Providers Must Educate Congress, CMS on Reality of Oncology Practice Finances, Dr Kavita Patel Says

As CMS moves to implement the Inflation Reduction Act (IRA) as well as the Enhancing Oncology Model (EOM), leading oncology providers must educate both Biden administration officials and members of Congress on how the new law and ongoing efforts at payment reform could impact community oncology, Kavita Patel, MD, MS, told a gathering of the first OneOncology Physician Leadership Conference, held Friday through Sunday in Nashville, Tennessee.

Patel, a primary care physician and former Obama administration policy official, is now a senior policy advisor at Stanford University and a venture partner with New Enterprise Associates. She is also a member of the editorial board at The American Journal of Managed Care^®. In Nashville, Patel offered a wide-ranging talk that covered policy issues affecting community oncology. Patel said that although she was “not a fan” of EOM, which the Center for Medicare and Medicaid Innovation will launch July 1, 2023, to replace the Oncology Care Model (OCM), “it's not going away.”

The EOM has been praised by some for promoting the best features of the OCM, such a patient navigation and same-day appointments to reduce hospital stays. But detractors say it allows no time for smaller practices to ease into value-based care before they face punitive financial models that could shutter a practice over a misstep.

Patel explained that the movement to models more heavily focused on downside risk continues a trend that started in the Trump administration—and one that has little to do with politics. The “first with a carrot, then with a stick” approach to downside risk can present challenges for oncology practices, which Patel noted offer complex care and need capital to pursue innovation.

Inflation Reduction Act. Describing the IRA as the most significant change to health care since the Affordable Care Act, Patel offered details on the impact and implementation of the new law, which will be phased in over 6 years from 2023 to 2029. Chief elements include a $2000 annual out-of-pocket cap for Medicare Part D, starting in 2025, and price negotiations for 10 high-cost drugs in Medicare Part B and D starting in 2026, moving to 20 drugs by 2029.

“Notice that it's very clear that physicians or providers are not on here,” she said, reviewing a complex slide outlining the implementation schedule.

In recent years, leaders of OneOncology and other members of the Community Oncology Alliance have raised alarms about the problem of direct and indirect renumeration (DIR) fees, which are caused by a Medicare loophole that allows pharmacy benefit managers (PBMs) to charge pharmacy fees tied to quality measures. For oncologists who manage an in-house pharmacy, these DIR fees are exasperating, because they can show up months or even a year after a drug is prescribed and be tied to measures well beyond the scope of cancer care.

Patel warned that policy makers and members of Congress need more education on the realities of community oncology practice finances, including things like DIR fees. The drugs covered under IRA price negotiations will, by definition, be high-cost drugs, and there could be fallout for practices. “Are you going to get stuck with DIR [fees] coming out?” Patel asked.

Aspects of the IRA seek to shield smaller biotechs from the law’s impact, and Patel warned that pharmaceutical companies, health plans, and PBMs are hard at work looking for ways to protect themselves from losing money. With the downward pressure on out-of-pocket costs for consumers, however, “there is opportunity for actually something good to come out of it,” she said. “If there’s more affordable drug coverage, then there could be a boost in enrollment.”

Some models show that Medicare Part D enrollment could rise from 74% of beneficiaries to 85% or 95%, she said.

Implementation of the law will be key, and CMS is building an office with personnel who have drug pricing expertise. Patel also noted that models from the Congressional Budget Office don’t factor in how the commercial sector will respond to Medicare decisions under the IRA, but oncology practices won’t have a choice. “There’s still a lot of questions about what segment of the population this [law] hits, and how this will affect them,” she said.

She warned oncologists to demand a seat at the table, so that policy makers gain an understanding of the business side of oncology. “All of this will happen at a very clunky, poorly constructed manner, unless you give inputs and try to say, ‘Let me explain to you what happens when I have a cancer patient who's on this particular drug that we have that thrive. And here's why we do this. And here's what DIR [fee] does. Here's exactly what the finances are.’ That level of understanding never comes into play.”