratuzumab alone or with chemotherapy), second remission rates were not better than the control group, which consisted of children who received chemotherapy alone. However, among children who sustained a complete remission, those treated with epratuzumab were more likely to become minimal residual disease-negative as compared with those who received chemotherapy alone.

	A JAK kinase inhibitor, ruxolitinib (Jakafi, Incyte) is the first drug specifically approved for the treatment of myelofibrosis. The drug is in clinical trials for other indications, including multiple myeloma and certain leukemias.

	One compound that Bertino is watching is CPX-351 (Celator Pharmaceuticals), a liposomal formulation of cytarabine and daunorubicin, which in phase IIb trials showed substantial clinical activity in elderly patients experiencing their first relapse of AML.

	Rituximab (Rituxan, Genentech), the first monoclonal antibody approved for use in cancers, gave the same type of momentum to lymphoma research that imatinib gave to leukemias.

	In 2006, the FDA approved an indication for the first-line treatment of patients with diffuse large B-cell, CD20-positive, non-Hodgkin lymphoma (NHL) to be used in combination with cyclophosphamide, doxorubicin, vincristine, and prednisone (CHOP) or other anthracycline-based chemotherapy regimens. Since then, the indications have expanded to include first-line treatment of patients with low-grade or follicular B-cell, CD20-positive NHL with cyclophosphamide, vincristine, and prednisone (CVP) or following CVP chemotherapy; or for the treatment of previously untreated or treated patients with chronic lymphocytic leukemia (CLL) in combination with fludarabine and cyclophosphamide (FC). Last year, the FDA expanded the indication again for maintenance therapy for patients with previously untreated CD20-positive B-cell NHL who responded to rituximab in combination with chemotherapy.

	Lymphoma, which represents about 5% of all US cancers, has seen a nearly 20% increase in incidence in the past 20 years, during which leukemia incidence has declined slightly. However, the mortality rate for lymphoma has decreased by nearly 50%.

	“One of the most exciting drugs, brentuximab vedotin, is in Hodgkin disease,” said Bertino. The FDA approved brentuximab (Adcetris, SeattleGenetics) last year for the treatment of HL and systemic anaplastic large cell lymphoma. Brentuximab is an antibody-drug conjugate that combines the monoclonal antibody brentuximab and with relapsed CD30+ cutaneous lymphoproliferative disorders achieved an objective response, including seven complete remissions and four partial remissions. The company is also looking at using brentuximab earlier in poor-risk patients. Bertino called it “a big step forward” that might produce better salvage regimens.

	However, the FDA issued a warning earlier this year about several cases of progressive multifocal leukoencephalopathy (PML), a rare but fatal demyelinating disease associated with brentuximab, and added a new black box warning highlighting this risk to the drug label. In addition, the FDA added a contraindication warning against the use of brentuximab in combination with bleomycin because it increased the risk of pulmonary toxicity.

	Pfizer is conducting phase II and III trials of inotuzumab, an investigational antibody that targets CD22, an antigen expressed on about 90% of B-cell malignancies. In early trials, the compound has demonstrated efficacy against CD22(+) B-cell NHL. It is also being looked at with rituximab for patients with relapsed/ refractory aggressive NHL who are not candidates for intensive high-dose chemotherapy.

	Novartis plans to file an expanded label application for everolimus (Afinitor), an mTOR inhibitor, to treat lymphoma in 2015. Currently, it is indicated for renal cell carcinoma and pancreatic tumors.

	Pixantrone (Pixuvri, Cell Therapeutics), the novel aza-anthracenedione, looks promising for NHL, but it is stalled at the FDA. The company recently withdrew its new drug application and said it will resubmit an application later this year. The Oncologic Drugs Advisory Committee panel rejected its previous application.

	The EXTEND trial demonstrated that patients with relapsed/refractory aggressive NHL who were treated with pixantrone compared with other chemotherapy agents achieved significantly higher rate of confirmed and unconfirmed complete remission (CR/CRu), significant increases in overall response rate, significantly greater progression-free survival (PFS), and a positive trend in overall survival.

	Pharmacyclics is sponsoring trials of the Bruton’s tyrosine kinase (BTK) inhibitor called PCI-32765 that looks promising against mantle cell and chronic lymphocytic leukemia, said Bertino. “This drug has produced complete remissions in these lymphomas.”

	BTK mediates B-cell receptor signaling that is important for normal B-cell development. PCI-32765 appears to directly affect CLL cells by inducing programmed cell death, but also blocks the ability of CLL cells to migrate toward and adhere to lymph nodes. In a phase II trial, PCI-32765 was well-tolerated.

	According to the NCI, the overall incidence and mortality rates of multiple myeloma (MM), which is the second most common blood cancer in the United States, have remained fairly stable over two decades. Every year almost 22,000 people are diagnosed with the disease, and a little over 10,000 die. The five-year survival rate is only about 40%.

	Bristol-Myers Squibb and Abbott are working on a monoclonal antibody, elotuzumab, for relapsing MM. Interim results from a phase II trial of elotuzumab showed a partial response or better among patients with relapsed MM who received elotuzumab and lenalidomide and low-dose dexamethasone. The median time to PFS was not reached after 4.9 months of follow-up.

	“There remains a need for more effective and tolerable treatment options for patients with relapsed multiple myeloma, as almost all patients eventually relapse and require further therapy,” according to Paul G. Richardson, MD, clinical director of the Jerome Lipper Center for Multiple Myeloma at the Dana-Farber Cancer Institute, Boston, Massachusetts, in a press release about the results.

	The next-generation proteasome inhibitor, carfilzomab, is also being developed for patients with relapsed and refractory MM. Onyx Pharmaceuticals reported on three trials of carfilzomab at the recent American Society of Hematology meeting, in which patients had a durable response and appeared to have an acceptable safety profile. Carfilzomab is being looked at in the phase III ASPIRE trial. Patients with relapsed MM who have received 1 to 3 prior therapies are being randomized to lenalidomide and low-dose dexamethasone with or without carfilzomib. The FOCUS trial, another phase III trial, is looking at carfilzomib as single-agent therapy in the same type of patients.

A closer look at the hematology pipeline where there are multiple promising studies in progress for hematologic malignancies, including lymphoma, leukemia, and multiple myeloma.

Hematology Pipeline: Baby Steps After a Giant Leap

	A new program in Michigan is looking to identify ways to standardize and deliver oncology care more effectively and efficiently in the hopes of eliminating avoidable care. The new program is geared to support community oncologists because it changes the reimbursement emphasis to patient care, instead of drug reimbursement.

	Oncology care delivered in a community oncology practice is less expensive than care delivered in a hospital facility, said John Fox, MD, MPH, associate vice president of Medical Affairs at Priority Health, a Michigan health plan that offers a broad portfolio of products for employer groups, individuals, Medicare, and Medicaid.

	Priority Health launched the two-year pilot program with seven community-based oncology practices to enhance cancer care while changing the way it reimburses oncologists.

	The focal points of the program will be payment reforms and care enhancements. Oncologists will be paid a monthly care management fee independent of the cancer type and drug therapy, and will share in the savings that result from implementation of standard care management programs, according to Fox.

	Current fee structures pay oncologists based on the costs of the drugs administered to patients, which creates “an incentive for physicians to prescribe more costly drugs,” he said.

	“We are removing the dependency on drug margins from physician compensations,” Fox said.

	In addition to standard evaluation and management and infusion services, oncology groups will receive a flat monthly fee of between $150 to $250 per patient for patient support services, such as end-of-life and financial counseling, case management, medication therapy management, survivorship programs, and social work services. This flat payment, which will be independent of cancer type and route of chemotherapy administration, will coincide with paying the acquisition cost of chemotherapy.

	We are removing the dependency on drug margins from physician compensations.”

	In return, the physicians group will develop common treatment pathways for high-volume conditions, both in the adjuvant and metastatic settings, develop standardized protocols for telephone management of patients, as well as engagement and education tools for the patients, so all patients receive the same support regardless of which doctor treats them.

	“Our expectation is that if we have more standardized pathways, more standardized patient engagement, better standardization of telephone care management protocols, it will reduce emergency room visits and hospitalizations,” Fox said.

	“While we like to control drug costs, it is becoming difficult to do because we have better drugs that are more expensive. The focus of this program is controlling costs by reducing avoidable emergency care and hospitalizations, as well as paying oncologists for support services through a case management fee.”

	Fox said that although this program has no guarantee of success, Priority Health has decreased costs in other healthcare areas by instituting standardized care delivery.

A pilot program in Michigan strives to keep oncologists in the community by basing reimbursement on care management.

Reimbursement for Care, Not Drugs

	Economic pressures are forcing many oncologists to leave small private practices.

	Oncologists are under enormous economic pressures that are changing the configuration of community oncology. These pressures include increasing costs, decreasing reimbursements, more patients (many uninsured or underinsured), drug shortages, clinical pathways, the burden of regulatory compliance, the cost of technology, and a host of other issues.

	Although most of the changes have been incremental, eroding at the traditional private practice, they are ultimately forcing many oncologists into larger institutional organizations and putting small private practitioners on the endangered species list.

	The Community Oncology Alliance (COA) has tracked the financial health of 1042 community practices. The organization reports a 40.6% increase in the number of practices that have been acquired by another organization or merged into hospitals. In a 2011 report, COA noted 315 practices that had been acquired by hospitals and 11 practices that merged or were acquired by another organization. Another 199 practices closed, and 369 reported they are in a financial bind.

	“Trying to manage a practice independent of a hospital or another large system is becoming impossible,” said Thomas L. Whittaker, MD, FACP, a hematologist/oncologist at Central Indiana Cancer Centers, which has partnered with Indiana University Health. “The financial risks are too high, and financing is driving the change.”

	Most experts agree that future oncology practices will look very different from practices 20 years ago.

	“The solo or small group practices are going to go away,” said Jeffery C. Ward, MD, a medical oncologist at Puget Sound Cancer Centers, an affiliate of the Swedish Cancer Institute in Edmonds, Washington. Ward sees two types of private practice affiliations emerging: those that are part of a hospital or academic institution, and those that are part of a large cancer management network.

	Cancer treatment used to require inpatient care. Chemotherapy was inelegant, and it was difficult to manage the nausea and side effects. As antiemetic regimens and shorter drug infusions were developed, cancer care evolved to outpatient care, said Whittaker, who is also president of the Association of Community Cancer Centers (ACCC).

	Money also had a hand in this change, after the federal government instituted a formula to pay for oncology drugs—the Average Wholesale Price (AWP) + n. This allowed profits on the administration of infusion drugs, providing a supplemental income to oncology practices.

	“The margins on those drugs became larger and larger to the point where an oncology practice depended upon them to sustain and maintain the size of a practice,” said Dean H. Gesme, Jr, MD, FACP, FACPE, a medical oncologist with Minnesota Oncology, part of the US Oncology Network. “The large infusion room, the number of nurses—this entire infrastructure was based on the global amount of revenue coming into the practice.”

	At one time, it was estimated that 80% of cancer patients received their chemotherapy regimen in a community practice, and 50% of the practice’s income came from buying and administering drugs, according to a 2001 article in the 

	Having set up this payment system, the government and other payers began chipping away at it. The Medicare Modernization Act changed AWP to Average Sales Price (ASP) in 2005, which provided little or no margin on the chemotherapy drugs.

	The bigger we get, the better negotiating we can do with our payers. We’ve given up on Medicare. The government will pay what it will pay.”

	“Now, reimbursement is based on ASP, which covers the cost of most, but not all drugs, but does not add significant profit to the bottom line for running a practice,” said Elaine Towle, CMPE, director, consulting services, Oncology Metrics, a division of Altos Solutions.

	“We’re seeing oncologists looking to leave their current community practice for financial safety and being lured into institutional settings,” Gesme said.

	Drug reimbursement, and now drug shortages, have influenced operating budgets and staffing, said Towle, who coauthors the National Oncology Practice Benchmark reports published by the 

. “Payers are increasingly seeking ways to get a better handle on the drug spend. One of the ways they do that is by requiring prior authorization or precertification, frequently on an individual drug basis. If you have 20 chemotherapy chairs and you must precertify drugs on even half of that patient population, the overhead has to increase dramatically.

	“Drug shortages also affect staffing. When you have a patient that needs chemotherapy, and you realize you don’t have the drug on hand, you need someone on your staff to figure out how to get it. Is there another source? Or do we need to go back to the clinician and say, ‘We can’t get drug A for Mrs. Jones. How are you going to change your treatment plan?’ That is another layer of complexity that takes people to manage,” said Towle.

	Towle’s survey has found that labor costs have increased, while revenue is flat or down, and she thinks that most of that labor is to manage reimbursements and drug shortages.

	In the new oncology world, bigger is better because the largest practices can negotiate the best reimbursements with third-party payers and the best prices on oncology drugs, said Ward, who is also the chair-elect of the American Society of Clinical Oncology (ASCO) Clinical Practice Committee and associate editor of the 

	Gesme agreed, saying that practices must reach a “critical mass” to leverage contracts. “The bigger we get, the better negotiating we can do with our payers. We’ve given up on Medicare. The government will pay what it will pay. Our leverage in private practice is in negotiating with private payers,” he said, noting that his 60-doctor practice is looking to add physicians from several specialties.

	“If we can get a large enough group of specialists together, then we will be able to negotiate very well with third-party payers,” said Gesme.

	“The definition of community practice is clearly changing,” said Towle. “Five or ten years ago if you said community practice, you were talking about a physician-owned private practice. Now when you say community practice, it is less clear what you mean because it might be a physician-owned practice, a hospital-owned practice, a large oncology network— there are all kinds of arrangements out there. My definition of community practice is anyone who provides oncology services in the community setting, and ownership differentiates one from another.”

		Oncologists in 102 US practices reported three leading pressures affecting their business decisions.

		Source: From the National Oncology Practice Benchmark Report (

	The backlash may have backfired, though: As payers squeeze oncologists on the drug spend, they push them into larger institutions. However, it costs payers more to treat patients in a hospital than in an office.

	“We are at that tipping point where the payers realize that they have been penny-wise and pound-foolish in beating the medical oncologists to the point where they are changing their practice locations. Many of us are feeling embattled and cannot sustain a practice that we feel comfortable with in the community environment,” Gesme said.

Economic pressures are forcing many oncologists to leave small private practices for larger institutional organizations.