Stops and Starts Abound in the Oncology Payment Landscape

The landscape of policies and processes surrounding cancer treatment and the financial aspects of care is ever-changing, with each new rule affecting oncologists and patients. In a presentation at the Association of Community Cancer Centers (ACCC) 2023 Annual Meeting and Cancer Center Business Summit, government affairs experts took attendees through updates and considerations around several policies.

During the “Emergent Payment Issues in Oncology” session, Jennifer Walsh, director of public affairs at Foley & Lardner LLP, and Adria Warren, a partner at Foley & Lardner LLP, gave overviews on Cures 2.0, the No Surprises Act (NSA), and the 340B drug pricing program.

The Halt of Cures 2.0

Walsh opened the presentation with an overview of the Cures 2.0 bill, a follow-up to the 21st Century Cures Act, which passed in 2016 and still has funds to be distributed. Cures 2.0 was introduced in the House by Representatives Diana DeGette, D-Colorado, and Fred Upton, R-Michigan, in November 2021, and the legislation was well received by cancer care providers, associations, and other stakeholders.

“The legislation received high praise from stakeholders in the cancer community, and included provisions aimed at speeding up the delivery of groundbreaking cures, treatments, and innovations to patients. Further, it modernized certain aspects of the Medicare program, including those related to clinical trials,” Walsh said.

The bill also included extensions for a variety of programs and allocated $6.5 billion for the establishment of the Advanced Research Projects Agency for Health (ARPA-H) at the National Institutes of Health, which aims to facilitate expedited research for the prevention, detection, and treatment of a host of diseases, including cancer.

While the bill did not move through the normal legislative process, several of the bill’s provisions were included in a 2022 Consolidated Appropriations Act. Some provisions from the PREVENT Pandemics Act were also included in the year-end omnibus act.

The path forward for the remaining provisions remains unclear, Walsh said, although there is still hope that additional provisions will eventually pass and that additional funds will be reauthorized for cancer research.

Legal Challenges to the No Surprises Act

The NSA, a federal law protecting patients from some types of unexpected medical bills, passed as part of a larger year-end omnibus package in 2020. Under the legislation, practices such as surprise bills for emergency services—even out-of-network services that did not receive prior authorization—are banned. This includes surprise bills that patients could not have reasonably expected, such as being treated by out-of-network providers at an in-network hospital, for example.

In 2021, HHS released the first rule, which outlined the patients covered by the law: patients who are covered by job-based and individual health plans, who get emergency care, nonemergency care from out-of-network providers at in-network facilities, and air ambulance services from out-of-network providers.

A second rule in 2021 established a process for independent dispute resolution (IDR) to resolve disputes between providers and health plans. The Texas Medical Association (TMA) sued CMS—arguing that the IDR process skewed in favor of commercial insurers—and won, then sued again and won again.

“Now we're awaiting the third and hopefully final version of this rule on how the IDR process is supposed to work,” Walsh said. “Meanwhile, all of this created significant backlog within the IDR process, compounding the backlog where the massive number of claims being filed beyond what was originally anticipated. As a result, CMS had to pause and then later resumed the IDR process. But it's really not going to be effective until HHS issues that updated rule on the criteria that arbiters must consider to reach a decision on payment for services.”

Ongoing Issues With 340B

While the 340B drug pricing program intends to help safety-net providers deliver comprehensive care and effective drugs to more eligible patients, it has not been without its challenges.

The 340B program gives eligible entities significant discounts on covered outpatient drugs by establishing a ceiling price that these entities can pay for the drugs. Eligible entities including certain public and nonprofit hospitals, federally qualified health centers, entities with certain federal grants, and outpatient clinics at eligible hospitals. Private practices are not eligible— which community oncologists argue has contributed to the consolidation of oncology care to the hospital setting.

“For many drugs, the 340B pricing is the lowest price that's offered by manufacturers. And by capping when a covered entity pays spends before to do drugs, the covered entity could benefit from the increase to margin—ideally, and despite some of the things you can see in the newspaper, to reinvest the benefit the hospital and the community,” Warren said.

“As a health care transactions lawyer, I should note that the 340B program is an important consideration for hospitals that are considering opening provider-based outpatient oncology centers, and it continues to be a factor,” she said. The reimbursement for provider-based outpatient departments was reduced in the Bipartisan Budget Act of 2015, which applies to provider-based hospital outpatient departments that were not in existence before November 2015. However, 340B pricing is still available for new hospital-based centers that meet the requirements.

In 2018, CMS reduced the reimbursement by almost 30% for drugs acquired via the 340B program—the intention was to approximate the discount received by 340B entities when purchasing from manufacturers, but this effectively shifted savings generated by the program from providers to Medicare, Warren said.

Litigation followed immediately, but CMS continued this track until June 2022 while litigation made its way through the courts. Last year, the Supreme Court ruled in favor of the hospitals.

“The implications of the decision for 340B-covered entities is enormous, because its implication is not just for 2018 and 2019, but the years since,” Warren said. “The estimated reimbursement amount in CMS’ opinion is $1.96 billion dollars to hospitals.” The ruling was that CMS did not follow the proper processes for varying those payments, she said.

CMS is required to implement the payment and changes in a budget-neutral manner, which they also did in 2018 and presumably increased payments for other services and non-340B drugs as budget offset. The Supreme Court did not propose a remedy or suggestions to “unscramble the egg,” as Warren put it. There is also the question of how CMS will address the retroactive period, although it began reimbursing at the higher rate again immediately. Additional rulemaking is expected in April, Warren noted.

Commercial payers and pharmacy benefit managers are also considering rate cuts, and Congress and the states are considering ways to eliminate price discrimination for 340B entities. On the other hand, litigation brought by drug companies to limit the use of contract pharmacies to distribute 340B drugs was successful, which restricts the use of outside pharmacies for entities who have in-house pharmacies, with a series of cases ongoing.

In addition to ongoing processes, Walsh and Warren emphasized the dynamic landscape of oncology payment and reimbursement policy, highlighting a reignited Cancer Moonshot initiative, the launch of the Enhancing Oncology Model, delays in the Radiation Oncology Model, and merit-based incentive payment and value-based care arrangements.