Where Are We Going? Does Anyone Know? - March 2012

Oncology as a medical specialty is, and always has been, rapidly evolving. The world in which we provide care for patients is also rapidly evolving, and not always in sync with our changes. Doctors will be needed to diagnose and treat patients, but where and how that happens may look dramatically different in only 10 years. We still have the ability to shape that future, but what we do today, and every day from now on, will help to define our role. More external forces than internal forces have already shaped our evolution to 2012 from the 1970s, as described below.

Physician Offices Replaced Hospital Centers
When oncology was evolving as a medical specialty, most cancer care was delivered in hospital inpatient units. Side effects of cancer treatments were almost as debilitating as the treatments themselves. While we were looking for medical solutions to fight cancer, hospital-based diagnosis-related groups (DRGs) came along in 1984, and a low price for the chemotherapy DRG encouraged hospitals to shift cancer care into the outpatient setting of the hospital, where it predominantly remained until the US Food and Drug Administration (FDA) approved drugs such as ondansetron (Zofran) starting in 1991. These drugs allowed us to manage side effects of toxic cancer drugs in a far more controlled manner, and fueled the growth of physician offices with infusion suites that functioned as acute care medical centers in the community setting. Specially trained physicians and nurses streamed away from hospitals into these community offices, and pretty soon, about 80% of all cancer care (and clinical research trials) was being provided in these community settings. Many hospitals completely closed their outpatient infusion centers, and often made collaborative arrangements for community medical oncology practices to create what looked like integrated cancer centers to the general patient.

Physician Rates Lagged Behind Current Models
During the same time period, federal policy changes regarding healthcare reimbursement for all services occurred, which, although not focused on oncology, had a far-reaching effect on cancer care. In the mid-to-late 1980s, the resource-based relative value system (RBRVS) was created. After a market review, the RBRVS established physician and practice work and expense codes for each medical specialty; these codes and valuations defined a sweeping change in professional services reimbursement by 1989 for all medical specialties. The problem for oncology was that only 2 years after the RBRVS was calculated and put into process, the community oncology office evolved. Consequently, the care scenario on which the RBRVS rates were based ceased to exist and was no longer representative of the new model that had emerged. Professional codes and reimbursement rates for oncology services never caught up to the reality of the practicing model.

Buy and Bill Evolved for Efficiency and Stayed by Default to Cover Practice Costs
Oncology physicians, like the hospitals from which they came, bought cancer drugs from distributors, treated patients, educated patients on symptoms and side effects, and then billed the insurer for the treatment actually delivered. Cancer drugs were not readily available from any other source, and specialized oncology distributors evolved to serve the growing cancer center market. In 1993, the federal government recognized that the physician codes and rates for oncology were inadequate and that the margin on the average wholesale price–based drug reimbursement model was covering the inadequacy, but the government decided not to change the situation because of the complexity of enacting such a change.

In 2003, the World Shifted Under Oncologists, Patients
Just as some wins were being logged against cancer death rates, and care management and treatment allowed some cancers to become more chronic than fatal, 3 key aspects of the 2003 Medicare Modernization and Im­provement Act (MMA) shifted the oncology care model.

First, reimbursements for oncology drugs paid to medical offices were reduced, and now based on an average sales price (ASP). Drug acquisition and inventory costs, even distributor mark-ups for sale to physicians, were not included in the ASP calculation. Despite a couple of years of temporary transitional adjustments, reimbursement rates and calculations for professional services related to oncology care also continued to decline on a net basis. Margins were tightening and practices started to analyze drug costs and reimbursements for both themselves and the patients.

Second, Medicare Advantage plans were established that offered Part D drug benefits to Medicare patients. Initially, premiums, copays, and coinsurances were low and attractive to Medicare patients. Gradually, third and higher tiers were created for specialty drugs, and oncology drugs tended to be placed on the highest tiers. This led to increased coinsurances and copays for patients with cancer, and started a chain of patient access to care issues and site of care shifts based upon patient insurance coverage. A majority of Medi­caid and Medicare patients without supplemental insurance were likely to shift to the limited hospital outpatient center sites of service, driven by cost burdens for physicians and patients in the community setting.

Third, the Competitive Acqui­sition Program (CAP) generated attention on the prospect of a specialty pharmacy delivering drugs (in a practice known as “white bagging”) to an oncology practice and billing the payer directly, thus eliminating physician buy and bill. The CAP program was not successful or attractive to either specialty pharmacies or oncology physicians, and faded into limbo after its first years of existence. The program did, however, spark interest among specialty pharmacies about entering the oncology market for the first time.

Further Change and Interest from External Parties
In 2009, a new wave of federal healthcare reform created incentives for hospital-employed physician models and accountable care organizations (ACOs) to evolve. Not only specialty pharmacies, but also a number of pharmacy benefit managers and other companies aggressively built programs and proposals for private health insurers to use in managing oncology drugs, treatment, and costs. Words and concepts such as pay-for-performance, guidelines and pathways, preferred treatment regimens, evidence-based payments, episode-based payments, and oncology medical homes became hot topics and buzz words for 2010, 2011, and into 2012. Hospitals became interested again in expanding their oncology services and started buying practices that felt financially vulnerable as a result of all of the changes since 2003.

How Will Cancer Care Evolve Now?
Doctors will continue to treat patients. Drugs will be discovered and eventually approved by the FDA. All else appears to be up for grabs. There are at least 6 key variables that could shape what the cancer care delivery market will look like in 2022. Your decisions as an individual physician, administrator, and group may not change any of these by themselves, but should a sufficient volume of individual decisions all go in one direction or another, the tides could be shifted for those who do not take action.

1. Site of care.
   The federal government is encouraging consolidation between hospital organizations and private physician groups. In some states (ie, VT, RI, most of MA, and KY for now), there are few private oncology practices left; the rest have been integrated into hospital systems. Private health plans are concerned, because many feel that the rates they pay hospitals for services and drugs are higher than the rates paid to practices. Some plans are rapidly changing contractual terms for both practices and hospitals to address those inequalities. There can be advantages to more integrated systems: multidisciplinary care management, enhanced supportive services that are not billable in their own right, enhanced communications across a broad spectrum of departments, and enhanced accreditation and quality designations. There can be advantages to physician-based practices remaining separate but collaborative with integrated systems: streamlined delivery and cost-efficiencies, patient-focused care, enhanced software systems suited specifically for oncology, and physician-driven focus on quality and patient care. Size and business acumen coupled with technology ad­vances will be essential for any practice seeking to remain independent.
    
2. Oncology management.
   Numerous private entities are building programs for sale to health plans and the federal government that address managing oncology care across all sites of care. The current diversity of care sites in oncology and the silos in which care is delivered can become a liability to those who pay for the cancer care, because of limitations on their ability to collaborate with or influence all of the moving parts of the care process. Even if the oncology management focuses solely on the approval, claims processing, and possibly delivery of drugs, there may be interest by health plans on such solutions if they can be applied universally across all care providers. The more volatile the financial stability of the oncology providers in a market, the more likely that programs of this nature may be considered by health plans and the private entities. Once an oncology management program is established in an individual health plan, the harder it will be for either hospitals or independent practices to negotiate exceptions.
    
3. Evidence-based care, guidelines, and pathways.
   Successful health reform in oncology will be driven by data we do not currently have. We cannot track the variation in care across groups, hospitals, and practices today in a way that relates to a consistent national standard or to help us prove existing treatment standards of care. At best, some groups in some regions have started the process. In the near future, we will either come together on a single or limited number of platforms we find clinically acceptable in the oncology community, or the decision of which platforms are used will be made outside of the oncology community. We want to let evidence support decisions, but to get evidence we have to share data. Hospitals, private practices, and patients will need to become comfortable quickly with the concept of collectively assessing chosen treatments for state and stage of patients, and then combining that clinically enhanced data with health plan claims data that brings in total cost of care for those patients. If we do not, health plans will develop (some already have started) their own extrapolated cancer data and use that for future oncology coverage policy.
    
4. Medical homes and ACOs.
   Hospitals and primary care organizations across the country are exploring ACO options. Oncology is not yet part of that discussion and is not even addressed in the initial Medicare descriptions of ACOs. What oncology practices do in 2012 will likely set the stage for future negotiating power in their markets once these new structures, however they evolve, become established. Numerous pilots exploring the concept of an oncology patient–centered medical home are in play already across the country (eg, in CA, MA, MI, NM, and PA), but these are complex processes that require a significant level of sophistication both on the part of the practice and any participating health plans. One worry is that practices that wait and watch will find themselves unable to catch up fast enough and will be caught up in the tide of whatever becomes the prevalent model for their geography. The old adage, “It takes money to make money” could be modified in this situation to, “You can’t win if you don’t play, and it will take money and technology and commitment to play.” We do not know exactly what model will survive into the year 2022, but we do know we will be using technology to track and move patient care through more detailed and consistent processes than have ever been envisioned in the past.
    
5. Access to care.
   Some pundits have reported that Medicaid enrollment may exceed Medicare enrollment in the next few years as health insurance exchanges evolve, if they do. Should that happen, and reimbursement levels for large numbers of patients shift from commercial plans to these exchanges, that alone could drive all independent care providers to join a system—and there is little that any one innovative group or health plan could do to stem that tide. Shifting medical care and reimbursement rates to one level, particularly if it is a lower level comparable to current Medicaid rates, could become devastating to the war we have recently fought with cancer. Lowest common denominator care pricing could adversely affect access to, and private patients’ selection of treatment regimens with newer, perhaps more costly drugs. Medicaid drug formularies for the most part appear to be heavily influenced by net prices and rebates and far less by conventional medical practice or clinical decisions. Ultimately innovation in oncology care may become stifled, or drugs and medical care may become more distinctly tiered than today. One would hope that this will not be a likely scenario, but as of now, it is in the realm of possibilities.
    
6. Specialty pharmacy, pharmacy benefit management, and oncology.
   There is a strong interest and drive for health plans, specialty pharmacies, and pharmacy benefit managers to define a management role in oncology, through interactions with health plans and employers, more than physicians and hospitals. Although most hospitals now utilize their own pharmacies, oncology care is still billed under the medical benefit. The medical benefit is under intense scrutiny as to whether a complex and costly disease such as cancer can be best tracked through that process, or if an alternative structure, such as the pharmacy benefit (which is not traditionally billed by physicians), would be preferable. Physicians in independent practice tend to be more vocal about such changes and engaged in discussions with health plans and employers about the viability of those and other alternatives. Physicians employed by hospitals may tend to be less engaged, which could be an asset or a problem for both the other physicians in the community and the health plans seeking to address oncology issues. Specialty pharmacies seeking to enter the oncology market may find increasing numbers of markets controlled by hospital systems, which tend to utilize their own pharmacies.

Where are you going? Will you lead the way or be swept along by forces seemingly beyond your control? The year 2012 is a landmark year. There are more opportunities than ever to collaborate, engage, track, evaluate, and move the discussion of oncology management forward in a positive way for patients, physicians, hospital systems, health plans, and employers.

Knowing what is riding the wave coming our way is the first step. Deciding to push forward into the current and start paddling is the second step. Enlarging your platform and adding tools to assist you navigate the turbulent waters is the next. Hopefully, when this is over, you’ll be one of the groups that has ridden the wave all the way into the next decade and will be proudly fighting cancer with your patients for another decade.