Lack of interest derails Medicare B drug program

The alternative purchasing system for drugs given in the office had only about 4,200 physicians and one drug vendor sign on in three years.

By Jane Cys, amednews correspondent. Nov. 10, 2008.

Randolph Johnston, MD, a Cheyenne, Wyo., ophthalmologist, jumped at the chance to sign up for Medicare's competitive acquisition program in 2006. As a CAP participant, he no longer would have to buy the Part B drugs his practice used and then bill patients for them; instead, a drug vendor chosen by the government would take on those roles.

It seemed to make financial sense. Because some of Dr. Johnston's patients had trouble paying for their office-administered drugs, the practice would get small monthly payments and carry over the balance -- often thousands of dollars.

How CAP works
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"And I just thought, 'I'd really rather not be in the money-lending business. I'd rather be in the medical business,' " said Dr. Johnston. "CAP sounded like it would transfer that part of the responsibility to somebody who is used to dealing with that."

But administrative hassles, drug delivery problems and other troubles quickly dampened his enthusiasm. "After three months of the program, we wrote a letter and begged to be let out," said the vitreoretinal specialist, who will become the American Academy of Ophthalmology's president-elect in January 2009. Although CAP is voluntary, he was stuck with it for the rest of the year.

Dr. Johnston isn't the only one who has had troubles with CAP. In September, the Centers for Medicare & Medicaid Services said it would put the program on hold as of January 2009. Officials cited "contractual issues" and did not elaborate.

5 vendors were invited to participate in a Medicare B drug purchasing program; 1 accepted.

The program will resume, a CMS official said, but there is no specific date. "We're considering many alternative ways to improve CAP, because we do want the program to succeed."

The competitive acquisition program, launched in July 2006, was created as an alternative to the usual payment system for Part B drugs, which are typically injected or infused in the physician's office. Under CAP, doctors receive their drugs for free from BioScrip Inc., the vendor chosen by the government through a competitive process. Medicare takes care of paying the vendor and billing patients. Physicians bill Medicare only for administering the medications.

Congress designed the program to ease the burden on physicians who did not want to be Part B drug purchasers and to save money for Medicare by negotiating lower drug prices. But in its first three years of operation, only about 4,200 physicians opted into the voluntary program -- a lower-than-expected number, CMS officials said. Many of the 180 drugs on the CAP list are for chemotherapy, but few oncologists joined.

Burdensome rules on drug transportation and storage kept many oncologists away from CAP, said Matt Farber, manager of provider economics and public policy for the Assn. of Community Cancer Centers. For example, the program requires drugs to be administered in the facility to which they're delivered, which prevents doctors from moving drugs between office locations. Also, physicians must order CAP drugs for a specific patient and not to restock a general supply that could be used on multiple patients.

Such restrictions mean CAP does not allow for flexibility when it comes to treating patients, doctors said.

Oncologists, for example, may need to delay patients' drug treatments based on blood test results, said Joseph Bailes, MD, a medical oncologist and chair of the government relations council of the American Society of Clinical Oncology. "What happens if a drug is delivered and not used? Who has the responsibility?"

The only vendor in a Medicare B drug purchasing program is not renewing its contract.

When Dr. Johnston would determine during an exam that a patient would need a drug handled by CAP, the patient would have to schedule a return appointment to get it. Under CAP rules, the physician wasn't allowed to store the medications, and BioScrip did not have same-day delivery. This was inconvenient for his patients, some of whom had to travel several hours for the specialist's visit.

In addition to CAP's excessive forms and too-frequent phone calls, Dr. Johnston said he was bothered by the program's waste. When he was buying meds himself, the pharmacy could divide a vial of Avastin into multiple doses for multiple patients. Under CAP, Dr. Johnston had to order an entire vial for each patient, extract a single dose, then toss the rest.

"That was the final straw," he said. "I just couldn't stand throwing away the other 399 doses out of every vial and having every patient pay for essentially 400 doses when they're just using one."

Looking ahead

CMS officials urged Medicare participants to use the CAP hiatus to suggest changes that could improve the program. The agency will hold an open door forum on the issue in December.

The AMA remains unsure about the program's viability, given inadequate pay to doctors for many Part B drugs, wrote AMA Executive Vice President and CEO Michael D. Maves, MD, MBA, in an August letter to CMS. Because payments to vendors under CAP are discounted, even below the average rates that doctors receive under Medicare, many vendors likely will decide CAP isn't worth it, he said.

Five vendors were offered a three-year CAP contract in 2006. BioScrip was the only one that accepted, and Dr. Maves noted it declined to renew, citing an unacceptable profit risk. "The fact that there was only one vendor in 2008 and it has elected to exit the program may leave physicians with no alternative to Medicare payments that do not cover their costs."

CMS has proposed revisions to attract more doctors, such as allowing them to transfer drugs between office locations under some conditions.

Dr. Johnston said the program's concept still appeals to him, but he wouldn't join again without substantial changes. "The basic program was written by some bureaucrat who had never sat in an office and watched a patient be treated."

A major CAP overhaul might convince more oncologists to sign up, Farber said. "But at this point, not too many tears will be shed in oncology in general about this."

ADDITIONAL INFORMATION:

How CAP works

Most physicians buy their office-administered Part B drugs directly. Those who participate in the Medicare competitive acquisition program can get the medications through it. Here's how the processes work:

Non-CAP process

A physician buys needed drugs on the open market and stores them in the office.
Upon administering the medication, the physician bills Medicare and the patient for the allowable cost of the drug.
Medicare and the patient pay the physician 106% of the average sales price of the drug, plus an administration fee.
If the physician was able to negotiate a drug price from the vendor of 106% of ASP or less, the doctor will cover his or her costs.

CAP process

A physician opts into the voluntary program for one year.
If the physician needs a drug on the CAP list for a particular patient, the doctor orders the medication for free from a vendor contracted by Medicare through a competitive process.
After it is delivered, the physician administers the drug to the designated beneficiary only and cannot store any remaining for another patient.
The drug vendor bills Medicare and the patient for the allowable cost of the drug. The physician bills only for the cost of administering the medication.