Equalize payments for cancer care

For years, a growing gap has emerged between reimbursements for cancer care provided in the community-based care setting and reimbursements for the same care provided in hospital outpatient departments. A September 2013 report by the Moran Company found significantly higher costs to the Medicare program for patients receiving chemotherapy treatment in hospital outpatient departments versus the same service provided in physician offices, and furthermore that hospital outpatient departments use more drugs, more expensive drugs and more services to treat similar patients.

{mosads}Services like IV chemotherapy are consistently paid for at markedly greater amounts in the hospital setting. The result has been higher costs to Medicare, higher co-payments for patients and payment incentives for shifting patients to hospital outpatient departments for cancer care.  MedPAC commissioners estimate that the current practice of shifting patients to these higher-cost settings results in $2.1 billion in increased spending each year for the Medicare program and its beneficiaries. 

This payment inequity unfairly puts community-based cancer care and the patients they serve at a disadvantage.  Between 2005 and 2011 there was a 150 percent increase in chemotherapy administered in the hospital outpatient setting compared to community cancer clinics. While hospitals reaped more than triple their previous reimbursement amounts (from $90 million to $300 million), hundreds of freestanding cancer centers have been forced to close their doors. Responding to these perverse incentives offered by Medicare, the hospitals are making more money while the lower cost community clinics are having trouble keeping their lights on.

The numbers are concerning. A recent survey of oncology practices found that 288 oncology office locations have closed; 131 practices merged or were acquired by a corporate entity other than a hospital; 43 community oncology practices have started referring all of their patients elsewhere for treatment; and 469 oncology groups have entered into an employment or professional services agreement with a hospital.

To remedy this alarming trend, Reps. Mike Rogers (R-Mich.) and Doris Matsui (D-Calif.) have introduced the Medicare Patient Access to Treatment Act, (H.R. 2869), which would equalize payments for cancer care across treatment settings.  By aligning payments for outpatient cancer care in the hospital outpatient department and physician office setting, this legislation would protect beneficiary choice and access to cancer care in community-based settings many patients prefer.

Aligning payments for cancer care across settings – as MedPAC is recommending to Congress – simply makes sense. Not only is community-based care less expensive for Medicare – a typical one-hour IV chemotherapy infusion costs Medicare $133 in an office environment and $299 in the hospital outpatient department, but patients also prefer the community setting because it is typically closer to home and associated with shorter wait times.