Competitive pressures and profound marketplace changes are a fact of life for the oncology business, and for a practice in San Antonio, Texas, that handles a large population of rural poor, planning sessions routinely involve discussions on how to stay independent and continue doing things the way physicians there feel is best. 

 in the first of a series of practice profiles that will look at community oncology around the country and how physicians are adapting to change.

Doctors at START believe that their independence brings them closer to patients by affording them flexible options in care, but they also know that as oncology increasingly becomes more sophisticated and costly, the old way of doing things cannot endure. Gladys Rodriguez, MD, a hematology/oncology doctor at START, has been practicing for two decades and says the romance of being a community practitioner is still there, though a large, well-equipped team is now almost essential.

“The solo practitioners are fading away, not because people don’t like to be by themselves,” Rodriguez told Oncology Business Management. “It’s just that because of the cost of medications, the infrastructure you have to provide, the chemotherapy in your office, because of all the reporting you have to do, it’s almost impossible to meet all of those requirements and still be able to provide the care. And because of that, the number of people who will be able to go to a rural place and try to practice by themselves is very limited.”

This month’s issue covers much ground on the legislative front, where we look at the repeal of the Sustainable Growth Rate formula and what changes the Medicare Access and CHIP Reauthorization Act will bring to the oncology profession at the practice management level. Kavita Patel, a health policy scholar and a managing director of Clinical Transformation at the Brookings Institution, advises in our story on this topic that physicians become more familiar with this legislation and communicate their concerns to the Centers for Medicare & Medicaid Services (CMS), as this legislative reform may be more difficult to influence later.

Doctors will want to pay close attention to the system of performance incentives, which can include steep payment cuts in later years for failure to achieve targets. Patel notes that physicians will not be blindsided by payment reductions, but adds that these are legislative mandates. “The timeline for this is pretty aggressive,” Patel states. “By the fall of this year CMS has to deliver on some of these programs, so the time for feedback is right now.”

This 340B Drug Pricing Program also comes under the lens as we review testimony from a March congressional hearing on efforts to audit this drug discounting plan that began two decades ago under the best of intentions. Department of Health and Human Services Assistant Inspector General Ann Maxwell was frank in her testimony before the House Subcommittee on Health, stating that “diversion” may be an appropriate word for what’s happening to the discount savings available through the program.

, Gina Villani, MD, MPH, a hematologist/oncologist in the Harlem section of New York City, wonders at the logic that keeps 340B out of reach of her clinic, the Ralph Lauren Center for Cancer Care and Prevention, which has few commercially insured patients. “The whole purpose of 340B was to give a helping hand to people who are taking care of uninsured and Medicaid patients. We’re the perfect candidate, but because of the way they structured it we don’t qualify,” says Villani, who is CEO of the clinic.

Last but not least, our cover story looks at the practice of upcoding—where physicians choose higher paying Medicare codes allegedly to get more money for no extra care. We hear the other side of the argument, that electronic health reporting has finally made it possible for physicians to bill accurately according to the extent of the care they deliver, and also that this trend represents a sort of a catch-up for payments that physicians have been disallowed in the past by various unfair payment policies. It’s an argument that may stand the test of scrutiny, but more scrutiny by CMS and private payers is inevitable.

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Competitive pressures and profound marketplace changes are a fact of life for the oncology business, and for a practice in San Antonio, Texas, that handles a large population of rural poor, planning sessions routinely involve discussions on how to stay independent and continue doing things the way physicians there feel is best.

Reforms May Bring Radical Change

The signing of the Medical Access and CHIP Reauthorization Act of 2015 (MACRA) ends the yearly nightmare of congressional budget wrangling associated with the Sustainable Growth Rate (SGR) formula, but it will intensify the pressure on both physicians and the Centers for Medicare & Medicaid Services (CMS) to achieve a leaner, more effective health payment system. Oncologists and other physicians need to acquaint themselves with the new legislation, and if they have any ideas for improvement, those need to be registered with CMS quickly, advises Kavita Patel, health policy scholar and managing director Clinical Transformation at the Brookings Institution, an independent research organization.

The clock is ticking, Patel warns. “Like many things in Washington, it took a long time for us to get to this stage where we had an SGR fix, but the timeline for this is pretty aggressive. By the fall of this year CMS has to deliver on some of these programs, so the time for feedback is right now. Doctors should become familiar with the provisions in this legislation, and respond to it quickly.”

MACRA eliminates an unwieldy formula for determining physician Medicare payments and brings doctors a big step closer to what the Department of Health and Human Services has envisioned as a value-based care environment. Signed into law last month by President Obama, the legislation contains a broad set of incentives for doctors to meet performance measures, which are designed to end the practice of relying on volume of care to build up revenues.

“I think this will really up the stakes for us, and I hope this will bring us to the stage in 2019 where we have much more flexibility to innovate with ideas that are coming from the ground up,” Blase N. Polite, MD, MPP, chair of the Government Relations Committee for the ASCO, told 

Polite, a medical oncologist with University of Chicago Medicine, is optimistic that the level of involvement physicians had in helping to design MACRA and the changes that were incorporated into the $200-billion-plus spending measure mean that CMS will be more receptive to physician input in the future as the incentive plan is refined. Patel agrees that physicians do have an ear at CMS. “I do think that CMS has an intention of working with doctors to achieve a balance. It is just as all things are: the devil is in the details. There are a lot of aspects of this legislation that CMS has to turn into policy, so I do think the dialogue with CMS right now is pretty important.” That being said, these changes have been legislated, and CMS is under a mandate to implement them, Patel says.

The SGR, designed to keep physician payments in line with inflation and the gross domestic product, was blasted for its reliance on huge congressional spending adjustments each year to avoid wild swings in physician compensation. This year, a threatened 21.2% SGR cut in spending helped to prompt movement on the repeal measure.

The replacement package involves $175.4 billion in additional spending over 10 years to keep physician payments stable and to incentivize improvements in coordination, efficiency, and quality of care delivered. The bill also would temporarily extend the Children’s Health Insurance Program (CHIP) and a number of other expiring provisions related to Medicare, Medicaid, and certain grant programs.

An analysis by the Congressional Budget Office has predicted that through 2025, MACRA will increase direct spending by about $145 billion and revenues by about $4 billion, causing a net increase in federal budget deficits of $141 billion.

The program will lead to modest improvements in physician pay over the next several years, with much higher increases and also bonuses to kick in later, based on measures of performance and whether physicians participate in alternative payment models (APMs), which CMS believes will be key to cost-efficient high quality care.

Some of the pay adjustments that may result could reduce CMS compensation for physician services by up to 9%, but Polite notes that there are opportunities for physicians to receive fairly substantial pay increases and bonuses. “Those at the top end could receive as high as a 27% bump,” he says

. Those who enter the APMs may eventually qualify for 5% bonuses that are based on their Medicare payments over the previous year.

Patel notes that the payment penalties are graduated, so that physicians have plenty of time to correct their procedures and avoid the deepest payment cuts. “It doesn’t go from zero to 9% in one year. You would have to be ‘underperforming’ in previous years. If you’re having consistent problems year after year, and you know that you’re likely to be in that negative 9% category in year five, then you need to do something different about the way that you practice; and it might be that you’re a great doctor but the business of your practice or the clinical work flows need to be changed, and that’s the type of thing I think CMS is looking to try to help doctors with.”

Physicians will be nudged to participate in APMs, such as medical homes, accountable care organizations, and bundled care, through which they can sidestep some of the penalties that may result from failure to meet performance standards in the Merit-Based Incentive Payment Systems (MIPS), which are a hallmark of CMS changes.

		Figure 1. SGR Repeal Creates Two Tracks for Providers

		2. Meaningful Use; Physician Quality Measure Reporting; Value-Based Payment Modifier.

		3. APM participants who are close to but fall short of APM bonus requirements will not qualify for bonus but can report MIPS measures and receive incentives or can decline to participate in MIPS.

The Advisory Board Company, http://www.advisory.com/health-policy.

Initial annual pay increases amount to just 0.5% a year under the program, and Congress has legislated additional support for MACRA in the form of $500 million annually from 2019 to 2024, to help pay for some of the incentives.

In a review of the legislation, CMS indicated that certain factors such as an unsteady economy or inflationary pressure could still necessitate the congressional “patches” that were common to the SGR-based payment formula.

 However, CMS expressed confidence that otherwise MACRA represents a balanced replacement for SGR.

“The physician payment rates would be problematic under [MACRA] in years with high inflation, in 2025 when the 5% APM bonus and the $500-million additional pool for MIPS are scheduled to expire, or at the point when the cumulative effects of payment updates not keeping up with physician costs become too large,” CMS wrote.

Key to the optimism expressed by Polite was a shift in performance measures that graduated the penalties and rewards under the program, rather than having broad cutoffs based on certain achievement scores that would have made a single point the difference between getting a bonus, larger fees, nothing at all, or even seeing physician payments reduced.

“We were always concerned about threshold payment systems,” he says. “It creates winners and losers, and disincentives people from working together.”

Physicians are also concerned about being forced into competing with one another rather than competing with themselves, says Ted Okon, executive director of the Community Oncology Alliance, regarding the program. He noted that a physician who achieved improvements over a period of time but didn’t do as well as another practice in the same care bracket might still face penalties. This is an apparent feature of the Oncology Care Model APM introduced earlier this year by CMS, he said.

Relying on systems that cause physicians to compete with one another is typical of many private sector payer programs, and CMS cannot be expected to take another route, Patel said. “I would look to see CMS feel comfortable with the approaches other payers are taking, but I don’t think CMS has any desire to put something in place that makes doctors feel uncomfortable or unable to practice in the way they thought they could.”

Like Polite, Okon believes MACRA is a “step in the right direction.” APMs can be effective, Okon says, noting that a body of evidence has accumulated in recent years showing that experiments with these models have worked out.

COA wants CMS support for a different oncology care model, however—one that involves input from the oncology community. Okon says physicians should be able to formulate their own APMs as long as they meet achievable criteria laid down by CMS. US Representative Cathy McMorris Rodgers is backing proposed legislation for a different APM that COA also stands behind.

While there is reason for hope, Polite says, there could still be the case where a physician finds himself getting whittled down on the revenue side by negative performance reviews.

“We have no idea, and I don’t think CMS has any idea yet, how they’re going to set up these merit-based payment systems so that they’re equitable,” Polite says. “That is a concern for everybody. On the MIPS side, that is the 10,000-pound gorilla in the room.

“They absolutely have to be set up in the right way, otherwise you have what people call a payment randomization program, where if I have the wrong mix of patients or have a different set of resource uses for whatever my practice is, I can be penalized even if I’m doing the right thing,” Polite adds. “That’s where all of the specialty groups are going to be vigilant in the next few years in helping them get the risk adjustment mix right.”

		Congressional Budget Office staff. Cost Estimate and Supplemental Analyses for H.R. 2, Medicare Access and CHIP Reauthorization Act of 2015. 

. https:// www.cbo.gov/publication/50053. Published March 25, 2015. Accessed April 21, 2015.

		Estimated Financial Effects of the Medicare Access and CHIP Reauthorization Act of 2015 (H.R. 2). Centers for Medicare & Medicaid Services website. http://www.cms.gov/Re- search-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/2015HR2a.pdf. Published April 9, 2015. Accessed April 21, 2015.

The signing of the Medical Access and CHIP Reauthorization Act of 2015 ends the yearly nightmare of congressional budget wrangling associated with the Sustainable Growth Rate formula.

Doctors Can Expect Pressure to Compete Under MACRA Changes

The healthcare market has been consolidating in recent years with practice mergers, hospital partnerships, and acquisitions or affiliations with primary care and specialist practices. Large health systems have diversified services and revenues and begun managing risk as accountable care organizations (ACOs)—sometimes even offering their own health plans.

The formation of an integrated delivery network (IDN) can be vertical (usually involving hospitals acquiring or affiliating with a large physician group or forming an HMO) or horizontal (mergers, partnerships and affiliations between multiple providers). Much of this consolidation and IDN formation is happening quietly and steadily, but the increasing corporatization of the US market and the trend from community to hospital outpatient care delivery is on the radar of payers and pharmaceutical manufacturers alike.

These trends raise a few key concerns. Payers are concerned that acquisition of practices (especially oncology practices) by hospitals inflates costs of services because the hospital “outpatient setting” is associated with higher reimbursement rates and facility fees than the community setting,

without necessarily offering improvements in quality or efficiencies. Manufacturers note that this dynamic contributes to the increasing number of entities and sites eligible to receive 340B discounted drugs,

 which in turn takes a toll on manufacturer revenues. Another concern is that IDNs are influencing physician behavior and drug selection.

These concerns are not without merit: a similar wave of consolidation in the 1980s and 1990s resulted in the formation of some particularly sophisticated systems such as Geisinger and Kaiser Permanente that are often associated with highly centralized decision making, lack of representative access and limitations on drug selection. With the availability of better healthcare information technology to link providers, computerized physician order entry, and clinical pathways in oncology, implementation of draconian limitations on prescribing based on costs and contracting is easier than ever. The consolidation of oncology practices through affiliation or acquisition

 raises the question of whether this will significantly change the way decisions are made about oncology care.

Kantar Health explored the dynamics of the impact of IDN care delivery on physician autonomy and drug decision making in a 2014 survey with 80 IDN oncologists. We found that many IDNs have the ability to influence drug selection through outpatient formularies, electronic medical records, and physician order sets that restrict the treatments that can be prescribed 

		Figure 1. Impact of Integrated Delivery Networks (IDN) on Prescribed Treatments

		Percentage Among Total IDN Oncologists (n = 80)

Kantar Health data also show that some IDNs may incentivize physicians based on oncology performance, and treatment pathways--which reorganize care around evidence-based medicine and coordinated treatment--are significantly more common in oncology practices and centers that are part of IDNs than in the community setting.

 In addition, since IDNs often participate in ACOs, this reimbursement structure may further prompt more cost-conscious physician behavior, even in oncology. About one-third of IDN oncologists participating in an ACO in Kantar Health’s 2014 survey stated this reimbursement arrangement had caused them to be more careful in selecting cost-effective treatments.

Although many IDNs have the capability to heavily influence oncology decision making, it would be a mistake to conclude that oncology care delivery is universally more regimented and proscriptive in any IDN setting. IDNs often hesitate to take a heavy hand with oncologists, and caveats help oncologists to maintain autonomy over their drug choices 

		Figure 2. Pushes and Pulls on Oncologist Autonomy in the IDN Setting

Although most IDNs may refrain from denying oncologists flexibility in decision making, it is possible that the minority may become the majority in the future. For now, variation in cancer care delivery and decision making within IDNs makes it difficult to generalize about these increasingly important stakeholders. Still, Kantar Health has found that meaningful characterizations can be made based on analyses of the IDN delivery structure (eg, payer ownership, degree of integration, site of care), which can help manufacturers support a meaningful, strategic approach to allocating resources and engaging with IDNs.

More time will be needed to see if the tone of the health system and cancer center relationship changes significantly as the consolidation process continues. It is likely that health system executives may opportunistically explore ways to nudge physicians to meet new goals; after all, oncology practices are likely to have been acquired for profitability and to better manage patients across the care continuum, including their associated costs and risk. At least until health executives start changing priorities, what my doctor told me about his practice is likely to hold true in oncology: “Nothing is going to change.”

		Community Oncology Alliance and Milliman. Comparing episode of cancer care costs in different settings: an actuarial analysis of patients receiving chemotherapy. August 2013. http://www.communityoncology.org/ UserFiles/Milliman_SiteCostofCancerStudy_2013.pdf

		The Biotechnology Industry Organization (BIO), the Community Oncology Alliance (COA), the National Community Pharmacists Association (NCPA), National Patient Advocate Foundation (NPAF), the Pharmaceutical Care Management Association (PCMA) and the Pharmaceutical Research and Manufacturers of America (PhRMA). The 340B Drug Discount program: review and analysis. Winter 2013. https://www.bio.org/sites/default/ files/340B%20White%20Paper%20FINAL.pdf

		Community Oncology Alliance. Community oncology practice impact report: the changing landscape of cancer care. June 2013. http://www.communityoncology.org/pdfs/Community%20Oncology%20Practice%20 Impact%20Report%206-24-13F.pdf

		Kantar Health. Oncology market access US. August 2014. oncologymarketaccess.com

The healthcare market has been consolidating in recent years with practice mergers, hospital partnerships, and acquisitions or affiliations with primary care and specialist practices. 

Doctors May Lose Care Control to Integrated Delivery Networks

Doctors wondering why patients don’t seem to be taking their medication or following through with treatment may suspect that financial problems may be the reason, but a new study adds credence to that possibility.

Going bankrupt is high on the list of worries for 37.1% of cancer patients who participated in a recently published survey by the Washington, DC-based Cancer Support Community (CSC), an international nonprofit.

The survey was completed by 480 adults living in the United States, and 21 others who were diagnosed with cancer and were either undergoing treatment or in remission. The respondents were mostly white, female, and non-Hispanic.

Nearly 2 out of 5 patients were seriously concerned about bankrupting themselves or their families as a result of treatment expenses; 71.1% said they did not receive any social or emotional support services, including screening for distress during cancer care. Among those, more than half (55%) said they didn’t know where to find such support.

The survey also found that among the respondents, 22.1% experienced delays in care, 61.9% of which involved lateness in scheduling a test or procedure, 46.7% involved delays in being referred to a physician or health care team, and 22.9% experienced delays in obtaining a prescription.

A series of video interviews accompanying the report showed cancer patients discussing the difficulty of meeting out-of-pocket expenses and the trade-offs they had been forced to make, such as choosing doctors based on co-pays, cutting back on food, activities—including education&mdash;to save money, and becoming isolated from family members. “Even if I starve to death, I will not let go of my insurance. That is my life,” said one woman identified as Mary from Culver City, California.

“People are making decisions like consumers in a situation where the clinical stakes and the potential suffering of patients is substantial,” said a physician quoted in the video, John D. Sprandio Sr, MD, a specialist in hematology and oncology based in Philadelphia. He said two of his patients recently had elected not to undergo therapy because of costs.

The survey was designed to gauge access to insurance, providers, and services, and to assess patients’ concerns about direct costs of cancer and care. Kim Thiboldeaux, CEO of CSC, concluded, “health care reform is working well for some, and not as well for others. In patients for whom it is working well, there are still bumps in the road.”

Nearly half (47.7%) of respondents said they had paid more for their treatment over the past 12 months, attributing those added costs to insurance premiums (61.2%), deductibles (46.7%), and treatment co-pays (45.8%).

Most of the patients were covered by an employer-based plan or some form of Medicare; 18 participants had purchased their coverage through a health insurance marketplace; and five patients reported not having insurance of any kind and being unable to afford a plan.

Nearly all of the survey participants were women (94.4%), white (77.8%) and college educated (70.6%), with just over a quarter employed full-time and 33% working part-time.

The majority of respondents were breast cancer patients (19.6% metastatic and 41% nonmetastatic). Roughly 60% had undergone chemotherapy, 57.7% surgery, 48.5% hormone therapy, and 43.1% radiation.

Switching Doctors Becomes a Necessity for Some

Patients in the survey expressed strong concerns about having to switch doctors because of network limitations (21%); being able to get a second opinion (21%); and having to switch hospitals or clinics because of network limitations (20.5%).

“I made appointments with doctors only to have them call me back later and say, ‘Oh, we don’t take your plan, we take other plans,’” said a woman identified only as VJ from La Quinta, California. However, the woman said she obtained insurance through Affordable Care Act reforms, and her out-of- pocket expenses had declined considerably as a result, despite the hassle of finding participating providers.

Nearly 20% said they did not have enough time with their healthcare team. This trend was more pronounced among those with lower incomes, the survey said, stating “Future research should evaluate efforts to provide tailored resources for low income survivors, particularly during the first 6 months posttreatment when distress levels are highest.”

Large proportions of the patients said they spent time talking with their providers about therapy goals, risks and benefits, alternative treatments, palliative care, and work impact. However, 34.4% said they had discussed the financial costs of treatment, while 51.8% said they had discussed their treatment’s impact on work.

According to the survey, 16.3% of patients said they were not able to get the treatment they needed.

In a set of conclusions, the CSC recommended further monitoring of the costs of cancer care, evaluating how the cost burden affects patients’ emotional health, and studying the new health insurance marketplace.

To access the full report, visit http://ow.ly/LodMY.

Going bankrupt is high on the list of worries for 37.1% of cancer patients who participated in a recently published survey by the Washing- ton, DC-based Cancer Support Community, an international nonprofit.

'Consumer Mentality' Causes Patients to Skip Care, Medicine

Molecular testing has become an important tool for oncologists.

It provides genomic information unattainable by other testing methods, which makes it a driving force behind the trend toward precision medicine. As the use of testing increases, so does the importance of understanding exactly what it can do for your patients and how to get the most out of the results. Here are five easy ways to make sure you’re getting the most benefit for your patients.

There are hundreds of molecular tests currently available for clinical use in oncology. Most of these tests are for diagnosing a certain type of cancer or classifying the type of tumor, but the number of tests for disease monitoring or determining treatment strategies is rapidly increasing.

Like imaging exams, molecular diagnostic tests are tools to give physicians information, but not all tests are interchangeable. Just as different types of imaging exams have different clinical applications, the same is true for molecular testing. It’s crucial to understand what information each test provides so that you order the correct test.

Two of the most common types of testing technologies are polymerase chain reaction (PCR) and fluorescence in situ hybridization (FISH). Each uses a different technique and has many variants that are used for different purposes. Some labs only offer one technology, while others offer multiple types; the important thing is to make sure the lab is using the right technique for the right purpose. Increasingly, labs are using next generation sequencing technology to sequence millions or billions of DNA strands in parallel. This has allowed for faster and broader gene sequencing, which has sped up the pace of discovery in oncology and the number of treatment options available to patients.

We are beginning to see a focused effort by oncology experts to formalize guidelines on the use of molecular testing for various types of cancer. These guidelines will address when tests should be performed, which testing method should be used, and what type of sample should be utilized.

In addition to understanding the technologies employed in the different tests, it’s also important to understand the scope of the test you are ordering. Some tests are focused and provide targeted analysis on a very specific gene or set of genes. Other tests offer whole genome sequencing and can detect all four main types of gene alterations and provide a comprehensive analysis of the 20,000+ genes in the human genome.

While the idea of receiving comprehensive genomic information sounds great, ordering a test that gives you more information than you need can have negative consequences. For example, the patient’s insurance provider may consider this level of testing unnecessary and not reimburse the lab for the added expense of the extensive testing, which can leave your patient with significant out-of-pocket expenses. Too much information may also “muddy the waters” in terms of providing a clear diagnosis or treatment recommendation.

3. Provide complete information to the lab.

It may sound simple, but you’d be surprised at how many physicians’ offices order tests without providing the complete information about the patient for whom the test is being ordered. Without access to the indication, patient’s age, gender, race and family history, a lab cannot provide an accurate interpretation of the test.

Whether laboratory testing is ordered by the oncologist or someone else in the practice, it is essential to provide complete information about the patient’s clinical findings and background with the order. If complete information is not provided, someone at the lab should follow-up to collect this information before testing begins.

You should expect to receive accurate, reliable and timely results from CLIA-certified labs. But it’s also important to consider how the results are provided and work with labs that provide them in a manner that is beneficial to your practice and your patient.

For example, does your lab send results in a paper format or electronically for easy input into your patient’s electronic health record? From a practice management perspective, the last thing you want is to slow down the flow of information or add steps to your workflow by having to manually input data. Not only does this create inefficiencies, but any time information is manually entered, it increases the chance for errors.

The other consideration is what information is provided on the report. Lab reports should provide more than just raw data, which can be cryptic and require significant analysis and research time to understand their meaning. Good lab reports provide context for the results data, likely in the form of ranges. They also use formal names of mutations rather than common names or different nomenclatures, which can leave room for misinterpretation. Most important, genomic results should help guide an oncologist’s treatment choices for a patient. A good report gives the oncologist suggestions for treatment options including clinical trials.

5. Develop a good relationship with your laboratory service providers.

Just as your representatives from drug manufacturers can help keep you up-to-date on the latest drugs, your lab representative should keep you informed of what tests are available, answer questions about specific applications, and help make sure you are ordering the test that will give you the information you need.

Oncologists have always depended on their lab partners to help them provide high-quality care to their patients. Today, with increased use of molecular testing, the need for trusted relationships is greater than ever before. Collaboration between oncologists and labs will be a cornerstone for the delivery of more personalized treatment and proactive prevention.

Catherine Tsien Swick is senior director for Lab and Precision Medicine at McKesson Specialty Health, and Lori C. Brisbin is chief commercial officer for med fusion.

As the use of testing increases, so does the importance of understanding exactly what it can do for your patients and how to get the most out of the results. 

More Effort Needed to Understand Value Breadth of Molecular Testing

Frustration is mounting with a federal program that was originally designed to allow hospitals that care for underserved people to purchase outpatient drugs at discounted prices. Just ask Dr Gina Villani, an oncologist in Harlem, New York City. Eighty-five percent of her patients are insured through Medicaid, but her clinic does not qualify for 30B Drug Pricing Program discounts. It is owned by Memorial Sloan Kettering (MSK) which, as an institution, doesn’t meet the 11.75% Medicaid patient requirement. As a result, Villani’s Ralph Lauren Center for Cancer Care and Prevention relies heavily on charity to subsidize the cost of treatment.

“If you want to take care of the poor, then you have to go beg people to help you out, and we’re not getting the benefits other places are getting,” Villani says.

Villani is among the population of physicians who feel that the 340B program, created in 1992, needs an overhaul, particularly in order to better serve the indigent and underinsured patients for whom it was intended. A loose definition of which patients are eligible is widely blamed for the extension of program benefits to populations who don’t need them.

A House Energy & Commerce Subcommittee on Health hearing in March on the apparent abuse of the program and the need to institute reforms has fueled hopes that the will to institute change is rising in Washington, DC. Officials from various government agencies reviewed audit information on the program and discussed the shortcomings of efforts to reform 340B. Hearing participants also heard about forthcoming guidance on how the 340B program should operate in future for better results.

“I think the hearing indicates that Congress is waking up to the very serious need for possible change in the program,” says Stephanie Silverman, spokeswoman for the Alliance for Integrity and Reform of AIR 340B, a consortium of oncologists, healthcare companies, and drug manufacturers. “There is a lot of pent-up interest across the ranks of the subcommittee for getting to what’s ailing the 340B program.”

In the testimony March 24, an official with the Office of Inspector General (OIG) in the Department of Health and Human Services identified numerous inefficiencies and inequities in the 340B program.

Assistant Inspector General for Evaluations Ann Maxwell said that in many cases 340B program participants have not passed along savings to their disadvantaged patients. In addition, Maxwell said, a lack of transparency in drug billing and manufacturer pricing has caused widespread inconsistency in the discounts that are applied to purchases, owing to regulatory provisions that have prevented the free flow of information that was intended to be shared.

“Without access to ceiling prices, 340B providers cannot ensure that they are being charged the appropriate amount by drug manufacturers. OIG’s work has shown that 340B providers have, in fact, been overcharged for 340B-purchased drugs in the past: we found that 14% of drug purchases under the 340B program in June 2005 exceeded applicable ceiling prices. As a result, 340B providers overpaid by a total of $3.9 million during that month,” Maxwell said.

In order to ensure proper compensation under the 340B program, states have been forced to do costly payment audits to compensate for the lack of information on ceiling prices, she said.

Maxwell also expressed concern about the rise of contract pharmacies, which have expanded rapidly and are handling an increasing share of 340B prescription business. These pharmacies make their determination about patient eligibility at the drugstore counter rather than at the doctor’s office, Maxwell said, and having no way of knowing who is eligible when the prescription is filled, make their determinations later. Each has its own system for making those determinations, he explained, and there is wide variation, some of which could be construed as “diversion” of 340B funds to unacceptable uses.

Exponential Growth of Contract Pharmacies

Meanwhile, growth of the contract pharmacy sector has been exponential. In a 2014 report, the OIG stated that the percentage of 340B providers that use contract pharmacies had risen to 22% from 10% in 2010

 and that the number of “unique” pharmacies serving as 340B contract pharmacies had grown by 770%.

Another flaw in the 340B design is that there is no stipulation for how savings from the program must be used, meaning entities are not required to pass those savings along to patients, Maxwell said. Patients who ought to receive discounts sometimes end up paying full price at the pharmacy, she said, either out of pocket or through their insurers.

This may happen either because pharmacies lack policies that force them to make 340B determinations at the register, or because they make those determinations too late in the process, after the patient has already paid full price, Maxwell said. “Several 340B providers in OIG’s 2014 report did not offer the 340B price to their uninsured patients at contract pharmacies.”

The Health Resources and Services Administration plans to issue wide-ranging 340B program guidance in June 2015 that will address patient definition and other contract pharmacy issues, Maxwell said.

In an official statement, ASCO, the nation’s largest association of oncologists, blasted the 340B program architecture as loosely written and capable of such broad interpretation that it has become an engine for growth and maximization of revenues by hospitals and other healthcare entities, rather than a well-controlled vehicle for delivering drugs into the hands of the underinsured and indigent.

Oncology practices acquired by 340B covered-institutions may qualify for participation in the 340B program and share in the wide “spreads” between wholesale and retail drug prices that are available, but many practices are not involved, and they are forced to compete against the high-octane growth of 340B-qualified entities, according to ASCO. The problem is magnified because drugs play such a huge role in cancer care. “The impacts—both intended and unintended&mdash;of the program are profound in cancer care because of the integral role that drug therapies continue to play in anticancer treatment regimens.”

New Definition Required for Eligible Patient

ASCO recommended that the government redefine the meaning of an eligible “patient” under the program to eliminate the ambiguity in the current language that allows for tremendous latitude in interpretation; and additionally, that the Disproportionate Share Hospital (DSH) formula, another measure of 340B eligibility, be replaced with something more effective.

Villani, who serves as chair of the ASCO Health Disparities Committee and was a coauthor of an ASCO 340B position paper, says having 340B eligibility at her clinic would make a huge difference because doctors there have a tight budget and very few privately insured patients. “Our margins are next to nothing. We’re working off 2 or 3 percent at best. If there were a couple of drugs whose cost wasn’t covered, there goes our margin for the month.”

She estimates that 40% of her budget comes from philanthropy, namely MSK and the Ralph Lauren Pink Pony Fund. Although donations are one way to cover expenses, Villani says, a “level 340B playing field” would go much further, providing revenue for service enhancement as well as a measure of dignity. “We’re running a business. We’re giving patients high-quality care. The current model is fee for service. Why should we even have to have philanthropy to run our operations?”

Beyond extending 340B coverage to where it can do more good, there is the need to gain control over the program, Silverman says.

“We heard government officials testify at the subcommittee hearing that there is no rule that requires institutions to be accountable for how they use the funds. Even though legislative history tells us that the program is intended for the benefit of underserved, needy patients, there isn’t an accounting that the law requires. And so it is hard to fault institutions that are trying to make ends meet for also trying to find as many additional economic resources as they can.”

She believes 340B should be salvaged, not scrapped. “There is no interest, at least from our group, in eliminating 340B, but I think there is tremendous interest in finding ways to get back to the origins of the program to serve the patient. What’s happening now certainly wasn’t intended. It has been a patchwork of nonregulation and then legislation, and then there has been a patchwork of activities, none of which has created a coherent whole,” she said.

Kavita Patel, a health policy scholar and managing director at the Brookings Institution, thinks that 340B reform will take more determination than Congress has right now, given that it has recently completed a repeal of the Sustainable Growth Rate formula and other healthcare action. “My overall sentiment is that 340B will continue to be a target in terms of scrutiny by Congress, but whether Congress has the ability to act on it is a totally different matter.”

			Maxwell A. Examining the 340B drug pricing program. Committee on Energy & Commerce. http://democrats.energycommerce.house.gov/sites/default/files/documents/Testimony%20-Maxwell-HE-340B-2015-3-24.pdf. Accessed April 22, 2015.

			Wright S. Contract pharmacy arrangements in the 340B program, OEI-05-13-00431. Department Health and Human Services, Office of Inspector General. http://oig.hhs.gov/oei/reports/oei-05-13-00431.pdf. Accessed April 22, 2015.

			Tompkins J. Policy statement on the 340B Drug Pricing Program by the American Society of Clinical Oncology. 

. http://jop.ascopubs.org/content/early/2014/04/15/JOP.2014.001432.extract. Published April 15, 2015. Accessed April 25, 2015.

Frustration is mounting with a federal program that was originally designed to allow hospitals that care for underserved people to purchase outpatient drugs at discounted prices.

Inequities of 340B Drug Pricing Program May Last Despite Rising Concern

For Gladys Rodriguez, MD, a practicing oncologist for 24 years, the daily schedule is filled with calls to payers and hours spent at the computer typing up electronic health records. Years ago, she recalls, she had a lot more time to spend with patients.

“There are days that I have to call 10 different insurance companies to get approvals. Ten years ago, I never had to go through that,” Rodriguez, an employee of the START Center for Cancer Care in San Antonio, Texas, told Oncology Business Management. “It’s not only me. It’s everybody here. My nurse and my nurse assistant probably spend half of their time on the phone.”

START is a bustling, multi-location practice that has many of the problems identified as typical of oncology practices these days by the American Society of Clinical Oncology (ASCO) in its recent report, “The State of Cancer Care in America, 2015.” Mountains of administrative work, negotiations with payers, and difficulty recruiting adequately trained staff are common issues for the Texas clinic.

In addition, members of the practice sit down regularly to consider the pressures of the marketplace and how to remain independent, Rodriguez says. START employs 12 medical oncologists, 4 radiation oncologists, 4 phase 1 researchers, 9 general surgeons, and 2 gynecologist oncology surgeons.

START’s practice area is the city of San Antonio—which has 1.4 million inhabitants&mdash;along with the surrounding metro district and a rural expanse that extends at least 3 hours by car from the city center, encompassing Laredo and the West Texas—Mexico border town of Eagle Pass. San Antonio is growing rapidly, but many of its residents are economically disadvantaged, and the practice works with a large population of Medicare, Medicaid, and underinsured patients. Many patients traveling long distances have no transportation of their own and depend on area groups and towns to chip in for bus service to bring them to START.

Roughly half of Rodriguez’s patients are Hispanic, and 1% are undocumented. Some come from as far away as Mexico. “There are some programs in San Antonio that provide care for breast cancer patients even if they are undocumented, and we see a lot of those patients,” Rodriguez says.

START has a robust clinical trials program with about 40 drugs in phase 1 testing. The trials program allows patients to receive treatment that may not be available at other practices, broadening the availability of new treatments and options for care, while pro bono activities and patient foundations help to fund medications and care for indigent patients. Rodriguez says that one of the reasons START physicians prize their independence is that a larger, acquiring organization might not allow them as much latitude in treating their patients as they currently enjoy.

But oncology practices throughout Texas always seem to be in talks with acquirers, and the danger is that a practice which currently poses no sizable threat to START’s operations could become an adversary through a merger. An alternate scenario—and one no less worrying&mdash;is that a large health organization will, rather than take over a local practice, “just hire people from the outside and start their own program,” Rodriguez says.

Many independent practices throughout the country are reacting to these pressures by raising the white flag. ASCO reported that 7% of respondents to its annual survey indicated a likelihood that their practices would close; and the Berkeley Research Group has reported that, based on its own survey, 33% of community oncology practices are in serious acquisition talks with hospitals, or in merger talks with other practices.

		Table 1. How Oncologists Spend Their Time

		aSource: Shanafelt T,Gradishar W, Kosty M, Satele D, Chew H, Horn L. Burnout and career satisfaction among US oncologists. J Clin Oncol. 2014;32(7):678-686,http://jco.ascopubs.org/content/32/7/678.full.pdf+html. Published March 1, 2014. Accessed April 22, 2015.

“The solo practitioners are fading away, not because people don’t like to be by themselves,” Rodriguez says. “It’s just that because of the cost of medications, the infrastructure you have to provide, the chemotherapy in your office, because of all the reporting you have to do, it’s almost impossible to meet all of those requirements and still be able to provide the care. And because of that, the number of people who will be able to go to a rural place and try to practice by themselves is very limited.”

When it comes to female oncologists, the START practice is well in step with the times. ASCO noted in its report that 30% of oncologists and 48% of oncology fellows are women. Five of START’s 12 medical oncologists are female, a ratio that has held steady for much of Rodriguez’s tenure with the clinic, and that ratio extends elsewhere in the city.

It was the high proportion of women at the University of Texas Health Science Center in San Antonio that encouraged Rodriguez to accept a fellowship position there when she was starting out. She knew she’d be able to find mentors and would be less likely to encounter the attitude that women would be any less dedicated to the work than men. “The reason I stayed in San Antonio was that I felt that I didn’t have to break any barriers,” she says.

Physicians at the practice also exceed national averages on minority composition. There are 6 Latinos—4 of the 12 medical oncologists and 2 of the 4 radiation oncologists. Nationwide, the average of Latino oncologists in general is less than 4%. START has one African American oncologist, specializing in gynecology. Nationally, African American oncologists make up 2.3% of the population. One medical oncologist at START is Asian Indian.

A Patient-Doctor Relationship Becomes a Friendship

When you add up the long hours and all the administrative frustrations, it is no wonder that Rodriguez says there are days when she feels a sense of burnout. But there are also rewarding moments when she is reminded of why she became a physician. She cites the case of a 21-year-old Mexican woman who came to her with a case of chronic myelogenous leukemia (CML) and who faced very limited options for treatment, among them interferon and the scary prospect of a transplant. “She was terrified,” Rodriquez recalls. Fortunately, the woman qualified for a trial for interferon plus imatinib (Gleevec), a tyrosine-kinase inhibitor, which beat the cancer into remission. “She’s now 37 years old,” Rodriguez says. “She had a baby. She is still disease-free and never had a transplant.”

In the intervening years, their relationship has grown far beyond that of patient-doctor: “She’s one of the first patients I saw in private practice, and so she saw me pregnant with my daughter and she has followed my family through all of these years. She still comes to see me.”

The advances of modern medicine have led to many more similarly wonderful achievements that couldn’t have been dreamed of years ago, and which make modern practice fulfilling despite all, Rodriguez says. Still, at 55, she is in the portion of the oncologist population for whom retirement is looming. It’s not a date that she looks forward to. The deciding factor will be whether she is able to keep up with the deluge of fresh information as multiple fields of cancer care explode with new developments.

“I remember a patient many years ago when I was young who came to see me because her doctor didn’t know about a new drug that she had read about in the newspaper and felt that he wasn’t up-to-date,” Rodriguez says. Reaching such a stage—being unable to advise patients of their true options&mdash;is, she says, her “greatest fear.”

For now, though, older doctors are an asset in a profession where the younger generation does not appear to have the same work ethic, Rodriguez says. In part, she blames softer hours in residency programs that were modified to prevent serious errors caused by overwork and fatigue. “Their expectation of what they have to do at work and how to be effective is kind of different,” she says of young physicians. “We have one older doctor in our group who sees almost twice the number of patients as the other doctors, and we realized that to replace him, whenever he decides he’s going to retire, is going to take two or three people. He starts at 5 o’clock in the morning and he’s the last to leave at 8 o’clock at night, and almost nobody these days wants to do that.”

Whether it’s the workload, or the preference among doctors for working in urban settings, or other reasons, it is difficult for the San Antonio practice to find the right employees, Rodriguez says. START has several open positions and has done a lot of interviewing. “Recruiting the right person for a practice requires interviewing many physicians,” she says. “Not only do we have to compete with other groups and institutions, but also with larger cities and physician preferences.” 

For Gladys Rodriguez, MD, a practicing oncologist for 24 years, the daily schedule is filled with calls to payers and hours spent at the computer typing up electronic health records. 