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Home > Press Room > Interviews & Features > 2001 M C & C Roundtable

Pending Changes in Medicare: What Lies Ahead for the Cancer Care Community?

Moderated by Clifford Goodman, Ph.D.
Featuring Thomas A. Ault, MS, and Nancy Davenport-Ennis

Clifford Goodman, Ph.D.
Clifford Goodman, Ph.D.
Thomas Ault, MS
Thomas A. Ault, MS
Nancy Davenport-Ennis
Nancy Davenport-Ennis

The managed-care industry is intimately tied to the vagaries of political winds and the shifting tides of legislature that rise and fall from Capitol Hill. To give our readers an update on the current state of affairs ranging from Medicare's prescription drug coverage benefit to HCFA's works-in-progress such as coverage for oral drugs, Managed Care & Cancer conducted a roundtable discussion moderated by Clifford Goodman, PhD, senior scientist at the Lewin Group. Dr. Goodman, who conducts seminars in technology assessment and innovation, spoke with Thomas A. Ault, a principal of Health Policy Alternatives and formerly a director with the department of HHS, and Nancy Davenport-Ennis, president and founder of the National Patient Advocate Foundation, a national organization that advances reform measures to improve quality access to health care. Dr. Goodman raised issues concerning recent and pending health-care legislation and asked Mr. Ault and Ms. Davenport- Ennis what these changes might mean to cancer patients, providers, and payers.

DR. GOODMAN: Drug delivery and payment policies loom large in Medicare's court. One of the areas I would like to address today is Medicare payment for physician- administered drugs. For nearly all of these drugs, Medicare pays 5% less than AWP [average wholesale price]. But HCFA [Health Care Financing Administration] found that physicians often pay far less for these drugs in the first place, so that the payment of AWP minus 5% appears to provide them with sizable windfalls. Is that the state of affairs?

MR. AULT: Yes, Medicare pays AWP minus 5%, and studies conducted by the Inspector General and the General Accounting Office [GAO] as well as articles in the press have suggested that Medicare is paying too much for these drugs. Accordingly, Medicare has wanted to lower its price. So that's definitely a threat.

DR. GOODMAN: It is my understanding that physicians say that they need that differential to cover other losses in the delivery of their services. Is that why you characterize it as a threat?

MR. AULT: Yes, physicians are paid according to a Medicare fee schedule. And Medicare payments for oncology services under the physician fee schedule, including drug administration, do not cover the practice expense costs. So, what oncologists and other physicians do is offset their losses on the physician fee schedule with the additional payments that they get from the drug prices.

DR. GOODMAN: So then, HCFA's current intent is to take off more than 5% of the AWP. Is that correct?

MR. AULT: HCFA has made proposals of AWP minus 17% over the last few years. That's their approximation of what the actual acquisition cost of the drug is.

MS. DAVENPORT-ENNIS: There would be a huge threat posed to the patient community with regard to access if the issue were to just result in AWP minus a number that is larger than 5%. That would bring physicians to the point of having to make choices about whether or not to see Medicare patients. The work we did last year with the American Society of Clinical Oncology as well as the Association of Community Cancer Centers clearly reinforced the fact that there is currently no provision for reimbursement of complete practice expenses. What the physicians told us last year is that they are essentially faced with three choices. First, they could refuse to see Medicare patients. Second, they could scale back staff and try to cut overhead, probably starting with some of the most expensive salaried positions, including the oncology nurses that are so supportive to the administration of chemotherapy. The third choice that physicians shared in more than one meeting is that they would be faced with closing their offices altogether, depending on what percentage of their patient populations were from the Medicare community. In every meeting, the physicians reiterated that, in 1997, members of Congress, HCFA, and the medical community mutually agreed to reimbursement being set at AWP minus 5%. And that is being threatened. Fortunately, we now have an opportunity to have a GAO study look completely and thoroughly throughout the country at what expenses are involved in administering chemotherapy and build an appropriate mechanism and process for reimbursing practice expenses. Then we can look realistically at what amount needs to be reimbursed for the drugs.

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