CMS Seeks Methods to Appropriately Reimburse High-Quality Cancer Care

February 1, 2006

In February 2005, Mark McClellan, MD, PhD, head of the Centers for Medicare & Medicaid Services (CMS), appointed Peter Bach, MD, MAPP, an associate attending physician at Memorial Sloan-Kettering Cancer Center, to serve as senior advisor on health care quality and cancer policy. A pulmonologist and intensivist by training, Dr. Bach has a strong reputation for research on quality cancer care, helping develop guidelines for lung cancer and chronic obstructive pulmonary disease (COPD).

In February 2005, Mark McClellan, MD, PhD, head of the Centers for Medicare & Medicaid Services (CMS), appointed Peter Bach, MD, MAPP, an associate attending physician at Memorial Sloan-Kettering Cancer Center, to serve as senior advisor on health care quality and cancer policy. A pulmonologist and intensivist by training, Dr. Bach has a strong reputation for research on quality cancer care, helping develop guidelines for lung cancer and chronic obstructive pulmonary disease (COPD). Cancer Care & Economics (CC&E) spoke to Dr. Bach about his position at CMS and how, among other things, the recent changes in Medicare reimbursement might affect community oncologists.

CC&E: What motivated you to take a position at the Centers for Medicare & Medicaid Services (CMS)?

DR. BACH: The primary motivation was an opportunity to work closely with Dr. Mark McClellan [head of CMS], who I believe has the right vision for the future of our health care system. By modernizing Medicare, we hope to realize necessary savings to the program and improve the quality of care for our patient population.

Moreover, Dr. McClellan is very sensitive to the clinical and fiscal challenges oncologists face during this transition. I felt that my research background in cancer care quality and my clinical experience with cancer patients might help CMS transition into a system in which high-quality care can be appropriately reimbursed.

CC&E: The 2005 Chemotherapy Demonstration Project helped many community oncologists cover the shortfalls brought on by reductions in drug reimbursement. The 2006 project, however, has been criticized as being an insufficient stop-gap. How do you respond?

DR. BACH: The 2005 demo project was successful because it proved that we could use oncology billing G-codes to collect data on patient-physician interactions and cancer care quality. That is the cornerstone of a much larger set of initiatives we are pursuing in 2006, including physician voluntary reporting and the 2006 Oncology Demonstration Project as ways of gathering quality information in the field from doctors.

The 2006 demonstration project is actually a by-product of what we learned in 2005. We shifted the focus of the 2006 demonstration project from chemotherapy administration to evaluation and management (E&M) encounters that provide us insight into the standards of care oncologists use when evaluating their patients.

This project will broaden our understanding of the complexity of cancer care. In short, doctors want to be paid properly for providing their patients with high-value care and we want quality measures to be a mechanism by which high-quality care can be appropriately reimbursed. The 2006 project will help us move in that direction.

CC&E: Medicare does not consider cost-effectiveness analysis when determining coverage policy. Why is that?

DR. BACH: Our decision making is focused on ensuring that therapies are reasonable and necessary, and that the risks do not outweigh the potential benefits. To that end, we are trying to build the evidence base so that doctors can make decisions in conjunction with their patients about which treatments provide the most value and benefit with the lowest degree of harm. That philosophy is fundamentally different from cost-effectiveness analysis where there is an implicit trade-off between the extent of benefit and the amount of cost.

Ultimately, we seek to develop a system in which the decision-making process to order tests or perform procedures will be based on sound evidence, thus eliminating many of the motives that result in wasteful utilization of our health care resources.

CC&E: Widespread use of expensive imaging technologies is a major growth area in health care. Should we be looking at ways to curb spending in this area?

DR. BACH: Certain studies have shown variations in the utilization of tests and imaging technology that exceed what certain clinical scenarios necessitate. These anomalies have resulted in significant bumps in expenditures in different regions of the country, which do not seem to be explained by the extent of illness in those regions. We do not, however, know the full implications or reasons for these variations.

That said, one of the goals of the Oncology Demonstration Project is to identify variations in practice standards and gather evidence that determines the optimal way to evaluate a patient's needs. That is why we chose practice guidelines as the benchmark, because guidelines contain specific recommendations about treatment decisions based on medical evidence. We have to begin by asking doctors whether or not they adhere to guidelines, and if they don’t, we would like to understand why. If the growth rate of resource utilization exceeds that which would be predicted based on the prevalence of disease, the system needs to be more sensitive to that trend.

CC&E: So, would guideline-driven care improve Medicare's budget woes?

DR. BACH: Guidelines are not the only solution by any stretch. It is our firm belief, and there are a lot of independent analyses supporting this, that if we achieve a high level of care in which all of our medical resources confer value to the patient population, this will, over time, reduce the growth in spending sufficiently to make the Medicare program sustainable. So this doesn’t have to do with cost-effectiveness, this has to do with high-quality care that creates better overall health performance, which places less burden on our health care resources.

CC&E: Under the Competitive Acquisition Program (CAP), participating practices will no longer receive Medicare reimbursement for chemo drugs that have traditionally offset losses on the drug administration side. Many community oncologists worry that choosing CAP could result in severe operating losses. How would you address their concern?

DR. BACH: I expect that oncology practices across the country will look at this program and come to different conclusions about its benefits to their particular practice. In fact, it is a program that will enhance access and offer a system in which oncologists are no longer at risk for co-pays and do not have to use a buy-and-bill approach. It is not mandatory, and each community practice has to determine if CAP fits its particular needs. We’re actually very excited about CAP. It is a good vehicle for establishing group purchasing power and simplifying the acquisition process.

CC&E: CMS released the 2006 Physician Fee Schedule, which will result in a 4.4% cut in payments to physicians. This latest cut has provoked concern from many oncology groups. What is your response?

DR. BACH: Obviously, reducing physician payments will affect community oncologists-to what extent depends largely on the particular practice. Physician payments are being reduced due to the sustainable growth rate (SGR), which is a formula designed to keep health care costs within expectations over a period of time. If spending on physician services and related services on the part B side rises faster than predicted, the SGR formula is designed to be a corrective measure. This formula is flexible, and we estimate that most of the cuts will be offset by a growth in total volume of services provided. However, the long-term payment dilemma will not be solved by increasing the amount of services physicians bill for. In fact, consistent with what I’ve previously said, we believe that the solution will be achieved through a system of greater efficiency.

We want a pay-for-performance system in which quality care can be appropriately reimbursed. And sometimes high-quality care takes more time and uses more office resources. In fact, most physicians want to be paid for the quality of their services, not the quantity. Right now, it's difficult to devise mechanisms within the reimbursement system that pay for the complexity of services oncolo-gists provide. Our challenge is to marry the payment component with the quality of the service.

CC&E: Any last thoughts?

DR. BACH: The economic pressures brought on by a burgeoning Medicare population and higher per-patient costs need to be addressed. We feel that optimizing performance at the local level will translate into a standard of care that brings more value to our health care system. More important, in order to prevent an untenable growth in future costs, it is essential that we move forward from a system that just pays for resource utilization to one that pays for quality. ONI