Broad Coalition of Health Care Groups Opposes APCs

ALEXANDRIA, Va—“Organized opposition to the Health Care Finance Administration’s (HCFA) proposal to reimburse outpatient Medicare cancer services according to ambulatory payment classifications (APCs) now includes many of the major players in the oncology community,” reported Lee E. Mortenson, DPA, executive director of the Association of Community Cancer Centers (ACCC), Rockville, Maryland.

Speaking at a plenary session of the ACCC’s 25th Annual Meeting, he said that “with two independent analyses confirming an initial HCFA finding that cancer centers would lose 30% of their current reimbursement for chemotherapy, ACCC has mobilized a variety of groups to speak with one voice on the issue.”

What Are APCs

Ambulatory payment classifications (APCs) are a new method, proposed by HCFA, of determining Medicare reimbursement of hospital outpatient services. With this method, similar services or drugs are bundled into a single APC; their costs are averaged, and all are reimbursed at the same rate.

According to HCFA, the payment amount is based on hospital costs, but cancer center administrators believe that the cost data used to determine the cost of cancer services and drugs are faulty and would result in huge losses for their institutions.

The oncology community also objects to the wide range of drugs included in a single APC. HCFA’s proposal groups all chemotherapy agents into only four APCs, and supportive care agents are not included.

Analyses by ELM and the Lewin Group, which were hired to replicate the HCFA database, also predicted significant losses for radiation oncology and a complete loss of reimbursement for supportive care should the proposal go into effect as currently written.

Groups “now on board” the opposition include the American Hospital Association (AHA), the American Medical Association (AMA), the American Society for Clinical Oncology (ASCO), the Cancer Research Foundation of America (CRFA), and major groups representing oncology nurses and patients.

“In their draft comments to HCFA,” Dr. Mortenson said, “ASCO noted that the proposal would result in sharp reductions in payments to hospitals for oncology-related services. . . . ASCO recommends continuation of the current reimbursement system.”

The AHA holds that there are serious problems with the data underlying the chemotherapy groups. It recommends that HCFA “carve out the costs for chemotherapy and chemotherapeutic agents, and pay on a reasonable cost basis until the agency fixes the underlying coding problems, collects new data, proposes new groups or rates, and includes the results in a subsequent proposed rule.”

In addition, AHA opposes the HCFA proposal to reimburse new therapeutic agents at the lowest rates. Because new drugs and technologies are generally both costlier and more effective than existing ones, they should be totally excluded from budget neutrality, the AHA asserts.

Turning to radiation oncology, Dr. Mortenson mentioned an ELM study showing that the proposed payment rates will make it impossible for providers to replace equipment without operating losses, a situation that will strongly discourage use of the most effective therapies. In its draft comments, ASTRO (American Society for Therapeutic Radiology and Oncology) said it supports the coalition’s position that “the proposed classification system . . . discourages the use of clinically appropriate but costly therapies and encourages the use of less expensive and less effective therapies.”

A federal bill known as HR 1090 and introduced in the House of Representatives by Rep. Gene Green, Democrat of Texas, would, if passed into law, carve out from the APCs any outpatient drug or biologic used as cancer treatment, supportive care, or both. It has more than 20 co-sponsors from both parties and the support of a wide range of organizations. Dr. Mortenson noted that copies of the proposed legislation had been handed out to those attending the ACCC meeting. He strongly encouraged all members of his audience to contact their congressional representatives and urge them to become co-sponsors.

While Dr. Mortenson views passage of HR 1090 as very important, he also noted that the oncology community’s strong condemnation of the APC proposal has already forced HCFA to reevaluate at least parts of its position. “In a joint meeting of ACCC and AHA representatives with HCFA officials,” he said, “the agency admitted that it included in its database only medical bills to patients listing a single procedure, a most unrepresentative sample of cancer treatments. In fact, this action systematically excluded the most representative multiprocedure bills.”

Because of oncology community complaints, HCFA is now re-evaluating the database on which it based the proposed system of APCs, Dr. Mortenson observed, noting that HCFA has admitted, in the agency’s words, that “we must make extensive revisions of our databases in order to respond to the industry. Therefore, we are reprogramming and documenting our databases in order to make interaction with potential commentors more efficient.”

This revision occurred, the agency statement said, because “numerous hospital industry groups . . . have requested extensive comparison of their databases” with those used to create the HCFA proposal.

Dr. Mortenson pointed out that the comment period on the proposal, first scheduled to end in September 1998, has been extended twice, with a current deadline of June 30, 1999.