Oncology ReimbursementOncology ReimbursementPast, Present and FuturePast, Present and Future

Association ofNorthern California Oncologists

Medical Oncology Associationof Southern California

Welcome & IntroductionWelcome & Introduction

Peter Paul Yu, MDANCO President

Steven Tucker, MDMOASC President

Forthcoming ANCO EventsForthcoming ANCO Events

• ANCO Audio Conference:Managed Care Contracting in an ASP WorldWednesday, July 13th, 12PM

• ANCO 2005 Annual MeetingTenaya Lodge at YosemiteOctober 14-16th

Acknowledgment of SupportAcknowledgment of Support

SponsorsAMGEN • APP/Abraxis Oncology

Bayer Oncology/Onyx Pharmaceuticals • Berlex LaboratoriesGenentech BioOncology

International Oncology Network/Oncology Supply • MGI PharmaMillennium • Novartis Oncology

Oncology Therapeutics Network/Onmark

ExhibtorsAstraZeneca • biogenIDEC • Bristol-Myers Squibb Oncology

Celgene • Enzon Pharmaceuticals • Lilly Oncology National Oncology Alliance

OrthoBiotech/Tibotec Therapeutics • OSI Pharmaceuticals Pfizer Oncology • Sanofi Aventis OncologySchering-Plough Oncology • US Oncology

Oncology ReimbursementOncology ReimbursementPast, Present and FuturePast, Present and Future

Dean Gesme MD FACP FACPEPast Chair, ASCO Clinical Practice Committee

Past Chair, National Coalition for Cancer SurvivorshipManaging Partner, Iowa Cancer Care

Do something every day Do something every day that scares you! that scares you!

Eleanor Roosevelt

Ground RulesGround Rules

All Theories are wrong but some are useful.

Doctors are men who Doctors are men who prescribe medicine of which prescribe medicine of which

they know little, to cure they know little, to cure diseases of which they diseases of which they

know less, to human being know less, to human being of which they know nothing.of which they know nothing.

Voltaire 1694-1778Voltaire 1694-1778

What Health Professionals What Health Professionals and Patients Wantand Patients Want

Quality Care

What Payers Want

Cost Control

ValueValue EquationEquation

Value =

Quality

Price

Everywhere the old order Everywhere the old order changes, and happy are those changes, and happy are those

who can change with itwho can change with it

Sir William Osler

System ChangeSystem Change

TransactionalTransformational

Transactional Change-- incremental

-- negotiated

-- political

-- imposed

Transformational Change-- altered paradigm

-- shift in values

-- reform in beliefs

Cost Control is Cost Control is TransactionalTransactional

Quality Improvement is Transformational

““Transformed means that Transformed means that when times are tough, we when times are tough, we

invest more in quality”invest more in quality”

Charles Buck – retired GE executive

Transformational Transformational Change ProcessChange Process

VisionStrategy

TrustTactics

Tests/TrialsImplementation

Physicians and TrustPhysicians and Trust

Only the best and brightest are chosen Thus, you are the best Others may not be as good Thus, others may make mistakes You will be responsible for all mistakes

affecting your patients Therefore, others can not be trusted Teams include others and therefore can not

be trusted

Transformational ChangeTransformational Change

Vision

Strategy

Trust

Tactics

Tests/Trials

Implementation

What We Say We WantWhat We Say We Want

Patient-centric care Pay for Performance Improved Quality Improved Outcomes

What We Will Pay ForWhat We Will Pay For

Process-centric care Pay for procedures Piecework mentality Identical Pay for Best or Worst

Care

All theories are wrong All theories are wrong but some are usefulbut some are useful

Oncology ReimbursementOncology Reimbursement

History Current Situation Future Possibilities

HistoryHistory

Surgery- 1809 first elective surgery- 1867 antisepsis --- Lister- 1890 Halsted radical mastectomy- 1896 oophorectomy for breast cancer- 1913 American Society for Control of Cancer- 1936 Women’s Field Army- 1945 American Cancer Society founded

“There must be a final limit to the development of manipulative surgery, the knife cannot always have fresh fields for conquest and although methods of practice may be modified and varied and even improved to some extent, it must be within a certain limit. That this limit has nearly, if not quite, been reached will appear evident if we reflect on the great achievements of modern operative surgery. Very little remains for the boldest to develop or the most dexterous to perform.” Sir John Erichsen Lancet 1873

SurgerySurgery

Endoscopies Laparoscopies Sentinel node evaluations Stereotactic procedures Enhanced diagnostics – CT, MRI, PET,

Ultrasound RFA, cryoablative procedures Nanotechnologies Transplantation

Radiation TherapyRadiation Therapy

3D computerized treatment planning IMRT Dynamic dose delivery techniques Continuous RT Stereotactic Radiosurgery Intracavitary brachytherapies Radioimmunoconjugates

Pay Per ProcedurePay Per Procedure

New procedures priced liberally Procedure becomes quicker, safer, and

simpler with time Eventually, commoditization occurs and

price falls Procedure replaced by new technology

and again priced liberally at first

Chemotherapy Chemotherapy ReimbursementReimbursement

HISTORY- 1946 Nitrogen mustard- 1953 Aminopterin- 1960s alkylators and antibiotics- 1970s platinum compounds, BMTs - 1980s taxanes, biotherapies, ABMT- 1990s growth factors, anti-emetics- 2000 targeted therapies

Drug ReimbursementDrug Reimbursement

60s through early 80s – inpatient care – cost plus pricing

80s-2005 – AWP pricing methodology -- evolution to outpatient care setting due to:

- improved anti-emetic regimens

- shorter drug infusions

- availability of skilled oncology nurses

- physician investment in infrastructure

Office Based ChemotherapyOffice Based Chemotherapy

81.3% to 85.7% of chemotherapy given in office setting in 1990s according to National Centers for Health Statistics (CDC)

Patient preference in most situations 98% office based chemotherapy in

many practices Skilled personnel, specialized facilities

Drug ReimbursementDrug Reimbursement

AWP pricing- simple, published reference- reproducible and verifiable- subject to manipulation

leucovorin, lupron, generics- controversial- unsustainable

Oral DrugsOral Drugs

Levamisole --- inexpensive veterinary anti-helminthic product, repriced aggressively for adjuvant colorectal therapy.

Thalidomide --- banned in the 1960s. Used for ENL in 1970s and 1980s. Adapted and repriced in 2000.

Gleevec, Iressa, Tarceva

ASP MethodologyASP Methodology

Untested Fairness subject to question Price to some will go up if it goes down to

others Average price not available to all Congressionally mandated Unsustainable Some feel the result of ASP will be de

facto drug price control

Drug AdministrationDrug Administration

CMS uses AMA CPT coding for reimbursing all physician services

Administration fees based on historical charges and “practice expense” before 2005 as no “physician work” considered

Practice expense defined using “top down” methodology ---average price per hour for each specialty rather than resource based

Drug AdministrationDrug Administration

Drug administration relative values supplemented in 2004 by 32% add-on mandated by MMA

ASCO and other surveys suggest that administration costs still severely undervalued even with the add-on in 2004

2005 add-on decreases to 3% Temporary codes for Medicare only

Temporary CodesTemporary Codes New code for implanted port flush – minor effect

financially Add physician work component to admin codes – AMA

RUC throws out physician survey data and uses lower values similar to 2004

Unbundling of admin codes for 2005 – but practice expense recalculated to factor in unbundling

CMS mandates payments for physician time spent dealing with chemotherapy admin complications – but no new codes and no consideration of special resources

Treatment planning and services provided relative to chemo admin (patient teaching, phone calls, financial counseling, psychosocial support) not separately payable – AMA CPT Workgroup formed

Temporary CodesTemporary Codes

2005 temporary codes will be incorporated in AMA published codes in 2006

Thus, 2005 will see private plans use different codes than Medicare

Confusing and complicated for patients, physicians and payers

Increased office overhead for billing

Americans always try to do Americans always try to do the right thing, after they the right thing, after they

have tried every thing else.have tried every thing else.

Winston Churchill

Demonstration ProjectDemonstration Project

Patient-centric Symptom management – quality of care Fatigue, pain, nausea – simple scale

with minimal documentation requirements

$130/patient/day for Medicare patients receiving parenteral drugs in office

Economically will restore 30% – 60% of overall reduction from 2004

MMA Changes for 2006MMA Changes for 2006 Where will ASPs “land”? Regression to the mean predicted for drug

prices 3% chemo administration add-on is eliminated Competitive Acquisition Plan (MVI) – elective for

practices, details uncertain All drugs? Supportive care drugs? Safety Timeliness Drug denials Collection issues Costs of administration for practices

The moral test of government The moral test of government is how it treats those who are is how it treats those who are in the dawn of life, the children, in the dawn of life, the children, those who are in the twilight of those who are in the twilight of life, the elderly, and those who life, the elderly, and those who are in the shadows of life – the are in the shadows of life – the sick, the needy and the sick, the needy and the handicapped.handicapped.

Hubert H. Humphrey

TheThe FutureFuture

It’s difficult to make It’s difficult to make predictions, especially about predictions, especially about

the future.the future.

Y Berra, C Stengel, S Goldwyn, D Quayle, W Rogers, M Twain, V Gorge, G Marx, W Allen, and many others

The FutureThe Future

Transactional change

OR

Transformational change

Transactional ChangeTransactional Change

Increase efficiency --- CMS’ recommendation to physicians

IT/EMR – improved efficiency and ability to gather quality data, BUT who will pay for it – value equation does not favor this

Physician response – play by AMA/CMS rules ADD PROCEDURES

CT, MRI, PET, Labs, daily or weekly chemotherapy Change patient mix – reduce indigent care, reduce

Medicare exposure, refer poorly reimbursed cases to hospitals

When elephants dance, the When elephants dance, the chickens must be careful.chickens must be careful.

Asian proverb

Transformational ChangeTransformational Change

Physicians paid for medical advice and care services

Reasonable and equitable payment for all expenses related to chemotherapy services and management

Commitment to Quality assessment and improvement

Trust and teamwork

Obstacles to Obstacles to TransformationTransformation

Lack of trust CMS commitment to AMA CPT process Limited ability of CMS to spend on

transformational projects Preoccupation with cost control Private payers deferral to CMS payment

methodologies Lack of techniques to define quality

QualityQuality

Pay for performance is certainly acceptable --- but….

Requires uniform definition of performance and validation of measures

Surrogates for performance may exist;

structure

process Donebedian

outcomes

StructureStructure

Some payers offer a premium for practices utilizing approved Electronic Medical Records technology

ProcessProcess Data gathering and sharing Computerized physician order entry Electronic prescribing Measures of access to care Multidisciplinary coordination of care Guidelines compliance Enhanced services

Patient education Psychosocial care Financial counseling Symptom management by oncology nurses

OutcomesOutcomes Response Survival Symptomatic improvement Functionality

Return to work Resumption of activities

COST ---- in its role in the value equation

Physician Risk Acceptance for Physician Risk Acceptance for CostsCosts

Prospective payments Bundled charges Episode treatment grouper

Disease specific Age adjustments Stage adjustments Comorbidity adjustments

We have upped our quality, We have upped our quality, so up yours.so up yours.

Anonymous

What Will It Be?What Will It Be?

Transactional Change Incremental Negotiated Political Imposed

OR

Transformational Change Vision Strategy Trust Tactics Tests/trials Implementation

Science is organized Science is organized knowledge. Wisdom is knowledge. Wisdom is

organized life.organized life.

Immanuel Kant

Physicians must lead the Physicians must lead the healthcare team for the benefits healthcare team for the benefits of their patients. Payers must of their patients. Payers must

be included as part of the be included as part of the healthcare team. Together we healthcare team. Together we must work to maximize value must work to maximize value offered within our healthcare offered within our healthcare

system. This will require system. This will require transformational change.transformational change.

These are my principles and if These are my principles and if you don’t like them, I have you don’t like them, I have

others.others.

Groucho Marx