Major Fight Escalating Over Medicare's Payment Plan for Cancer Drugs

A brand new Medicare pilot proposal that tests ways physicians pay for chemotherapy, and other drugs has sparked outrage among cancer doctors who are demanding the Obama Administration reconsider or scrap the plan.


According to an AP article written by Ricardo Alonso-Zaldivar, the reaction has caused many to question the government's ability to tackle some of the most expensive drugs for treating life-changing diseases. Interestingly, Salazar said the question isn't whether those drugs are fairly priced, but whether Medicare's current payment policy encourages doctors to prescribe the costliest medications so they can make more money.   Medicare now pays doctors and hospital outpatient clinics the standard sales fee of a drug, plus a 6 percent add-on, somewhat reasonable by federal budget cuts.  The new proposal changes the add on rate from 6 percent to 2.5, but includes a flat fee for each day the drug is administered.  If it is determined that the plan lowers costs and maintains quality, the policy would become permanent.

The opposition has come fast and furious from advocacy groups and physicians.    In a story published in Health Leaders, Alan Bach, CEO of the National Patient Advocate Foundation says the Medicare proposal will hit patients in rural areas the hardest.  Bach says people in rural areas are still receiving care in community settings.  By cutting reimbursements, providers may not take Medicare patients or the provider may sell to a hospital driving patients to a setting further away.

A recent study by the Community Oncology Alliance has us concerned about the cost of care in a hospital setting verses a independently owned clinic.   The study indicates the cost of chemotherapy in a hospital-owned outpatient facility was 34% higher compared to the same treatment patients receive at an independent oncology clinic.  An increase of any portion on medications would be especially hard on senior citizens who live on fixed incomes.  Dr. Debra Pratt, MD, Vice President of Texas Oncology believes the net result of the new proposal will be patients having less access to care, more hospitalization and increases in the cost of care.

Apparently the issue hasn't gone unnoticed in Washington DC. United States Senator Grassely, a critic of the pharmaceutical industry has already received 70 letters from constituents and most of them coming from concerned patients.  Senator Grassley said, “The proposal creates different access based on where a beneficiary lives and the Obama administration should go back to the drawing board.”

Dr Allen Lichter, CEO of the American Society of Clinical Oncology says the plan is insulting.  He believes some people think physicians are saying, “What's the most expensive way I can treat a patient?”  Lichtner's organization represents over 20,000 US Cancer Specialists and he firmly believes Medicare is making a dreadful mistake.  Unlike most medications, cancer drugs don't have a low cost alternative. 

According to a proponent of the measure, Dr. Peter Bach, director at Memorial Sloan Kettering Cancer Center in New York, views the Medicare decision favorably.  Bach believes doctors, like most people respond to financial incentives, and thinks Medicare's current payment plan sends the wrong signal.

In our view, it is apparent that the rhetoric is heating up, but with physicians being the gatekeeper of our health care system and with their prescribing decisions potentially determining the financial success of medications, Pharmaceutical Research Manufacturers of America and the Biotech Innovation Organization will be spending time and resources lobbying this issue.

We can only hope at the end of the day, that whatever direction this proposal takes, senior citizens will not be paying more for their medications.


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