We saw in the news this week that an oncologist from Tennessee pleaded guilty to illegal purchasing of foreign drugs. How did it come to this? If you’ll recall, we heard back in February that there were counterfeit versions of Avastin in the market, and oncologists were (knowingly and/or unknowingly) administering fake Avastin to patients that has no active ingredient (bevacizumab) in it. The physician in this probe, William Kincaid of Tennessee, has signed a plea agreement.

The only people that truly know the facts are those involved in this probe, but there are a couple of themes that emerge from a case like this that are worth acknowledging. We asked another oncologist from Tennessee, Jeff Patton, MD, CEO of Tennessee Oncology, his thoughts on what may have happened here and what others should learn from this example.

OBR: In addition to the case example we saw this week regarding illegal purchase of unapproved Avastin, we have also seen examples of Medicare fraud amongst oncologists. Is it really the buy and bill model that is at fault here? Are practices so financially stressed that some are taking drastic steps to stay alive? Or is it unfair to generalize?

JP: Decreasing margins are driving small and medium size practices out of business across the country. Unfortunately, people sometimes do desperate things in desperate times. I’m not saying I’m ok with it. I think the buy and bill model is the most efficient, cost effective, patient centric model out there. But any model can be squeezed out of business if the margins are shaved too thin.

OBR: What should other practices, operating a small business, learn from this example?

JP: I think practices need to be proactive. If they don’t have the scale for employee professional management they should engage outside consultants to help them evaluate their options. For many small practices, staying the same is just not an option long term. They should evaluate merging with other practices vs. exploring a financial relationship with their local health system.

OBR: Do you think this situation will continue to worsen? Will oncologists be surprised at the depth of the problem?

JP: Healthcare is clearly in transition and I do fear that it will become more difficult short term. In the fee for service model, I think the proposed healthcare exchanges will accelerate the closing of community oncology practices. We as community oncology practices need to develop partnerships with our payers to evolve to value based payment models to survive as independent entities.

NOW THAT THE RESULTS ARE IN, ONCOLOGISTS AND HEALTHCARE PROVIDERS CAN FOCUS THEIR ACA CONCERNS

The re-election of Barack Obama has profound implications for cancer stakeholders. Cancer care is affected by provisions in the Affordable Care Act such as:

1. physician payment reform and deficit reduction
2. areas of special mention such as coding and payment reforms to molecular diagnostic testing or bundling of radiation services

Below is a short primer on the implications of Wednesday night’s election results and a prelude to the Forecasting issue which will be published in the January issue of OBR. Further below are the results of a survey conducted the day after the election (Wednesday Nov 7) on 62 oncology health care professionals.

Affordable Care Act

With President Obama’s reelection, implementation of the Affordable Care Act will proceed as planned. However, there are still significant issues outstanding.

• Regulations regarding Essential Health Benefits (EHB) are expected before the New Year.
• HHS has indicated that sitting Governor’s need to make an Exchange declaration – state-based, partnership, or Federal Exchange – by November 16, and not pass the decision onto the next Governor.
• Many states have not made decisions regarding Medicaid expansion.

To date HHS deadlines have all been set through guidance and are not enforceable through regulation. Additionally, with a split Congress it is likely that HHS may grant states more flexibility, especially when it comes to deadlines.

Deficit Reduction

Over the next two months there will be serious deficit reduction debates in efforts to avoid the planned sequestration. Health spending will likely be targeted, below are possibilities:

• Exchange subsidies. Democrats may concede to limited cuts in the Exchange subsidies in order to gain other offsets
• Medicaid per capita caps. With President Obama winning the White House, block grants are likely off the table, but capping per person spending in Medicaid is an idea introduced by Bill Clinton in 1995 that is gaining traction.
• Equalization of services across settings of care. A possible initiative of Congress would be to equalize fee schedules between the physician office and the hospital outpatient department. A next step, and a more divisive one for industry, would be equalizing services within the same site of service; for example IMRT and proton beam therapy.
• Laboratory Services. We expect some movement for co-pay for laboratory services both widely used services as well as advanced diagnostic and molecular tests. We would not be surprised to see a reworking of the entire Clinical Laboratory Fee Schedule. Molecular testing is still undergoing change as CMS.
• Payment Reforms. We would not be surprised to see additional items or services put up for competitive bidding in Medicare or for additional bundling pilots for services including cardiology and cancer care.

Oncology Implications

• Oral parity and compendia coverage stand out as the most salient coverage issues related to state EHB benchmarks. In states where such policies are considered a mandate the state may decide not to allow oral parity or compendia coverage because the cost implications would be borne by the state alone and not the federal government.
• Access to specialty drugs and higher cost treatments is at risk.
• Per capita caps would lower Federal spending on Medicaid and squeeze state budgets. As a result, States would likely cut provider rates as well as cut benefits for enrollees, again jeopardizing access.
• Medicaid expansion marks the first time men would be a significant population under Medicaid and may usher in use of products or services for prostate cancer or colorectal cancer that are not widely used today.
• CMS supported a bundled payment scenario for radiation therapy services. CMS also supported an Oncology Medical Home Demonstration. The agency will procure additional bundling pilots or move to bundle services outright.

Finally, two additional points of concern from our vantage point consulting for many OBR readers. We expect that commercial payers will key off many of these activities especially the bundled payment and demonstration scenarios and potentially co-payments or re-designed payment for lab services. We also believe CMS and FDA will continue to proliferate data mining as a mutually beneficial opportunity for both agencies and continue to explore opportunities to collaborate. The agencies have been working in tandem on parallel review and national coverage determination activities and we do expect some changes to the coverage with evidence development (CED) evidentiary guidelines and process.

Contributed by Marc Samuels, MPH, JD and Valerie Hutchins, Hillco Health

POLL SHOWS SOME COMMUNITY ONCOLOGY GROUPS CONCERNED ABOUT ELECTION’S IMPACT

As a stark backdrop to the HillCo Health issues cited above, OBR conducted a survey of 62 oncology practice leaders (MDs and practice managers included) on the day after the election (Wednesday Nov 7^th) and found that oncology practice leaders are, in some respects, more concerned about their business than they are access to quality cancer care. Some see the President’s win as an affirmation that the provisions of the Affordable Care Act (ACA) will remain and therefore will increase access to cancer care. On the other hand, providers in other oncology groups — still struggling in markets weakened by the economy — disagree, indicating that as a result they will hold off on plans to expand.

Below we detail the results of our survey. 85% of the poll respondents are from community oncology practices with at least 3 board certified oncologists. N=49 MDs and 13 Administrators.

53% believe the President’s re-election will increase access to cancer care because the ACA calls for an increase in the number of citizens with insurance.

41% disagree, believing that the insurance mandates may increase practice volume and income in the short term but they will decrease access long term because fewer primary care providers will be able to accept patients with the government’s insurance plans, leading to potential delays in cancer diagnosis.

One quote in particular resonated – “Have you tried to find a PCP for someone aged 65 and older?” asked one oncologist from Tennessee. “Try adding several more million into the mix [due to the ACA].”

34% said the President’s re-election means it is now more likely that they will pursue a merger with another group to be able “gain leverage over payers” and reduce operational risks. “If you can’t beat them, join them. It’s survival,” said one group administrator from Kansas. Of those more likely to pursue a group merger about half said they are now more likely to look into development of an accountable care organization or ACO, the concept created under the President’s Affordable Care Act that gives providers opportunities to share in savings for better quality care.

27% said they were waiting for the election to decide as a group whether to sell their practice to a hospital or academic center; now, with the President’s re-election, all 27% said they will begin this process, citing concerns about lower reimbursement and greater demands on practice economics.

Overall, 37 of the 62 said the election results will have no impact on their business strategy or operations while 25 believe they will. Many of those who will make a change said their practice is located in an economically weakened market and “volume has not returned to pre-recession levels,” so a President Obama victory, in their opinion, did not “reassure” them. Several groups said they will intentionally delay plans to hire more staff and “see fewer patients” due to pressure on their reimbursement and volume; others said they will “not expand their office locations” in the timeline planned.

Of the 25 who will make a change due to the President’s re-election, 15 voted for Gov. Romney, 9 voted for President Obama and 1 did not say. OBR believes its respondent mix is somewhat more conservative in ideology.

These results are meant to be an initial evaluation of opinions, and a larger study is required to draw valid conclusions concerning the impact of the election on oncologists. Regardless, the next two months will be critical, as we approach the fiscal cliff, in determining attitudes and perspectives toward the future of cancer care.

Contributed by Bryan Cote, OBR

PS – if you are interested in sponsoring a larger study on the impact of the election, contact the publisher at don@oncbiz.com