Medicare reimbursement cuts will affect cancer care system

The Community Oncology Alliance (COA), a national non-profit organization that represents oncologists and other cancer care providers, strongly opposes cuts in Medicare reimbursement for cancer care outlined by the Centers for Medicare & Medicaid Services (CMS). In spite of President Obama’s vow to protect Medicare in his speech to Congress last night, the new rules scheduled to take effect on January 1, 2010 specify an additional 21.5% decrease in all physician-related services payments by Medicare. These cuts, which include massive payment reductions for medical oncology, diagnostic imaging and radiation oncology, are scheduled to occur regardless of the outcome of the healthcare reform process.

Over the past five years, the cancer care system has already been severely strained by a series of cuts to Medicare reimbursement for drugs and services. The new cuts are especially alarming, given that almost 50% of all cancer patients are Medicare patients. While the healthcare plan the President presented last night included only a limited public option under his proposed insurance exchange, some proposals call for a public insurance plan based on Medicare rates, which would only compound and perpetuate the problem.

Based on data from community oncology practices across the nation, COA estimates that the new cuts will result in a staggering 38% annual average reduction in Medicare reimbursement for chemotherapy infusion services alone. As a result of these cuts, cancer patients across the nation will experience delays in diagnosis and treatment, face longer waiting times, be obliged to travel farther for care and in some cases be unable to find local access to cancer care.

“President Obama recommitted in his speech last night to building on what works and fixing what does not work,” said Patrick Cobb, M.D., president of COA and managing partner of Hematology-Oncology Centers of the Northern Rockies in Billings, Montana. “But the cancer care system is already broken after a steady series of cuts to Medicare reimbursement for drugs and services each year over the past five years. The Medicare reimbursement cuts planned by CMS will kill cancer care as we know it. Community cancer clinics have already had to close satellite facilities and cut staff. Smaller clinics are struggling to operate and more will close.”

To measure the likely impact of the Medicare cuts on actual reimbursement, COA developed a financial analytical tool based on the data provided in the proposed CMS rule outlining the cuts. Detailed financial data resulting from nearly 200,000 patient visits was submitted to a certified public accountant that aggregated the results.

“The magnitude of the proposed cuts in the reimbursement for administration of life-saving cancer drugs will be tremendously damaging to patients depending on quality, accessible cancer care,” said oncologist Dr. Mark E. Thompson of The Mark H. Zangmeister Center in Columbus, OH. “These cuts are not reflective of underlying market costs and will seriously impair our ability to continue to treat cancer patients.”

Dr. Thompson and his staff have already taken a number of steps in the past year to deal with cuts in reimbursement from Medicare and private payors. They have eliminated staff positions, reduced staff hours, initiated a wage freeze and referred Medicare patients with inadequate supplemental insurance coverage to hospital inpatient infusion centers.

“The patients do not receive the same level of care in hospital infusion centers, often waiting longer for lab tests and the preparation of their treatments for each chemotherapy visit, and the cancer care is ultimately at a higher financial cost than we can provide in the community oncology setting,” Dr. Thompson said.

Fact Sheet

Scheduled Cuts in Medicare Reimbursement for Cancer Care by Centers for Medicare & Medicaid Services (CMS)

• New rules by the Centers for Medicare & Medicaid Services (CMS) scheduled to take effect on January 1, 2010 specify an additional 21.5% decrease in all physician-related services payments by Medicare.
• Based on data from community oncology practices across the nation, COA estimates that the new cuts will result in a staggering 38% annual average reduction in Medicare reimbursement for chemotherapy infusion services alone. COA estimated the likely impact of the Medicare cuts on actual reimbursement using a financial analytical tool it developed based on the data provided in the proposed CMS rule. Detailed data from nearly 200,000 patient visits was submitted to a certified public accountant that aggregated the results.
• The cuts, which include massive payment reductions for medical oncology, diagnostic imaging and radiation oncology, are scheduled to occur regardless of the outcome of the healthcare reform process.
• The new cuts are especially alarming, given that almost 50% of all cancer patients are Medicare patients.
• Reimbursement cuts to oncologists for cancer drug administration have already occurred every year since 2003, with a total decrease in reimbursement from 2003 to 2009 of 68%. This means if an oncologist was reimbursed $100 in 2003 for the net profit or loss on a drug plus its administration, in 2009 he or she is being reimbursed $32.
• These numbers are applicable for Medicare reimbursements (often 50% or more for community oncology practices) as well as third party payors that follow Medicare guidelines.
• Additional data from COA showing that, on average, current Medicare payments to community oncologists cover only 55% of the costs of services associated with the delivery of cancer care. This data was obtained through COA’s “Components of Care” study, a survey of oncology practices across the nation that quantified the clinical and operational components and associated costs for delivering cancer care.
• The areas of underpayment include life-saving chemotherapy infusion services as well as other vital cancer care services such as treatment planning, treatment evaluation, testing, care coordination, supportive and palliative care, and patient counseling.
• For as many as 40% of all cancer drugs, the Medicare reimbursement is already less than the acquisition cost.
• The CMS cuts will also impact essential diagnostic imaging and radiation therapy services. Reimbursement cuts in these vital services are counter-productive to coordinated care and will place additional financial burden on community oncology practices.
• COA and many community oncology practices have submitted comments to the Centers for Medicare & Medicaid Services opposing the planned cuts.