Medicare cuts raised chemotherapy treatments, changed drug choices

Doctors treated more lung cancer patients with chemotherapy and changed which drugs they used to adapt to cuts in Medicare reimbursement, economists found.

Doctors switched from drugs that experienced the largest losses in their profit margin, carboplatin and paclitaxel, to one that didn't, docetaxel, economists reported in a study published in Health Affairs.

Medicare cuts effective January 2005 substantially reduced outpatient chemotherapy reimbursement. Medicare had previously reimbursed chemotherapy drugs at 95% of their average wholesale price, but the drugs were available to physicians much more cheaply than that. So Medicare first lowered reimbursements to 85% of average wholesale price, and then again in January 2005 to the manufacturers' average national sales prices for the previous two fiscal quarters plus 6%.

Economists used Medicare claims data to analyze practice patterns up to 24 months before and 10 months after January 2005 for 222,478 beneficiaries with a confirmed lung cancer diagnosis between 2003 and 2005.

Before the law took effect, 16.5% of patients received chemotherapy within one month of diagnosis. Afterward, chemotherapy within one month increased 2.4% (P<0.001) to 18.9%. This increase came almost entirely from treatment in physicians' offices. Before the law took effect, 13% of patients received chemotherapy in a physician's office; afterward, 15.3% did.

Payment rates for carboplatin, paclitaxel, and etoposide declined dramatically in the new reimbursement system. Reimbursement rates for a standard monthly dose declined from $1,845 to $930 for carboplatin and from more than $2,270 to $225 for paclitaxel. Payment rates were relatively flat for docetaxel, a high-price drug at about $2,500 per standardized monthly dose, and gemcitabine HCl, at $1,300 per monthly dose.

The percentage of patients receiving carboplatin declined from almost 56% to 54%, while the percentage of those receiving paclitaxel declined from 30% to 26%. Prescriptions for docetaxel increased 1.2% to 1.8%. The absolute change was small, involving a base of 9.2% of patients who were receiving docetaxel before 2005, but represented a 13% to 20% relative increase.

The timing of the changes preceded the cut in reimbursement by several months, suggesting physicians knew the law's impending impact and were changing their prescribing patterns ahead of time. Docetaxel's increase preceded the change in reimbursement by about a month, further suggesting that physicians were changing their existing stock in anticipation of the new law, the authors wrote.