Payment for Cancer Care: Time for a New Prescription

The prescribing patterns of oncologists have long been of interest to health care economists and policy makers. Our field is unique in the extent to which we serve as both prescribers and dispensers of therapeutics. Because of the large profit margins historically associated with the management of outpatient infusion services, concern has been raised about the potential for physician-induced demand driven by financial considerations. Until 2005, oncologists were reimbursed at 95% of average wholesale price for chemotherapeutics; because they were often able to purchase these drugs at significant discounts, profits could be quite large. One example among many was the reimbursement for paclitaxel, which in 2004 was six-fold higher than the actual cost. The introduction of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) was designed to reduce expenditures for costly agents, and in 2005, a payment system was introduced that paid fee-for-service (FFS) practitioners 106% of the national average sales price. This was felt to represent a more stable and reliable benchmark, while providing physicians with a revenue stream to compensate for the administrative costs involved in delivering these therapies. After the MMA was implemented, economists sought to determine whether a reduction in profit from chemotherapy would alter physician behavior, either by increasing chemotherapy use overall or by shifting selection of treatment to those agents associated with the greatest profit margin. This hypothesis, derived from economic theories, postulated that physicians are motivated to achieve a balance between target income (while not compromising high-quality care) and personal leisure time. The MMA provided the opportunity to conduct a so-called natural experiment. The hypothesis that physician behavior is impacted by reimbursement in an FFS environment is supported by many studies. For example, Hadley et al found that use of breast-conserving surgery rather than mastectomy was more frequent in geographic regions in which reimbursement was higher. Others have found that following the MMA, chemotherapy use was increased for drugs that maintained more generous reimbursement. Shahinian et al investigated changes in the use of androgen deprivation therapy in men with localized prostate cancer. After enactment of the MMA, the reimbursement for androgen deprivation therapy was considerably lower than before the MMA, and the use of gonadotropin-releasing hormone agonists declined substantially. Each of these studies suggests that financial considerations may have an impact on physician treatment behaviors. Consistent with these observational studies, survey data support the notion that oncologists are aware of the direct impact of chemotherapy and parenteral supportive medication prescribing on their incomes, particularly among physicians with productivity incentives. In the article that accompanies this editorial, Hornbrook et al tested the hypothesis that following passage of the MMA, financial incentives led to reduced use of agents for which reimbursement declined substantially. In addition, they predicted that these relationships would not be present in integrated health networks that lacked financial incentives for providers. They explored chemotherapy administration among 3,613 patients with colorectal or lung cancers in the Cancer Care Outcomes Research Surveillance Consortium. Although administration of drugs affected by the MMA declined after enactment of the new payment model, the findings were not consistent between colorectal and lung cancers. Likewise, patients treated in FFS settings were less likely to receive drugs affected by the MMA after that law was passed. However, discordance was again observed for different cancers. These inconsistent findings suggest that factors other than financial incentives might play an important role in oncologists’ prescribing patterns. For example, changes in practice patterns driven by new clinical data would not be surprising during this or any longitudinal study of oncology care. The rapid uptake and implementation of new evidence in routine practice is highlighted by a recent study that demonstrated a dramatic decrease in use of epidermal growth factor receptor inhibitors in patients with colorectal cancer when new evidence regarding RAS gene mutations as predictors of treatment resistance was disseminated. Ideally, the decision on whether to administer chemotherapy and which drugs to prescribe would have no associated financial incentive. Rather, oncologists would be reimbursed for the care they provide and would base their recommendations solely on evidence regarding treatment value in the context of individual patient preferences. Financial incentives could be aligned with clinical outcomes. Cost savings to payers and society would be realized through adherence to evidencebased practice, improved patient outcomes, and practice efficiencies derived in part from a simplification of the current payment structure. Recently, the American Society of Clinical Oncology proposed a model to achieve these goals with bundled payment linked to episodes JOURNAL OF CLINICAL ONCOLOGY E D I T O R I A L VOLUME 32 NUMBER 36 DECEMBER 2