Press Release

Embargoed Until Contact

June 17, 2010
12:01 AM EST

Kay Campbell
(301) 652-1558


Sue Ducat
Director of Communications
(301) 841-9962


Medicare's Physician Payment Cuts: How Did They Affect Cancer Patients?


Bethesda, MD - As a result of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, physician reimbursements for outpatient treatment of cancer patients were lowered. In the first study to examine how these reductions affected the likelihood and setting of chemotherapy treatments for Medicare beneficiaries, researchers looked at patients recently diagnosed with lung cancer and found that they received more, rather than fewer, treatments.


How Medicare’s Payment Cuts For Cancer Chemotherapy Drugs Changed Patterns Of Treatment
By Mireille Jacobson, Craig C. Earle, Mary Price, and Joseph P. Newhouse


Jacobson is with the RAND Corporation in Santa Monica, California; Earle is affiliated with Cancer Care Ontario (Canada); Price is with Kaiser Permanente in Oakland, California; and Newhouse is at Harvard University in Boston, Massachusetts. Funding for this research was provided by the Robert Wood Johnson Foundation.


In the study, the authors used Medicare claims data for 222,478 beneficiaries diagnosed with lung cancer between 2003 and 2005 in order to compare the likelihood of treatment and rates of reimbursement before and after the 2003 act took effect. They found that the percent of patients receiving treatment in a physician’s office one month after diagnosis increased from 13 percent before the payment change to approximately 15 percent after it. Payment rates for most of the most commonly used chemotherapy agents declined dramatically. However, the authors found no evidence that the changes in reimbursement rates reduced beneficiaries’ access to chemotherapy. This is a finding consistent with overall patterns in health economics literature: When fees that comprise a large share of physicians’ incomes decline, utilization increases. The literature also finds that when fees that account for a small share of physicians’ incomes decline, utilization decreases.


The authors found both patterns were involved in this study, with more lung cancer patients receiving chemotherapy and an increase in the use of docetaxel, a relatively more expensive and formerly less-utilized drug. The authors conclude that the latter may have offset some of the savings projected to result from the 2003 act. “The increase in utilization [of chemotherapy] may have important implications for the well-being of Medicare beneficiaries with cancer," they write. “Future work should determine the implications for these findings for Medicare spending and the health of Medicare beneficiaries. The ultimate message is that payment reforms have real consequences and should be undertaken with caution."

About Health Affairs

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears each month in print, with additional Web First papers published weekly at The full text of each Health Affairs Web First paper is available free of charge to all Web-site visitors for a two-week period following posting, after which it switches to pay-per-view for nonsubscribers. Web First papers are supported in part by a grant from The Commonwealth Fund.