Oral Oncolytics: Impact of Site of Care

Bruce A. Feinberg, DO: We focused a bit on the patient side of cost, but there’s another piece of the finance [puzzle]. We’ve got the societal issues with the cost of care, we’ve got patient issues; but we have practice finances, as well. We have a reimbursement system, which has really been designed around keeping oncology practices “whole” through the reimbursement for the drug in its infusion—which has been the historical, or traditional, model the last 40 years. Now, we’ve got this ever-increasing number of oral agents.

What’s the compensation look like when you’re managing a patient with an oral if you’re dispensing [versus not dispensing it]? What is the impact, and how do you have to be cognizant of it?

Bruce J. Gould, MD: I guess recognition of whether we use an IV or oral, based on financial incentives, is not really as prevalent as you would think. That’s because when I treat a patient, obviously, I have to follow the standard of care. For most diseases, it’s not usually a treatment [choice] between IV or oral oncolytics. Usually, there’s clear-cut guidelines that guide me and others in terms of what is the appropriate treatment, and I go with whatever is appropriate.

Clearly, oral oncolytics are becoming more a part of our practice. Our practice, years ago, invested in a retail pharmacy, and I can tell you that that pharmacy has helped us offset the revenue loss in our IV business—not because we’re doing less IV business, but our margins in the IV business continue to be compressed. So, the oral oncolytics have helped supplement the revenues to our practice, which has helped keep us independent. With us being independent, the cost of care to the healthcare system is less than it would be if we were a hospital-based practice.

Bruce A. Feinberg, DO: So, you’re involved with the Community Oncology Alliance (COA). That’s clearly been a major point of research for COA. They’ve demonstrated (in various reports) 25% to a more than doubling of [cost] increase when that site of care is in a hospital facility. A lot of it is in benefit design. Payers are obligated, because of certain resources that large hospital systems provide, in having to make that reimbursement schedule.

John L. Fox, MD, MHA: I don’t think that’s the case. We reimburse based on a fee schedule with physicians. With hospitals, however, we are subject to negotiations with those individual hospitals. Hospitals have more market power, and we may have more market power than physicians. So, while we can establish an outpatient fee schedule for physicians and for infusion centers, we don’t [always] have that same ability. I think it’s more a function of negotiating power than it is the fact that we want to pay more or have to pay more.

Bruce A. Feinberg, DO: So, the bottom line is, you are paying more. I would think that you would have a preference for community site-of-care delivery—what I would call independent, private practice, community, site-of-care delivery. The drug is the same and, in some cases, actually it was [administered in] the exact same facility and [by the same] doctor as it was the year before, but now that physician’s practice has been bought by the hospital. So, payers should have that preference.

John L. Fox, MD, MHA: We absolutely have that preference, and yet we can’t create oncology practices. COA has done a wonderful job of cataloging the demise of community-based oncology practices. A number of insurers have established their own infusion centers, but if they’re not staffed by oncologists, it’s hard to infuse an oncology drug in that setting. Infusing chemotherapy in the home is something that’s being tested, but even that’s challenging. So the bottom line is if those facilities don’t exist, I’m kind of captive and have to use that facility.

Bruce A. Feinberg, DO: But oral therapeutics would be respite because oral therapeutics would be equal on both sides. Site of care would no longer be an issue.

John L. Fox, MD, MHA: That’s right. If, in fact, the cost of oral therapies [was] less than the infused therapies.

Bruce J. Gould, MD: And if you had an oral equivalent to an IV product, which, in many cases, you don’t.

Bruce A. Feinberg, DO: Well, with some you do. Clearly, 5-FU (5-fluorouracil) versus capecitabine.

Bruce J. Gould, MD: That’s one. Seriously, I’ve reviewed this. I can name them. There are 70 oral oncolytics, and there’s [about] 7 or 8 drugs where there’s IV or oral equivalence. Capecitabine is one. But there are other drugs you probably have forgotten about—busulfan, cytoxan, etoposide, leucovorin, methotrexate, and the other one is melphalan. Again, with those drugs where there’s oral or IV, you usually use whatever is called for with the protocol that you give the particular patient. And typically, it’s going to be IV in our world, with capecitabine being the notable exception.

Bruce A. Feinberg, DO: So I want to [revert] back to a comment that Bruce made about the fact that they decided to become a dispensing practice [and] started a retail pharmacy. It’s definitely helped them weather some of the financial storms that have happened over the last few years.

From a payer’s standpoint, for those patients who were infused, that piece of the story for orals is very important for them in their full financial picture.

John L. Fox, MD, MHA: Right.

Bruce A. Feinberg, DO: There’s no reason in the benefit design that you would want to begrudge them the ability to dispense. Or is there? Do payers have that ability to influence where dispensing is done?

John L. Fox, MD, MHA: I think that’s going to be state-by-state and payer-by-payer. Certainly, as a payer, we’re more than willing to allow community-based practices to dispense drugs. We recognize that there is a cost associated with managing any chemotherapy regardless of whether it’s oral or IV. If physicians make a margin on that drug, good for them if it helps them stay in practice.

Bruce has indicated that those margins have. As a regional health plan, as a provider-owned health plan, we’re very interested in keeping dollars locally. And to the extent that community-based pharmacists with dispensing pharmacies can dispense, it keeps those dollars local. But, I think the larger question is, how do we fund the management of patients with cancer?

Oncology practices do a lot of things that are uncompensated. Both of you know that better than I do. How do we fund that? The CMMI (Center for Medicare & Medicaid Innovation), and their oncology care model, has come forth with a $160 per-patient per-month care management fee for the 6-month bundle, which will help offset a lot of those costs that practices incur. We, and a number of other health plans, are doing the same, recognizing that physicians aren’t reimbursed for managing those complications and side effects of oral oncolytics.