Doctors now have to talk money along with treatment
There is a very interesting piece in the Wall Street Journal called “Pricey Drugs Put Squeeze on Doctors.” It provides yet another view into the very knotty problem of runaway medical costs. The issues here are that doctors have to buy cancer drugs for their patients vs. sending them to a pharmacy. It’s just a mess of thin margins (to the doctor), sky-high prices, and a nightmare getting reimbursed. The upshot is that doctors are now wrestling with having to have an economic discussion along with a treatment discussion. That may be a good thing, but it crashes into centuries of medical ethics. Here’s a snip.
Unlike most physicians, who write patients prescriptions that they can fill at a pharmacy, oncologists must buy many drugs upfront because they’re delivered intravenously in the office. As a result, doctors are on the hook until patients or insurers pay the bill. Reimbursement delays and denials are now more common as insurers clamp down on claims. Some patients can’t afford high co-payments.
“Twenty years ago, when I was in training, nobody really dealt with economics,” says Stephen Hufford, an oncologist in San Francisco. The prevailing thinking, he says, was: “Cost should never be an issue in someone’s care.”
That approach increasingly looks untenable. In February, after delays in payments from insurers, Dr. Hufford was working to pay off several hundred thousand dollars of past-due bills to his drug distributor. When he ordered $20,000 of chemotherapy for three patients he was to see the next day, he says the distributor refused to deliver the drugs unless he paid in advance and reduced his outstanding balance by another $20,000. He didn’t have $40,000 in his bank account.
There was a time when none of this mattered. Margins at retail were huge and reimbursements were easy to come by. Now, all that’s on its ear and many cancer docs are on financial ropes themselves trying to cash flow expensive drugs, help patients deal with their own financial problems, and fighting to get reimbursed.
Until recently, prescribing chemotherapy to patients was a rich source of doctors’ revenue. Through the 1990s, oncologists profited from liberal markups of up to 100% on some staple chemotherapy drugs. Pricier cancer drugs created through biotechnology offered slimmer margins of 10% to 15%. Still, oncology remained lucrative thanks to “big bucks” in cancer drugs, says oncologist Thomas Marsland of Florida Oncology Associates, a practice in Jacksonville. “We became retail pharmacists.”
The exorbitant markups drew congressional scrutiny and sharp cutbacks with the passage of the Medicare Modernization Act in 2003. In 2005, Medicare limited doctors to a 6% markup on intravenous drugs, which account for a large share of new cancer drugs. Private insurers followed. Margins shrank. Payments from patients were less reliable, too, as many struggled to cover co-payments.
One obvious conclusion is don’t get cancer. Beyond that, this is just the tip of the cake. Over the next 20 years, there will be more and more shifting of costs and complexity towards patients and doctors, creating more and more uncertainty and risk for both. That may or may not be a good idea, but that’s what’s coming.
The alternative is European style government vetting and intervention, but that’s not the American way. At least not yet.
Tags: Medicalreimbursement, Medicare Modernization Act, decision making, decision ethics
