1. C OMMUNITY O NCOLOGY A LLIANCE Is There a Home for Oncology in ACOs? Ted Okon Executive Director 9/16/11

2. Community Oncology Alliance2 Presentation  Brief update on important events from DC Proposal to debt “super committee” to cut Medicare drug reimbursement to ASP + 3% MedPAC proposal to cut specialists’ fess by 18% as SGR “fix”  ACOs, as currently constructed by CMS, leave little room for oncology  Medical home is a better model for oncology Basically just a next step of the current oncology care model Allows for different payment options  What you can do Please be engaged NOW!

3. Community Oncology Alliance3 The Changing Landscape of Cancer Care Delivery  1042 Clinics Impacted 199 Clinics Closed 369 Practices Struggling Financially 48 Practices Sending ALL Patients Elsewhere for Treatment 315 Practices Acquired by a Hospital 111 Practices Merged/Acquired Source: COA Practice Impact Tracking Database as of 3/31/11

4. Community Oncology Alliance4 Landscape Change Over 6 Months Source: COA Practice Impact Tracking Database as of 3/31/11

5. Community Oncology Alliance5 Why is the Landscape Changing?  Medicare changed oncology reimbursement in 2004/2005 and has made additional payment cuts since that time  Medicare payment changes have influenced private payers over time More payers have moved to ASP-based drug reimbursement  Congress’ inability to fix the SGR-based Medicare payment system has created additional pressures Business planning is next to impossible for oncology practices  Health care reform is proving to be a motivating force for market consolidation Tremendous uncertainty for providers; has them running scared Hospitals consolidating their markets by integrating private practices (such as oncology) Payers are even looking to consolidate their markets by acquiring health care deliver systems – Highmark and West Penn in PA

6. Community Oncology Alliance6 Drug Shortages (All Drugs) Source: University of Utah Drug Information Service Shortages Specifically of AntiNeoplastic Agents 3 23

7. Community Oncology Alliance7 What is Causing Drug Shortages?  Precipitating event was a fundamental change in the Medicare reimbursement system from AWP to ASP Effectively created price controls on low-cost generics  Rebate pressures from growth in Medicaid and 340B programs have further decreased generic profitability  Do manufacturers focus on low profit generics or more profitable product lines? Tight capital may further influence this decision  Number of generic manufacturers have decreased per drug Manufacturing, quality, supply, and regulatory problems have more pronounced impact when fewer manufacturers

8. Community Oncology Alliance8 Challenges Facing Oncology  Additional reimbursement cuts proposed by Medicare in the 2012 Physician Fee Schedule Pay Attention to the GPCI  29.5% SGR cut if Congress does not act before 1/1/2012  Debt “solution” created a “super committee” that will consider provider cuts to Medicare Must find $1.2–1.5 trillion in spending cuts by end of year  Health care reform introduces tremendous uncertainty Will the mandate that all have insurance or the entire law be declared unconstitutional? Will ACOs work? Etc, etc, etc…

9. Community Oncology Alliance9 2012 MD Fee Schedule Impact Source: COA modeling based on data provided by community oncology clinics  GPCI = Geographic Practice Cost Indices Philadelphia -1% Rest of PA -2%

10. Community Oncology Alliance10 SGR Situation  29.5% cut effective 1/1/12 if Congress does not act  In limbo due to the debt deliberations and “super committee” Will the SC take up the SGR?  5 largest physician associations calling for 4-5 year transition period before SGR eliminated Replaced with new payment mechanism – Shared savings in ACO model? – Medical home? – Bundled payments?  Yesterday, MedPAC recommended “solution” to SGR mess

11. Community Oncology Alliance11

12. Community Oncology Alliance12 Debt Solution “Super Committee”  Super committee made up of 12 members of Congress House — 3 Republicans, 3 Democrats Senate — 3 Republicans, 3 Democrats  Tasked with finding $1.2-1.5 trillion in spending cuts before Thanksgiving congressional recess  List of $500 billion in Medicare cuts circulating Contains cut in Medicare drug reimbursement from ASP + 6% to ASP + 3%  If committee cannot agree on cuts, or agrees and Congress cannot pass legislation before 12/23, automatic spending cuts go into effect Includes 2% Medicare cut on everything Will impact oncology services and drugs  President just added to the burden with the American Jobs Act

13. Community Oncology Alliance13 ASP + 3%  House Democrat Ways & Means staff has included cut to ASP + 3% on the list of potential spending reductions  Discussion points by staff: Large oncology practices will not be impacted by cut to ASP + 3% Small practices may be forced to send patients elsewhere for treatment but patients will get treated There is no justification for ASP + 6% – Practices are simply use to getting it

14. Community Oncology Alliance14 Policy & Private Payer Health Care Reform Changes to Medicine  Policy makers bent on driving Medicare costs down Ensure quality in the process – At least give quality lip service Pay for “value” – Fee-for-service payment system has a big target on it Force care coordination  Examples already being implemented Hospitals will be paid differently based on value – MDs are next Bundled payments for hospitals to distribute to MDs Accountable Care Organizations to coordinate care  Private payers are following suit

15. Community Oncology Alliance15 What Oncology Needs to Do NOW  Define exactly what is quality and value in cancer care and measure it Lead; don’t be led on this  Put value and evidence-based medicine in the context of a model that works for cancer care Model needs to work for clinical & business operations  Explore new, viable payment models Lead; don’t be led on this Examples — shared savings, bundled, episode of care  Advocate for the model!!! Develop it, embrace it, believe in it, and “sell” it

16. Community Oncology Alliance16 “Won’t You Be My Neighbor”

17. Community Oncology Alliance17 Accountable Care Organizations (ACOs)  Think of ACOs as the “medical neighborhood” Different provider “neighbors” working together to spruce up the neighborhood ACO model not defined by “process” but by “payment” – The defining payment model is “shared savings” – If you produce $$$ savings you get to keep a portion Providing you meet quality targets – Providers on their own to figure out the process of making this happen Savings Quality

18. Community Oncology Alliance18 CMS/Medicare Model for ACOs  Proposed rule released by HHS/CMS Final rule released any day now???  Big picture Primary care driven – Specialists cannot take the lead in forming an ACO but can participate in it – Clearly is driven by primary care and large integrated systems Some easing of anti-trust provisions designed to hinder coordination of care in the first place Share in the savings if quality metrics are met All ACOs and provider participants go at risk at least after 2 years

19. Community Oncology Alliance19 How CMS ACO Payment Works  ACO participants still get paid under fee-for-service  Two shared savings options No risk for first 2 years, at risk for third year – Share in at least 50% of the savings Must hit a minimum threshold of savings Must satisfy “quality” criteria – At risk in year 3 for up to 7.5% of what care should have cost if no ACO At risk for 3 years – Share in at least 60% of the savings Same minimum threshold and quality criteria – At risk for all 3 years for up to 10%

20. Community Oncology Alliance20 ACO Questions for Oncology  How will cancer treatment fit into an ACO framework? Where are the quality measures relating to cancer care? If no specific quality measures to meet, how will patients be ensured of having access to the best — not least costly — therapy? Will ACOs want independent practice cancer care? – High cost treatment is an outlier  How do new $93,000 and $120,000 drugs not break the bank of an ACO? How will new therapy advances be treated?

21. Community Oncology Alliance21 COA’s Comment Letter to CMS on ACOs  Totally agree with what ACOs are trying to accomplish Increased care coordination Enhanced quality Decreased costs  Unfortunately, ACOs as proposed by CMS will not work Too much risk, too little reward Cancer care not mentioned in proposals Not one quality measure deals with cancer care  Solution we propose is the oncology medical home model Proven concept in a medical oncology practice Experience has produced consistent quality and value

22. Community Oncology Alliance22 The Medical Home Model  Think of the Medical Home as your house Your practice becomes the “medical home” for the cancer patient – You don’t treat all diseases but you coordinate the care among other treating physicians It’s all about the processes that will improve quality and reduce costs – Evidence-based medicine – Patient focus – Delivery of value Defined by process, not payment Different payment models can be utilized

23. Community Oncology Alliance23 Primary Care Medical Home  40 year old concept  Wide-spread acceptance of the Primary Care Medical Home concept 60 different pilots nationally Varied stakeholder collaboration – Primary care practices – Medical societies – Consumers – Insurance companies – Academic institutions – Medicaid

24. Community Oncology Alliance24 Medical Home in Oncology Experience  Dr. John Sprandio has made his practice a patient-centered oncology medical home Re-engineered the process of care Imbedded IT functionality Increased physician efficiency through standards Maximized “time, touch and teaching” opportunities with patients and families Promoted a culture of physician accountability Placed a constant focus on patient related disease management and coordination of care Measured increases in quality & decrease in costs Working with payers to build reimbursement into the model

25. Community Oncology Alliance25 COA Medical Home Efforts  Developing a structured, 3-level oncology-specific medical home implementation and recognition program What oncology practices need to do How to move along a 3-step process to the medical home  Developing a practical, viable payment approach relating to Medicare and private pay Submitted a demonstration project to CMS CMI Will be working with Congress on a legislative demonstration project Working with private payers and NAMCP on the oncology medical home model  Looking for input, help, and involvement from the oncology community! Help us develop and implement the model Please get involved!!!

26. Community Oncology Alliance26 Final Words — Action Needed Now!  Cancer organizations united to stop cancer care cuts Letter to the debt “super committee” Congress outreach/advocacy Advertising/media/press  Please help — Need grassroots activity! Go to Action Needed on the COA website Create awareness about the crisis in cancer care — payment cuts and drug shortages – Members of Congress – Media Please help by writing an OpEd “Like” Facebook page on the cuts – www.facebook.com/StopCancerCareCuts www.facebook.com/StopCancerCareCuts  Letters to state congressional delegation about the impact of the payment cuts and drug shortages

27. Community Oncology Alliance27 Inside the Beltway Advocacy

28. Community Oncology Alliance28 DC Hill Day on September 22 nd  Come to DC on 9/22  Help enlist members of Congress to Stop Cancer Care Cuts  Represent oncology on the Hill during a critical time  Make your media aware of your visit

29. Community Oncology Alliance29 Thank You! Ted Okon tokon@COAcancer.org Twitter @TedOkonCOA www.communityoncology.orgwww.communityoncology.org (COA & CAN) www.COAadvocacy.orgwww.COAadvocacy.org (CPAN) www.facebook.com/CommunityOncologyAlliance www.facebook.com/StopCancerCareCuts