Opinion: Medicare Reimbursement Scramble Means We're Already Divided and Conquered

More cuts to Medicare reimbursements are coming, and it appears to be every man for himself (and woman for herself) over what’s left. Healthcare zombies, just like the upcoming movie “World War Z,” that’s what we’ve become.

Last week it was Medicare Advantage. The health insurance lobby turned defeat into the status quo, winning a modest increase instead of a promised cut. Yesterday it was oncology providers, who launched a public relations blitz to overturn the sequester reimbursement cuts. We’ll see how successful their efforts will be when President Barack Obama announces his proposed federal budget, which reportedly will include an additional $400 million in cuts to Medicare (Medicaid appears to be spared).

The campaign by the oncology industry is especially ill-timed, as only a week earlier distinguished members of that medical fraternity in an op-ed piece in the New York Times were calling for reform of their profession and in particular how many of their brothers and sisters are driven by revenue. Twenty physicians signed their name to the op-ed article, writing:

Many cancer patients, after getting a diagnosis of a terrifying disease, pursue any potentially promising therapy, regardless of the price. But the main cost driver is the fee-for-service payment system. The more doctors do for patients, the more reimbursement they receive. Surgeons earn more for every procedure. Oncologists typically make more money if they use newly approved drugs and the latest radiation treatments than if they use cheaper, older alternatives that work just as well. (This is because they get paid back the cost of the drug, in addition to an extra 6 percent of that cost — the more expensive the drug, the higher the compensation.)

“The physician’s cash cow is chemotherapy,” is how one physician put it, as quoted in The Cost of Hope, an investigation into cancer healthcare by Pulitzer-Prize winning author Amanda Bennett. She describes the salad days of oncology, which lasted until 2005 when Congress changed the reimbursement formula on chemotherapy to today’s “cost of the drugs plus six percent.”

Oncology represents one of the largest, if not the largest, specialty in the healthcare industry. On dollar out of every 20 spent on healthcare goes toward treating cancer. In the New York Times op-ed article, the authors propose five steps to reform cancer treatment in the United States:

• Change fee-for-service to bundled payments.
• Require transparency of costs so physicians and others can see and compare costs, especially with regard to tests and procedures such as scans and chemotherapy drugs.
• Enact quality monitoring of patients and treatments “to ensure that there is neither under- nor over-utilization of care.”
• Encourage more “high touch” oncology practices, which are currently not covered by many insurers but will identify and treat cancer in its early stages, thus resulting in tremendous cost savings.
• Finally, implement better incentives for research.

It is important to note that the authors of New York Times op-ed article never once suggested “Don’t cut Medicare reimbursements.” Yet oncology professional organizations are campaigning for exactly that, despite members from their own ranks claiming that abuse of that system is rampant. Worse, those demanding Congress rescind the sequestration reductions offer no suggestions where the funds will come from to pay for those cuts. In the past, restored cuts have usually come from other healthcare providers.

Last week insurers got theirs; perhaps next week the oncology industry will likewise be rewarded. It will be a pyrrhic victory, because cuts made in one sector of healthcare industry will likely be added to cuts made to others, usually hospitals and physician groups. Politicians love it when groups end up fighting amongst themselves for scraps of funding. Once divided, we are conquered, and it will, in the end, hurt us all.