Are Oncologists' Financial Incentives Aligned With Quality Care?

Abstract

In the article that accompanies this editorial, Malin et al use data from the Cancer Outcomes Research and Surveillance study (CanCORS) to measure the association between medical oncologists’ compensation structure and their perception of whether their income will increase if they administer chemotherapy or growth factors. Compared with medical oncologists who were paid a fixed salary, those who were in fee-for-service (FFS) practices or who were paid a salary with a productivity incentive were more likely to anticipate greater income if they administered chemotherapy (odds ratio, 7.05 and 7.52, respectively; both P .001). Similar associations were found for growth factor administration. Several unanswered questions remain from this study. The study measures perception only; we cannot determine from these data if oncologists actually made more money by prescribing more chemotherapy or growth factors. We also do not know the structure of the oncologists’ productivity incentives, the magnitude of any increased income, and what drugs or disease settings may be responsible for the largest gains. In addition, the CanCORS study included patients treated for lung or colorectal cancer between 2003 and 2005 who were either living in one of five geographic regions or received care in one of five integratedhealthoroneof10Veterans’AdministrationHospitals. In addition, not all physicians responded to the survey. Therefore, it is possible that physician respondents may be not representative of contemporary practice patterns across the country. Despite these limitations, the findings of Malin et al are potentially significant because they suggest that perceived incentives might matter. If oncologists think that they will make more money by prescribing more, perhaps they will write more prescriptions. The rational choice theory of economics assumes that individuals will act in their own interest. Oncologists are no different; the current system is set up to reward prescribing more. To place this study in context, it is important to understand the current reimbursement policy. Before the Medicare Modernization Act (MMA) of 2003, Medicare reimbursed outpatient chemotherapy drugs at the lesser of the charge billed for the drugs or 95% of the average wholesale price. However, the acquisition cost was often much lower than the published average wholesale price, resulting in large margins for the prescribing physician. Reimbursements for paclitaxel were reported as being as high as six times the acquisition cost. Under the MMA, chemotherapy is now reimbursed at 1.06 times the average sales price of the previous two quarters, leading to a reduction in margins. To make up for some of this loss in revenue, additional payments are now included to reimburse for the cost of administering drugs. The work by Malin et al complements other empirical data that suggest that oncologists respond to financial incentives. A study of luteinizing hormone–releasing hormone agonist used for prostate cancer treatment found that use decreased after the MMA, particularly among patients for whom the benefit of these agents was uncertain, such as those with low-risk disease. This finding suggests that removing financial incentives may reduce unnecessary use, which should improve outcomes while controlling costs. However, in a situation in which treatment is indicated, prescribing patterns may shift in response to incentives toward equally effective but more expensive treatments. An analysis of Medicare payments for non–small-cell lung cancer found that after the MMA, older drugs such as carboplatin and paclitaxel that experienced significant cuts in reimbursement were used less frequently. However, docetaxel, which retained a relatively high margin given its higher baseline cost, was prescribed more often. Despite the limitations of the FFS system, modern oncology care requires coordination among physicians, payors, specialty pharmacies, and home care agencies. Oncologists should be reimbursed for the cognitive services they provide, unrelated to the amount of officeadministered chemotherapy they prescribe. One major change in oncology that is not reflected in the current FFS buy-and-bill system is the introduction of oral cancer therapies. For example, there are new hormonal therapies for prostate cancer, immunomodulatory agents for myeloma, and small molecules for breast, renal cell, and lung cancers. Oral therapies are much more convenient for patients but can be much more expensive for oncologists to use. Oncologists are responsible for managing toxicities, which can be significant, such as hypertension, diarrhea, or hand-foot syndrome, but do not receive any additional reimbursement for these efforts because the treatments do not involve office-administered drugs. For many indications, intravenous alternatives to oral drugs exist for which an oncologist could recoup margin incentives, as well as additional reimbursement for drug administration. These intravenous treatments are dually less convenient for patients and more costly for our health care system. The Affordable Care Act includes support for programs that will study alternatives to the FFS system. Two proposed models of payment reform include so-called global and bundled episode payments that provide different incentives. JOURNAL OF CLINICAL ONCOLOGY E D I T O R I A L VOLUME 31 NUMBER 5 FEBRUARY 1