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Medicare Chemo Payment Cuts: How Did They Affect Cancer Patients?



June 17th, 2010

As a result of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, physician reimbursements for outpatient treatment of cancer patients were lowered. In the first study to examine how these reductions affected the likelihood and setting of chemotherapy treatments for Medicare beneficiaries, researchers looked at patients recently diagnosed with lung cancer and found that they received more, rather than fewer, treatments.

In a Web First study published today by Health Affairs, and discussed in today’s New York Times, the RAND Corporation’s Mireille Jacobson and coauthors used Medicare claims data for 222,478 beneficiaries diagnosed with lung cancer between 2003 and 2005 in order to compare the likelihood of treatment and rates of reimbursement before and after the 2003 act took effect. They found that the percent of patients receiving treatment in a physician’s office one month after diagnosis increased from 13 percent before the payment change to approximately 15 percent after it.

Payment rates for most of the most commonly used chemotherapy agents declined dramatically. However, the authors found no evidence that the changes in reimbursement rates reduced beneficiaries’ access to chemotherapy. This is a finding consistent with overall patterns in health economics literature: When fees that comprise a large share of physicians’ incomes decline, utilization increases. The literature also finds that when fees that account for a small share of physicians’ incomes decline, utilization decreases.

The authors found both patterns were involved in this study, with more lung cancer patients receiving chemotherapy and an increase in the use of docetaxel, a relatively more expensive and formerly less-utilized drug. The authors conclude that the latter may have offset some of the savings projected to result from the 2003 act. “The increase in utilization [of chemotherapy] may have important implications for the well-being of Medicare beneficiaries with cancer,” they write. “Future work should determine the implications for these findings for Medicare spending and the health of Medicare beneficiaries. The ultimate message is that payment reforms have real consequences and should be undertaken with caution.”

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