Reimbursement News

Integrated Community Oncology Practices Need Cost Efficiency

By Jacqueline DiChiara

- Integrated community oncology practices represent a core foundation of cancer care by promoting a rewarding patient experience and helping cancer patients successfully battle complex social and health issues. Unfortunately, financial obstacles and Medicare reimbursement issues often thwart integrated community oncology practices from effectively delivering cost effective, high quality care. Integrated community oncology practices frequently face a series of severe economic and money-related pressures, generally resulting in their forced closing, merging, or acquisition by hospitals and hospital systems.

Integrated community oncology practices

This demise of the integrated community oncology practice is especially detrimental to the healthcare industry, as integrated community oncology practices provide high quality care that is economically advantageous compared with traditional hospital settings, confirms a recent study from Berkeley Research Group researchers Aaron Vandervelde and JoAnna Younts. The authors actively maintain community oncology practices provide highly efficient, lower cost access to cancer care to both patients and payers, including Medicare, than hospital outpatient departments. Integrated community oncology practices need cost efficiency to thrive and prosper. There is a growing tear in the healthcare industry requiring immediate patching.

Integrated community oncology practices are especially vulnerable to a wide array of financial challenges that threaten their well-being and negatively impact the care delivery model, state Vandervelde and Younts. Integrated community oncology practices face declining reimbursement concerns caused by changes in Medicare, sequestration, and alterations in private insurance.

Additionally, pressure brews from increased hospital competition. Many hospitals are actively benefiting from access to decreased drug prices through the 340B program. This presents an additional challenge for integrated community oncology practices as the payment disparity gap between physician offices and hospital outpatient settings widens.

Also, the cost of complying with increasingly complex government regulations, such as the Physician Quality Reporting System (PQRS), the Stark laws, and USP 797 regulations, poses an additional risk and manifests increased pressure on integrated community oncology practices.

The aforementioned challenges and concerns will both push and pull integrated community oncology practices into higher-cost hospital outpatient departments. “If these trends continue, our research suggests a different cancer care landscape marked by decreased access, less personalized care, and higher costs despite the significant gains in efficiency, coordination, and quality of care provided by integrated community oncology practices,” state Vandervelde and Younts.

There are many primary financial benefits to integrated community oncology practices, according to Vandervelde and Younts. They deliver high quality care at a cost that is discernably lower than hospital outpatient-based care and adopt payment reform models, including bundled payments and shared savings models.

"What we learned through this study is integrated community oncology practices are providing leading-edge cancer care in a convenient, high-touch environment at a lower cost than hospital outpatient departments," states Vandervelde. "Patients and payers alike are benefiting enormously from these practices and the coordinated and personalized approach they bring to cancer care."

Policy makers must exercise their responsibility to preserve the range of benefits provided by these practices to patients and the healthcare industry, maintain Vandervelde and Younts. “This is especially important as these practices are implementing innovative care and payment models, such as the oncology medical home, in treating the nation’s cancer patients,” they add, emphasizing that recent Medicare Sustainable Growth Rate (SGR) legislation and a fruitful push towards new alternative payment models promote substantially beneficial healthcare reform.

Lower out-of-pocket costs for cancer treatment delivered in a community setting, as opposed to a hospital setting, is a direct quantifiable benefit for beneficiaries, confirm Vandervelde and Younts.

“Medicare pays $6,500 more per year per patient for chemotherapy for 10 common types of cancer when provided exclusively in a hospital setting than in a physician office,” according to the authors’ mention of a 2011 Milliman study. “This higher Medicare reimbursement translates to an additional $650 in costs to Medicare beneficiaries, in the form of higher coinsurance.”

There is a markedly drastic cost difference according to setting, confirm Vandervelde and Younts. Chemotherapy spending per patient day ranged between 24% and 40% more in a hospital outpatient setting, confirm the report’s highlights of payment parity studies.

Healthcare experts within the study emphasized this stark difference in levels of personalization and individualized care between a community practice and a hospital’s approach to patient experience. As one physician interviewed explained, “It’s like the difference between your shopping experiences at Walmart compared to a boutique dress shop. At a boutique dress shop, you’ll meet the owner; they’ll have a hand in your care. At Walmart, you’re on your own.”

In light of this statement, integrated community oncology practices generally demonstrated excellent levels of coordinated care, confirm Vandervelde and Younts. Ninety-five percent of survey respondents rated community-based practices as “excellent” or “very good” in providing coordinated care. Only 30 percent of hospitals were rated as such.

The authors maintain patients receiving care at integrated community oncology practices obtain a valuable combination of both lower cost care and efficient delivery of personalized care though medical home models. Regarding cost savings, the average claim expense for chemotherapy in the Medicare fee-for-service (FFS) population is $1,560 when delivered in a physician’s office versus $2,064 when provided in a hospital outpatient department. This difference increased over the past several years, confirm Vandervelde and Younts, who maintain the integration of documented lower costs and more efficient care delivery models amplify value across the collective healthcare spectrum.

"Community oncology practices are involved in more payment reform initiatives than any other area of medicine in terms of actually enhancing the quality of medical care while reducing costs,” says Ted Okon, Community Oncology Alliance Executive Director. “However, it is a crime that the innovation is threatened by declining payment for cancer care, increased government regulation getting in the way of oncologists treating their patients, and consolidation into more expensive hospitals."

Community oncology practices, the essential foundation of the cancer care delivery system, continue to push through a variety of increasing challenges while providing state-of-the-art unparalleled value, care coordination, patient-provider communication, and needed personal attention, maintain Vandervelde and Younts.

If money could talk, it would declare a fresh state of emergency within the healthcare industry. Cancer patients are struggling to find high quality, economically advantageous care as some of the strongest hospitals close their doors due to mere matters of money. This unfortunate battle, well beyond the boxed definition of a healthcare struggle, is a humanist struggle that must dissipate into the clouds of a history extinguished.