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!
Drone vs. truck deliveries: Which create less carbon pollution?
31.05.2017 | University of Washington
New study: How does Europe become a leading player for software and IT services?
03.04.2017 | Fraunhofer-Institut für System- und Innovationsforschung (ISI)
An international team of scientists has proposed a new multi-disciplinary approach in which an array of new technologies will allow us to map biodiversity and the risks that wildlife is facing at the scale of whole landscapes. The findings are published in Nature Ecology and Evolution. This international research is led by the Kunming Institute of Zoology from China, University of East Anglia, University of Leicester and the Leibniz Institute for Zoo and Wildlife Research.
Using a combination of satellite and ground data, the team proposes that it is now possible to map biodiversity with an accuracy that has not been previously...
Heatwaves in the Arctic, longer periods of vegetation in Europe, severe floods in West Africa – starting in 2021, scientists want to explore the emissions of the greenhouse gas methane with the German-French satellite MERLIN. This is made possible by a new robust laser system of the Fraunhofer Institute for Laser Technology ILT in Aachen, which achieves unprecedented measurement accuracy.
Methane is primarily the result of the decomposition of organic matter. The gas has a 25 times greater warming potential than carbon dioxide, but is not as...
Hydrogen is regarded as the energy source of the future: It is produced with solar power and can be used to generate heat and electricity in fuel cells. Empa researchers have now succeeded in decoding the movement of hydrogen ions in crystals – a key step towards more efficient energy conversion in the hydrogen industry of tomorrow.
As charge carriers, electrons and ions play the leading role in electrochemical energy storage devices and converters such as batteries and fuel cells. Proton...
Scientists from the Excellence Cluster Universe at the Ludwig-Maximilians-Universität Munich have establised "Cosmowebportal", a unique data centre for cosmological simulations located at the Leibniz Supercomputing Centre (LRZ) of the Bavarian Academy of Sciences. The complete results of a series of large hydrodynamical cosmological simulations are available, with data volumes typically exceeding several hundred terabytes. Scientists worldwide can interactively explore these complex simulations via a web interface and directly access the results.
With current telescopes, scientists can observe our Universe’s galaxies and galaxy clusters and their distribution along an invisible cosmic web. From the...
Temperature measurements possible even on the smallest scale / Molecular ruby for use in material sciences, biology, and medicine
Chemists at Johannes Gutenberg University Mainz (JGU) in cooperation with researchers of the German Federal Institute for Materials Research and Testing (BAM)...
19.06.2017 | Event News
13.06.2017 | Event News
13.06.2017 | Event News
28.06.2017 | Physics and Astronomy
28.06.2017 | Physics and Astronomy
28.06.2017 | Health and Medicine