Dr. Bailes Urges Oncologists to Act Against APC Proposal

FORT LAUDERDALE, Fla—Time is running out for lobbying against the Health Care Finance Administration’s (HCFA) proposed Medicare hospital outpatient fee schedules, based on ambulatory payment classifications (APCs). The deadline for comments is June 30, 1999.

“If your hospitals have not written to the American Hospital Association saying this is a problem, you need to do something about it,” Joseph Bailes, MD, said at the National Comprehensive Cancer Network (NCCN) conference. He told the audience they can base their letters on ASCO’s draft comments on the issue.

Dr. Bailes is national medical director for Physician Reliance Network, a physician practice management company focused on oncology care. He is also ASCO’s president-elect.

Using APCs, HCFA projects (based on what Dr. Bailes called “almost incomprehensible data”) a 9% payment reduction for major teaching hospitals, and a 29% payment reduction for the Prospective Payment System (PPS) exempt cancer hospitals.

The structure of APCs is different from the older DRGs (diagnosis-related groups), he said. Some 7,000 HCFA codes have been compressed into 346 APCs. The payment amount is based on hospital costs from the cost report.

The plan proposes three APCs for outpatient delivery of chemotherapy—intramuscular subcutaneous, push infusion, and pump. “So when an individual presents for chemotherapy to a hospital outpatient department facility, he or she would be assigned to one of these three APCs with a dollar amount,” he said.

There are four APCs for chemotherapy drugs, grouped by the cost of the quantity specified in each J-code. “In other words,” he said, “within a specific category of chemotherapy drugs, there is absolutely no relation of one drug to another as far as cost.”

Dr. Bailes foresees a number of potential problems. “First is the lack of separate payment for supportive care drugs,” he said. “Currently, there is no separate billing for nonchemotherapy drugs, including growth factors and antiemetics.”

Second, he said, the bundling into a single APC of drugs of widely varying costs creates undesirable incentives. Paclitaxel (Taxol), for example, is in a category that reimburses $90, whereas fluorouracil (5-FU) is in a category that reimburses $50. “You can see that there is a potential incentive for physicians to use the lower cost drugs,” he said.

Patient co-insurance payments are also an issue. “For some of these drugs, the patient co-insurance will be substantial,” he said. For example, the patient co-insurance for 500 mg of fluorouracil could be as high as $45.

What to Do?

Dr. Bailes said that ASCO has been extremely active in combating the use of APCs. “We’ve met with HCFA and with the American Hospital Association. We have issued draft comments, which can be obtained from the ASCO office, suggesting several ways to handle this.”

First, he said, ASCO believes that chemotherapy drugs need to be reimbursed on a fee schedule as in the past. “We think that the HCFA cost data for major teaching hospitals, and certainly for cancer hospitals, are wrong,” he said. “HCFA even admits it is wrong on this, but doesn’t know how to fix it.”

ASCO also believes that because of these inaccurate data, the cancer services themselves—cancer services in the hospital outpatient department—ought to be kept separate (carved out), “at least for some period of time.”