Medicare Proposes Cuts for Cancer Drugs

Clinics, Docs Worry Cuts Could Damage Access to Care

July 27, 2004 -- The Bush administration is proposing to cut Medicare's payments for cancer drugs, a move some cancer physicians and advocates say could hurt the quality of patient care.

Medicare officials say they expect the cuts to save the program $320 million. Cuts for some of the drugs go as high as 89%.

Medicare does not yet pay for most drug costs incurred by beneficiaries. One exception is medication for cancer and other illnesses that must be administered in a doctor's office, often using special equipment. Medicare officials have long complained that the formula used to calculate doctors' payments for those drugs was outdated and that it grossly overpaid physicians for administering them.

Officials announced Tuesday that they were changing the formula, deeply cutting payments for some drugs and making up part of the difference with an increase in a fee doctors get for providing them.

"We now have new tools to pay appropriately for each drug as well as the valuable services that go along with administering drugs, rather than having an overpayment for one subsidy and underpayment for the other," Medicare chief Mark B. McClellan, MD, says.

Under the proposal, payments for Lupron, a hormone therapy used to treat prostate cancer , would drop from $500.58 to $234.28, a 53% reduction. Taxol, an anticancer drug used to treat ovarian, breast, and non-small-cell lung cancer, would be cut 81%, from $138.28 to $25.84 per dose.

Administration officials say the fee change will save patients $270 million next year because of reduced co-payments and deductibles.

For doctors, the cuts for drugs paired with increases in administration fees mean a likely overall 8% reduction in Medicare payments for the drug therapy, according to the agency.

Doctors Predict Access Cuts

Organizations representing cancer doctors and clinics warn that the reductions cut dangerously to their bottom lines, potentially damaging their ability to provide care to patients.

"I'm very, very concerned," says Patricia Goldsmith, vice president of the H. Lee Moffitt Cancer Center in Tampa, Fla. Goldsmith says private insurers often follow Medicare's lead on payment issues, meaning that many could cut chemotherapy payments to community doctors.

"My fear is that more and more cancer patients are going to be, shall we say, transferred to other facilities, including hospitals," she says.

Deborah Kamin, PhD, senior vice president of cancer policy for the American Society of Clinical Oncology, agrees that the cuts could "dislodge" such care from doctor's offices and force it into hospitals and clinics with more diverse revenue streams.

Cancer clinics set up to provide geographically convenient care in rural areas could fail to meet their costs under the cuts, Kamin says. "What's going to happen is that many won't be break-even anymore and will go away."

Medicare officials stress that the proposals are only a first step in a months-long process in which doctors will inform the agency about the impact of the cuts.

"We're certainly monitoring the [patient] access issue," says Herb Kuhn, director of the federal Center for Medicare Management. The American Medical Association is set to report to the agency on the costs of administering cancer drugs, which could spur a change in the policy.

"This is far from a done deal," he says.

SOURCES: Mark B. McClellan, MD, administrator, Centers for Medicare and Medicaid Services. Patricia Goldsmith, vice president, H. Lee Moffitt Cancer Center, Tampa, Fla. Deborah Kamin, PhD, senior director, cancer policy and clinical affairs, American Society of Clinical Oncology. Herb Kuhn, director, Center for Medicare Management

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