Oncology in 2017, like any year, has seen a lot of changes. But this year, the changes seem to be more definitive, and are leading to a dramatically different future for the specialty compared with previous years.
Consolidation of Insurers and Pharmacy Benefits Managers
The merger of Anthem and CIGNA was blocked. The Aetna and Humana merger fell through, but now CVS Health is in talks to buy Aetna. Express Scripts spent $3.6 billion to buy benefits manager eviCore, which most recently was providing the medical benefits management of oncology for CIGNA.
The top 5 insurers in the United States are all jockeying for market share and service expansion.1 United Health Group, which had 70 million subscribers in 2016, has its information and technology platform, Optum, including its pharmacy care service Optum Rx, in use in 4 of 5 hospitals.1
Anthem remains the second largest health insurer, with 39.9 million subscribers, and Aetna runs a close third, with 23.1 million subscribers. Humana runs a provider network of hospitals and physicians, serving 14.2 million subscribers. CIGNA rounds out the pack with 15 million subscribers.1
In 2017, we saw a shift. Payers and providers have always had a close relationship, and integrated delivery systems have long balanced the need for health services with the need to insure and pay for those services. Pharmacy benefit managers have dominated the pharmacy benefit management, but with the coming together of CVS and Aetna, and of Express Scripts and eviCore, the landscape is rapidly changing for providers. The potential for medical decision micromanagement from outside the provider community is looming and is more a reality than ever before.
Pharmacy Standards Impact
The pharmacy standards published by the US Pharmacopeia have been present and dominant for retail and licensed pharmacies for years. Physicians who oversee the administration and dispensing of drugs under their medical license were historically not subject to these standards, so they focused on guidelines by the Oncology Nursing Society and the American Society of Clinical Oncology for the safe administration of oncology drugs.
By the end of 2017, several states (ie, California, Maryland, New Jersey, and New Hampshire) will have passed legislation that directly references the application of pharmacy standards to medical practice. In New Hampshire, the board of pharmacy has given itself the right to inspect medical practices.
In November 2017, it did just that, citing several practices for standards violations and beginning proceedings to stop practices from mixing drugs until the violations have been repaired and the practices cleared. This has predominantly affected practices outside of oncology, because there is only 1 private practice left in New Hampshire.
Although the enforceable date for the US Pharmacopeial Convention Chapter 800 (USP 800) has been delayed until late 2019, USP Chapter 797 remains enforceable currently. State legislatures and boards have shown an interest in applying these pharmacy standards to medical services, as well as oncology clinical trial networks and regional health systems; even plaintiff lawyers are looking at the implications for oncology. This is not a trend that is going to go away. Although some elements of USP 800 are particularly onerous and not logical, and are being challenged by multiple stakeholders, there are basic elements related to drug safety and purity and to safe handling that will be difficult to challenge.
Practices have been given slightly more time to review gaps and develop solutions, and they can even delay some of the more costly changes until, and unless, they are accepted as final standards in the new USP 800 in a few years, but 2018 will have to be a year of focus and renovation for most practices.
Changes in the 340B Program Affect Hospitals and Physicians
Proposed changes to the 340B program may send seismic changes through the hospital and physician markets. This program—which allowed hospitals that meet certain indigent levels of service to acquire outpatient drugs at steep discounts—has come under significant challenges for the oversight and the way that some hospitals have applied the program internally. In July 2017, Medicare issued a Proposed Rule for 2018 that includes plans to reduce 340B hospital drug reimbursements from the Average Selling Price (ASP) plus 6% to ASP minus 22.5%.2
On November 1, 2017, the Centers for Medicare & Medicaid Services (CMS) published a final rule that will launch the ASP minus 22.5% reduction for 340B hospitals on January 1, 2018.3 The final rule is being challenged by affected hospitals, but the repercussions for the hospitals, physicians, and patients will be far-reaching.
Many physicians who signed contacts for employment or professional services agreements are likely to see their contracts renegotiated by affected hospitals. Oncology services may well be disrupted as the market adjusts to whatever becomes the new normal.
Disruptions and Future Changes
CMS created a massive disruption in the oncology delivery system in 2016 with the advent of the Oncology Care Model (OCM). The OCM marked the first time a major payer started a program that held participating oncology groups responsible for all the money spent on beneficiaries who were attributed to them, and the first time that a major payer has handed over full years of claims data to physician groups, with the challenge to figure out how to save at least 4% in the total cost spent in the first year of performance, and greater savings in successive years. There is an unassailable expectation for OCM participants to reduce the total CMS spending for oncology beneficiaries, breaking a trend of increasing annual costs for that major payer.
In 2017, we saw the first measurements begin for the Merit-Based Incentive Payment System (MIPS). Under the MIPS program, practices on a national level (not only in oncology) will receive rewards or penalties (or remain neutral) based on their positioning along a comparative cost and quality scale against their peers. This marks another program in which the expectation is that the total spending for this major payer (CMS) will be lower in future years than in the present.
These were seismic changes in 2017, and we will not know the outcome, or how the oncology market will be shifted, even in 2018. Oncology spending will continue to be heavily controlled by physicians or by external forces.
The expectation is that oncology practices will spend less next year than in the previous year, even in the face of new technologies and new treatments, which will lead to higher demands for value equations and hard decisions related to treatment and patient access. The new limitations going into 2018 have not been seen to this extent in previous years. Less is definitely more.
How are oncology practices going to cope? I believe practices are going to accept the challenge, make the transformations, and emerge stronger.
References
- Migneault J. Top 5 largest health insurance payers in the United States: these top five health insurance payers hold the largest net revenue and members. HealthPayerIntelligence.com. April 13, 2017. https://healthpayerintelligence.com/news/top-5-largest-health-insurance-payers-in-the-united-states. Accessed November 17, 2017.
- Centers for Medicare & Medicaid Services. Medicare program: hospital outpatient prospective payment and ambulatory surgical center payment systems and quality reporting programs. Proposed rule. Fed Regist. 2017;82:33558-33724.
- Centers for Medicare & Medicaid Services. Medicare program: hospital outpatient prospective payment and ambulatory surgical center payment systems and quality reporting programs. Final rule with comment period. Fed Regist. 2017;82:52356-52637.