Medicare Makes Some Changes in Outpatient Cancer Clinic Rates

Medicare has made some changes in how it will calculate payments to outpatient cancer clinics when the new ambulatory payment classification (APC) system goes into effect on July 1, 2000. The Association of Community Cancer Centers (ACCC) and the American Society of Clinical Oncology warned of the dire effects that would be caused by the version of the APC Medicare published in September 1998. They argued that the proposed reimbursement rates would preclude clinics from treating patients with expensive drugs such as paclitaxel (Taxol) and topotecan (Hycamtin). In the final rule, Medicare sanded down some of the objectionable edges in the 1998 proposal because Congress, which had also heard the outcries of the cancer community, forced the agency’s hand.

The APC system reimburses a clinic for all services in one payment, except the physician’s time, which he or she bills directly to Medicare. The problem is that Medicare calculated APCs for such things as chemotherapy administration based on 1996 costs, not taking into account the more expensive drugs introduced since then. With that in mind, Congress included an amendment in the Balanced Budget Refinement Act passed last fall. That amendment said that Medicare must develop additional “transitional, pass-through” payments for drugs in certain categories—one of which is cancer drugs—if they meet certain high-cost standards. These pass-through payments can only be made for 2 to 3 years; total pass-through payments to any clinic are limited by a formula. The ACCC believes that, when all is said and done, reimbursement for cancer drugs should amount to about 95% of average wholesale prices.