Study Finds Medicare Cancer Care Costs Lower at Physician Practices

As the Joint Select Committee on Deficit Reduction ("supercommittee") approaches its day-before-Thanksgiving deadline to carve out a plan to reduce the federal budget by at least $1.2 trillion over the next 10 years, including significant cuts to Medicare, a study has been released that demonstrates the cost-effectiveness of Medicare-funded cancer care treatment programs.

The Background

The majority of Democrats on the bipartisan committee have laid out a proposal to cut $3 trillion in total spending, mostly from federal entitlement programs such as Medicare. If the committee does not uniformly agree on a budget-cutting plan and Congress does not act on the recommendations, automatic cuts in the amount of $1.2 trillion will occur in January of 2013. Medicare and Medicaid will be exempt from these "trigger" cuts, half of which will come from Pentagon programs. Provider payments, however, could be reduced.

For now, it looks like the Democrats’ proposal will not be approved by the Republicans on the committee because of the proposed $1 trillion in new taxes. The Democrats’ plan calls for $400 billion in cuts to Medicare via the reduction of benefits to Medicare recipients. A newly proposed Republican plan includes a $500 billion cut to Medicare over the next 10 years and a $185 billion cut to Medicaid.

The Medicare cut includes shaving off $3 billion in reimbursement to doctors who care for Medicare beneficiaries. This news has spurred the National Patient Advocate Foundation (NPAF) to write a letter to the "supercommittee" asking them to consider the consequences of their budget savings on Medicare patient care and to oppose the deficit reductions "that would threaten patient access to care." The letter highlights that many of the Medicare patients that NPAF represent are poor, sick, and disabled. 30% of these Medicare beneficiaries have a "medical debt crisis" as a primary issue, and 40% are disabled. These are the patients, according to the NPAF, that will be impacted by the proposed Medicare cuts because of the effect on community clinics. Community oncology practices, where 84% of cancer patients receive care, will be forced to close. According to the Community Oncology Alliance, approximately 200 community-based cancer clinics have closed in the past three years, and 389 more are struggling to survive through mergers with local hospitals.

The Study

In this context, a new study that examined the cost of cancer care delivered by community practices vs the outpatient hospital setting shows that cancer care costs for Medicare beneficiaries are significantly lower in community-based care settings. The NPAF letter to the Congress committee states that 80% of cancer patients under Medicare Part B receive care from community oncology clinics, making this study a potentially powerful way for the advocacy group to bolster their view.

The study, "Site of Service Cost Differences for Medicare Patients Receiving Chemotherapy" was released by Milliman, an actuarial firm and commissioned by McKesson Specialty Health on behalf of The US Oncology Network. As most chemotherapy is now delivered in the offices of oncologists, and many cancer patients are elder Medicare beneficiaries, this issue of the site of chemotherapy has received attention as Medicare reimbursement policies continue to evolve.

The Milliman research looked at the 0.9% of Medicare patients that have 1 of 10 different cancer types and receive chemotherapy annually. These ten different cancer types make up 75% of the Medicare population, and 12% of this cancer cohort receive chemotherapy annually. A Medicare data set from 2006 to 2009 looked at statistics of 80, 000 Medicare cancer patients, parsing the patients by the type of site where they receive their cancer treatment.

The results show that the difference between physician office care and other settings is $600 per patient per month, which results in a $6500 lower cost per office-treated patient annually. Co-pay amounts were 10% lower for physician office care, equalling $650 per patient per year.

The Panel Discussion

In light of the short deadline for a decision from the Deficit Reduction Committee and the cancer care cost study, a panel of cancer care advocates and providers discussed the potential implications of a $3 billion Medicare cut that may threaten cost-effective community care.

"Some smaller physician practices may not be able to afford to administer these drugs in their offices," said Roy Beveridge, MD, Chief Medical Officer of the US Oncology Network in a press release. "We want the Select Committee and Congress to realize that ensuring high-quality, cost-effective care, and lower costs for Medicare and its beneficiaries fighting cancer, requires a viable community cancer care delivery system." During the panel, speaking for the US Oncology Network, he began by stating that the network is "very concerned with the repurcussions on the proposed cuts from our Congress."

Roy Beverigde was joined by Bruce Pyenson, a principal and consulting actuary at Milliman, Ted Okon, the Executive Director of Community Oncology Alliance as well as Nancy Davenport-Ennis, Founder and Chief Executive Officer of the National Patient Advocate Foundation.

Ted Okon discussed the effect of budget cuts on community cancer centers. "If you look at cancer care in general, it is in crisis. There has been a huge consolidation in the marketplace for cancer services and we have had over 1,000 practices that have been negatively impacted . . . The biggest shift is that towards the hospital setting, impacting over 300 practices and that basically plays to [this study] in terms of the increased cost and the more efficient care that is delivered in a community setting."

Okon also emphasized that Medicare greatly influences providers and therefore private insurance patients and highlighted that the Milliman study emphasizes how Medicare allows for cost efficiency in the community oncology care setting. Nancy Davenport-Ennis, of the NPAF, stressed the low-income patients that the NPAF represents, and that this population has no alternative if a local oncology facility closes.

Davenport-Ennis closed by saying that in the 1970s, the United States shifted cancer care to a community infrastructure, allowing patients to stay employed and maintain families while in treatment. According to the NPAF spokesperson, this community framework "reduced our cancer mortality rates 11% last year, for the first time in our nation’s history."

The panelists ended by stating that the United States needs to maintain a sustainable community cancer system and that this system is already being challenged. They want the public to understand that they believe the small savings from cuts to Medicare and patient care programs will increase the cost to our healthcare system and to patients.

An audience member’s question about clinical trials allowed the panelists to explain that 80% of clinical trials are offered in a community setting, allowing many more patients to engage in important study participation. The potential reduction in the number of community oncologists will result in reduced research and patient enrollment, according to Davenport-Ennis. Dr. Beverigde added that research "will further be affected in a negative way with potential cuts to community care."

The take-home message of the new study and the panel is that Medicare supports cancer patients, many of whom are disabled, that are facing financial hardships (two-thirds of the patients the NPAF represent have annual incomes of less than $23,000). The cuts, they believe, while targeted at reimbursement to doctors, will result in an increase in closed community clinics that cannot thrive without adequate reimbursement.

A decrease in community clinics will ultimately have a direct burden and negative impact on the access to care for Medicare patients receiving treatment in community clinics. This latest patient cancer care study also shows that these effects may also result in inflated costs to our national healthcare system.