The 2005 Medicare Modernization Act, which substantially reduced Medicare payments to physicians for administering outpatient chemotherapy drugs, has had a somewhat paradoxical effect. Rather than resulting in fewer treatments, as one might expect, a new study finds that the Act has actually increased chemotherapy treatment rates among Medicare recipients.
"This sort of dynamic runs contrary to what most people would expect, but economists often encounter this sort of thing," says Joseph Newhouse, the John D. MacArthur Professor of Health Policy and Management at Harvard University and faculty member at Harvard Medical School, Harvard Kennedy School, Harvard School of Public Health, and the Faculty of Arts and Sciences, who carried out the study with colleagues Mireille Jacobson, now at RAND, Craig Earle, now at Sunnyside Medical Center, and Mary Price.
The study will be released on June 17 as a web first by Health Affairs, and will also appear in its July edition.
Unlike the process for prescribing and billing for typical drugs, in which physicians simply write prescriptions that patients must then fill, oncologists purchase chemotherapy agents directly from pharmaceutical companies and then bill the patient's insurer. But they don't necessarily bill for what they paid.
Like cars, these drugs have a "sticker price," that is, a manufacturer's suggested cost that may or may not reflect what doctors actually pay. Many doctors will often purchase the drugs at a price far below the suggested cost and then bill insurance for the suggested price, making upwards of a twenty percent profit.
In 2005, the Medicare Modernization Act established that Medicare would no longer automatically pay what physicians billed. Instead, the federal government calculated the average amount that doctors typically paid for each chemotherapy drug, and then decided to reimburse no more than six percent above this average cost.
Many critics, however, claimed that this would adversely affect the patient and that less monetary incentive would encourage less patient care.
In the first-ever study to test this critique, Newhouse and his team looked at Medicare claims for 222,478 beneficiaries who between 2003 and 2005 were diagnosed with lung cancer. The researchers found that on average, within one month of diagnosis, chemotherapy treatment increased 2.4 percent after the Medicare Modernization Act, from 16.5 percent to 18.9 percent. What's more, use of more costly chemotherapy drugs increased, while use of less expensive drugs declined.
"Physicians don't always respond to incentives the way most people expect," says Mireille Jacobson of RAND, the study's first author, "but in this case they do respond in a way that makes sense to economists. It seems logical on the one hand that when you pay less you get less. However, in this case, since a high proportion of an oncologist's income depends on prescribing, paying less per drug results in more drugs."
The authors state in the paper that they cannot extrapolate from these findings either the appropriateness of increased treatment or the effects on health outcomes. Additional studies will be necessary to examine these areas.
This research was funded by the Robert Wood Johnson Foundation.
Written by David Cameron
Alyssa Kneller | EurekAlert!
Europe’s Demographic Future. Where the Regions Are Heading after a Decade of Crises
10.08.2017 | Berlin-Institut für Bevölkerung und Entwicklung
Scientists reveal source of human heartbeat in 3-D
07.08.2017 | University of Manchester
Whether you call it effervescent, fizzy, or sparkling, carbonated water is making a comeback as a beverage. Aside from quenching thirst, researchers at the University of Illinois at Urbana-Champaign have discovered a new use for these "bubbly" concoctions that will have major impact on the manufacturer of the world's thinnest, flattest, and one most useful materials -- graphene.
As graphene's popularity grows as an advanced "wonder" material, the speed and quality at which it can be manufactured will be paramount. With that in mind,...
Physicists at the University of Bonn have managed to create optical hollows and more complex patterns into which the light of a Bose-Einstein condensate flows. The creation of such highly low-loss structures for light is a prerequisite for complex light circuits, such as for quantum information processing for a new generation of computers. The researchers are now presenting their results in the journal Nature Photonics.
Light particles (photons) occur as tiny, indivisible portions. Many thousands of these light portions can be merged to form a single super-photon if they are...
For the first time, scientists have shown that circular RNA is linked to brain function. When a RNA molecule called Cdr1as was deleted from the genome of mice, the animals had problems filtering out unnecessary information – like patients suffering from neuropsychiatric disorders.
While hundreds of circular RNAs (circRNAs) are abundant in mammalian brains, one big question has remained unanswered: What are they actually good for? In the...
An experimental small satellite has successfully collected and delivered data on a key measurement for predicting changes in Earth's climate.
The Radiometer Assessment using Vertically Aligned Nanotubes (RAVAN) CubeSat was launched into low-Earth orbit on Nov. 11, 2016, in order to test new...
A study led by scientists of the Max Planck Institute for the Structure and Dynamics of Matter (MPSD) at the Center for Free-Electron Laser Science in Hamburg presents evidence of the coexistence of superconductivity and “charge-density-waves” in compounds of the poorly-studied family of bismuthates. This observation opens up new perspectives for a deeper understanding of the phenomenon of high-temperature superconductivity, a topic which is at the core of condensed matter research since more than 30 years. The paper by Nicoletti et al has been published in the PNAS.
Since the beginning of the 20th century, superconductivity had been observed in some metals at temperatures only a few degrees above the absolute zero (minus...
16.08.2017 | Event News
04.08.2017 | Event News
26.07.2017 | Event News
21.08.2017 | Medical Engineering
21.08.2017 | Materials Sciences
21.08.2017 | Life Sciences