Medical Oncologists and Meaningful Data

This blog post is Part I in a series on the topic of “meaningful data”.

Any of us working in Medical Oncology know that the Evaluation and Management (E&M) guidelines are not specialty specific, and that the treatment planning of infusion therapy is considered part of a visit. We know that this “suggests” that the majority of visits in a medical oncology physician office should be a level V service.

However, if we use the Physician Quality Reporting Initiative (PQRI) as the starting point for determining meaningful value, we see we have no less than 10 meaningful data points to begin adding to the note to help confirm the value. For example, if staging and line of therapy are added to every note, each has points that add value to the complexity of the note. If this is done in less than six months, medical oncology will have the perfect level V note as well as the demand for the level VI thru IX note.

Let’s take a quick look at the current state of the oncology business.

GPOs and Sales Margins
Mergers and takeovers are everywhere, from US Oncology becoming McKesson, to P4 Healthcare being purchased by Cardinal Health. And Oncology Supply has so many layers of overhead within their GPO structure, it’s no wonder medical oncologist can’t buy drugs at ASP. Contrary to what everyone says about the market, the system was designed so that every medical oncologist should be making at least a 6% margin on its drug purchases.

Don’t be confused on drug sales margins – the sales margin actually needs to be 18% when considering the low reimbursements on the services. Do medical oncologists continue to under code? The answer in my opinion is an obvious “yes” when you look at the national bell curve.

The national bell curve is 5% at level II, 38% at level III, 48% at level IV and 9% at level V. Our audits at Neltner Billing and Consulting (based on reviewing oncology notes) show that the oncology bell curve should be 70% at level V, 20% at level IV, 10% at level III and no level II visits.

Stay tuned in my next blog post for more information on this topic. Check out our in depth Billing Brief article How the Business of Oncology Drugs Relates to Meaningful Data For the Medical Oncology Practice (Part I of III) posted on our website, www.neltnerbilling.com. Let us know your comments.

Oncology Reimbursement: Where Have the Drug Profits Gone? Part 2

Where is all the money going? In identifying who is making what profit in the oncology drug distribution system, there are four parts to consider in pricing:

Manufacturer cost: the technological cost to produce, shop, or otherwise bring the drug to market. Their profit margin should be transparent – they know the end user’s profit margin is at a maximum 6%.

Distributor cost: includes acquisition costs, storage costs, and a reasonable profit margin. This margin is 2%, considering their cost is only 1% above the manufacturer cost. ASP (average sales price) does not include this 2% shipping, and distribution cost and this is a permitted cost added on to the ASP.

GPO (group purchase organization) cost: commissioned to help medical oncologists in the community purchase drugs at their lowest possible price. The GPO secures a .25% to .75% discount from the distributor, who would negotiate an even better cost with higher volume. The manufacturer does need to know the demand to appropriately staff and manage production.

Acquisition cost (or Oncologists’ cost): should be ASP less 2% as an industry standard, but in reality, it is typically 4% above ASP.

The Million Dollar Questions
Who is taking the 2% to 4% margin?
Are all these costs necessary?

In the end, the oncologist is suffering from this process. It’s way too complicated.

We would like to hear your thoughts on what process should we engage in to eliminate both the GPO and distributor overhead factors. Simply reply on the “comment” button below. You can provide your name or be totally anonymous. You can also email me (Marty Neltner) at mneltner@earthlink.net.

Where Does the Money Go?

In response to the comment on our post “Considering Solutions for Oncology Drug Purchasing”, we agree and that is why we are pushing into new directions in this area. The key ingredient we need is for small groups to band together to arrive at a critical mass to break up this price fixing between the distributors. Medical Oncologists were supposed to be able to purchase drugs at ASP and it's not the case. Right or wrong, our government says it is our responsibility to find the solution. With that said, we have three goals:

Goal 1: Attempt to find a way to purchase drugs at ASP,

Goal 2: If that fails, accumulate the data and visit CMS with specific information,

Goal 3: If CMS and government fail to act on the data we accumulate, then we collectively take legal action to prove that price fixing is occurring in the market.

These are the choices in a free market system. Call us and join our effort.

Reality is in the Results, and It is No Surprise

In our previous post, “Considering Solutions for Oncology Drug Purchasing”, we asked for you to fill out our short “worksheet” in the News area of our website. We had several responses from oncology/hematology practices, comparing what they are paying to the Medicare allowable. No surprise: most physicians are paying way too much. We have posted these current results on our Neltner Billing website, and will update this as we get more data from hematologists/oncologists across the country.

Now that you see the data, is it reality or myth that:

• Oncologists cannot purchase drugs at ASP or lower.
• Oncologists have been misled by industry representatives that oncologists are purchasing drugs at or below ASP.

The answer is reality, and you are proving it in your numbers. The table shows that most payments are red and blue. Red numbers denote payments of ASP+6% or higher; blue numbers denote payments between ASP and ASP+6%. There are few numbers in black which actually fall below ASP.

Thank you for the responses we have received so far and please keep them coming. It is clear from what we have collected so far, that ASP is flawed. The more data we can collect, the stronger we will be in lobbying for change. The data, the reality, cannot be ignored.

If any of you would be interested in attending pre-scheduled airport meetings, please comment back to us as we have considered this as a venue to discuss the ASP issue together in person.

Considering Solutions for Oncology Drug Purchasing

Thank you for your comments on the recent ASP post. Oncologists need to band together and find a solution to this problem.

Yes, this is doable. We need to create and engage in a process that suggests finding a solution in a free market system.

Medicare will never hear our plea for better reimbursement unless we can prove with documentation and examples that:
1. ASP is not working and why.
2. The current coding system is not properly reimbursing you for your cost.

How do we prove this to Medicare?

Who can purchase drugs at ASP or lower? You know that many of you are unfairly purchasing at ASP or higher. Following are some points to investigate in proving our case to Medicare:

1. How can we determine that the ASP formula is flawed?
2. Are distributors, GPO (Government Printing Office) and manufacturers taking more profit from the ASP formula than what they should be taking? Would the government agree?
3. Is it true that distributors obtain 2% plus from the manufacturers that are not counted in the ASP formula? If this is true, do distributors need to take another 4% profit from their customers?
4. Why hasn’t One Oncology launched its product? We are told that distributors will not sell to them and this interferes with the free market system. So, who is responsible for stopping this from working?
5. Have the manufacturers, distributors and GPOs misled their customers by making them think they are purchasing drugs below ASP, when in fact the customer is buying below ASP + 6% (huge difference)?
6. Isn’t the GPO supposed to help practices save money?
7. Aren’t we all supposed to purchase drugs at ASP?

Share your thoughts and ideas so we can collectively find the solution. On our Neltner Billing website, we have posted a short “worksheet” in the News area that will enable you to compare the Medicare allowable to what you are actually paying. You can fill it out, fax it back to us anonymously and we will build a spreadsheet with the results we receive. I think this is the type of real data we need to start lobbying.

Our next post will include a sample letter and instructions on writing your senators and congress representatives about this issue. We will do the same. If enough oncologists/ hematologists write in, we can create momentum. I think this is the first step in developing awareness.