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A Device to Kill Cancer Lift Revenue

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Posted by on Thursday, December 9, 2010, 6:24
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Roughly one in three Medicare beneficiaries diagnosed with prostate cancer today gets a sophisticated form of radiation therapy called IMRT. Eight years ago, virtually no patients received the treatment.

A Device to Kill Cancer Lift Revenue
A Device to Kill Cancer Lift Revenue

The story behind the sharp rise in the use of IMRT—which stands for intensity-modulated radiation therapy—is about more than just the rapid adoption of a new medical technology. It’s also about financial incentives.

Taking advantage of an exemption in a federal law governing patient referrals, groups of urologists across the country have teamed up with radiation oncologists to capture the lucrative reimbursements IMRT commands from Medicare.

Watch an interview with a former salesman for AKSM Oncology. The company helps urology practices build and manage treatment centers for IMRT, a fast-growing form of radiation therapy for prostate cancer.

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How the Journal Crunched the Medicare Numbers

The Wall Street Journal examined the IMRT utilization rate among prostate cancer patients who were first diagnosed with the disease while enrolled in Medicare. Read more.

Under these arrangements, the urologists buy radiation equipment and hire radiation oncologists to administer it. They then refer their patients to their in-house staff for treatment. The bulk of Medicare’s reimbursements goes to the urologists as owners of the equipment.

There are now at least 37 such urology groups in 16 states, ranging in size from a few physicians to more than 100. Critics, including some independent radiation oncologists who are losing business, say the urology groups steer many patients toward IMRT for financial gain, drawn by Medicare payments that can reach $40,000 per patient, depending on the state.

The urology groups deny this. They say they offer their patients a full range of treatment options, and their growing use of IMRT merely mirrors a national trend driven by patient demand. Integrating IMRT into their practices allows them to better coordinate patients’ care, they say.

Expensive new procedures like IMRT play no small role in the relentless rise of Medicare expenditures. This year, the federal health-insurance program for the elderly and disabled is expected to spend $524 billion on the care of its 47 million beneficiaries—a 40% increase from 2006. The Congressional Budget Office recently projected that federal spending on Medicare could double as a share of gross domestic product to as much as 7% by 2035.

In 2008, the last year for which data is available, Medicare spent an estimated $1 billion or more on IMRT, largely for the treatment of prostate cancer.

Urology groups’ ownership of IMRT equipment is just one example of what is known as “self-referral,” the practice by which doctors refer patients for treatments in which they stand to make a financial gain. Other examples include doctors’ ownership of sophisticated imaging machines, which has been linked to their over-utilization. Some medical researchers estimate that overbilling through such arrangements costs taxpayers tens of billions of dollars a year.

Opening the Medicare claims database could potentially curb overbilling by exposing physician practices to public scrutiny. Portions of the database are currently accessible for a fee, but information pertaining to individual doctors and their private practices is kept strictly confidential under a three-decade-old court ruling.
Prostate Cancer’s Costly New Radiation Treatment

Some urologists refer their patients for treatment on IMRT machines they own, and capture the lucrative Medicare reimbursement.


* In a set of frequently asked questions prepared for urologists, Urorad describes its business and argues for the integration of IMRT into urology practices “in light of … rising overhead.” It adds, “there is no better revenue source available to urologists than IMRT.”
* In promotional material signed by Urorad’s CEO, Mark Harrison, the company details its model’s compliance with the Stark laws and anti-kickback regulations. With underlining for emphasis, it adds, “Through the integration of IMRT services, urology practices can potentially double their practice revenue.”
* As part of a presentation distributed to urologists, Urorad lays out a “urologist’s return on investment,” showing that one urologist handling two new IMRT cases per month can increase his income by $336,000 annually.
* In a short newsletter prepared for its urology group clients, the company uses all caps to remind readers, “Each month that a urology group delays its decision to join the Urorad National IMRT/IGRT consortium, a Urorad member realizes an additional $500,000 of net revenue. The time to act is now!”
* A one-page marketing flier concludes by saying, “A Urorad IMRT center of excellence is the answer to rising overhead costs, decreasing reimbursements, and the loss of” revenue from the Justice Department’s crackdown on a hormone-drug scheme that had boosted many urologists’ income. “Join the Urorad team and let us show your group how Urorad clients double their practice’s revenue!”

The Wall Street Journal, together with the nonprofit Center for Public Integrity, obtained a 5% sample of all Medicare billing, but was unable to form an accurate picture of self-referring urology groups’ treatment patterns from the sample. The Journal subsequently obtained 100% of these groups’ billings from the Department of Health and Human Services for an additional fee. The Journal agreed not to publish billings of individual doctors. Instead, it is restricted to analyzing groups of 10 or more physicians.

More than 190,000 American men are diagnosed with prostate cancer each year. How—and even whether—to treat the disease has long been controversial because prostate cancer tends to grow slowly. Many victims are more likely to die from other causes.

Treatment options range from IMRT, which costs Medicare as much as $40,000 for a full course of radiation in places such as New York, to a cheap approach known as “watchful waiting,” which means simply monitoring the cancer with regular office visits and tests. Medicare pays up to $16,000 for a prostatectomy—surgery to remove the prostate—and as much as $19,000 to implant radioactive seeds to kill cancerous cells.

IMRT has become popular with patients because it is less invasive than surgery or seed implants. It is widely recognized as superior to the type of external radiation it replaced because it targets only the tumor, limiting damage to healthy tissue. But it has become a source of heated debate among health-care professionals, some of whom argue that it isn’t being used in a cost-effective manner.

“Overtreatment with IMRT is a fact,” says James Mohler, a urologist at Roswell Park Cancer Institute in Buffalo, N.Y., who chairs a physicians committee that sets national treatment guidelines for prostate cancer. Dr. Mohler cited a 2006 study in the Journal of the National Cancer Institute that found that 45% of American men with prostate cancer who received external radiation were being overtreated.
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A Journal analysis of Medicare claims suggests that IMRT usage is significantly higher in the five states where most of the urology groups that own radiation equipment are located. These states—New York, Florida, Pennsylvania, New Jersey and Texas—are home to 22 of the 37 self-referral groups identified by the Journal. The average IMRT usage for recently diagnosed prostate-cancer patients was 42% in those states in 2008. By contrast, the national average was about a third.

New York is home to the largest urology self-referral group in the nation, Long Island-based Integrated Medical Professionals PLLC. Created in July 2006, Integrated Medical has grown to 103 doctors across six counties and owns 11 linear accelerators, the massive machines used to deliver radiation.

Integrated Medical is headed by a urologist named Deepak Kapoor. “Is radiation a line of business for us? Yes,” Dr. Kapoor said in a July interview at the group’s main radiation facility. But, he added, IMRT wasn’t the practice’s most profitable activity, and use of the treatment was driven by patients, not by the practice’s doctors.

Asked during the interview what proportion of its prostate-cancer patients Integrated Medical treats with IMRT, Dr. Kapoor said he didn’t track such data closely, but said he would be “comfortable” with an estimate of “one out of six,” or 17%.

An analysis of Integrated Medical’s Medicare claims later performed for the Journal suggested a much higher rate. Between its launch in mid-2006 and the end of 2008, Integrated Medical administered IMRT to 601, or 53%, of 1,132 Medicare patients recently diagnosed with prostate cancer, the Journal analysis found.

Integrated Medical received $26.7 million from Medicare for the care of those 601 patients, according to the Journal’s calculations. If Integrated Medical’s urologists hadn’t owned radiation equipment and had referred these patients for radiation treatment outside of their practice, Medicare would have paid them only $2.6 million.

After being presented with the Journal’s data, Dr. Kapoor denied earlier giving a one-in-six estimate, and said he believed Integrated Medical’s utilization rate for IMRT was in “line with what’s practiced in the community.” He added that financial considerations never influenced IMP’s treatment decisions.

In a subsequent email he called the Journal’s methodology “severely flawed and inaccurate,” and said it understates the national utilization rate. “Any suggestion, inference, or innuendo that implies that IMP’s treatment of patients with prostate cancer is based on anything other than the best interests and personal choice of each, individual patient is blatantly false,” he wrote. He also wrote that Integrated Medical’s IMRT use was boosted by a large number of treatments of patients who were referred by outside physicians.

The consensus among prostate-cancer experts is that few patients aged 80 and older should undergo radiation because the risks of treating them outweigh the benefits. Their advanced age makes them far likelier to die from other causes, so the course of action typically recommended for them is watchful waiting or, sometimes, hormone therapy.

Integrated Medical administered IMRT to 91 male Medicare patients aged 80 and older over the period the Journal examined. That amounted to 35% of the Medicare patients 80 and older diagnosed with prostate cancer that Integrated Medical treated. The group received $3.7 million in IMRT payments from Medicare for these patients. Dr. Kapoor said more than 80% of those patients suffered from intermediate to high-risk cancer, justifying more aggressive treatment, and all were offered—and declined—watchful waiting.

By contrast, the proportion of prostate-cancer patients 80 and older who were treated with IMRT was between 13% and 24% in a half-dozen states where no self-referral groups existed in 2008, the Journal found.

Integrated Medical treats far fewer patients with cheaper radiation seeds than with IMRT because seeds cause more side effects, Dr. Kapoor said. Some prostate-cancer experts dispute that assertion, and research studies have shown little difference between the two. Dr. Kapoor said the large difference in costs between IMRT and seed implants was not a factor he and his colleagues took into account in their treatment decisions.

“Our credo in medicine is not, ‘spend the least money,’ ” he said. “It’s, ‘first do no harm.’ “

IMRT was first developed in the 1990s. It improved upon older radiation technology with a combination of new software and hardware that could mold a radiation beam to match the shape of a tumor.

Medicare started paying for IMRT in 2002, setting its reimbursement rate for the procedure high to take into account the costs of the technology and the added personnel required to administer it. The price of a new linear accelerator can exceed $1.5 million.

The new Medicare reimbursement coincided with urologists’ loss of a major source of income. Throughout the 1990s, many urologists had supplemented their revenues through an arrangement with the maker of Lupron, a hormone drug for prostate cancer. Under the arrangement, Lupron producer TAPPharmaceutical Products Inc. sold urologists the drug at a steep discount, while the urologists in turn billed Medicare for the full price.

The arrangement ended in 2001 when several urologists were indicted and TAP Pharmaceutical paid more than $840 million to settle a Justice Department investigation. Deprived of the Lupron profits, some urologists’ incomes declined by as much as one-half, according to several urologists who were practicing at the time.

IMRT emerged as the perfect income substitute, says Mark Harrison, a radiation oncologist based in McAllen, Texas, who first had the idea of integrating IMRT into a urology practice.

Bob Giglione

After consulting lawyers, Dr. Harrison determined that administering IMRT in urologists’ offices would fall within an exception to the so-called Stark law, which bars doctors from referring Medicare patients to facilities in which they have a financial interest.

The exception—which was included in part to accommodate prestigious multispecialty institutions such as the Mayo Clinic—allows doctors to provide “ancillary” services in their offices during a patient’s visit, such as lab tests.

Armed with his legal opinions, Dr. Harrison created a company called Urorad Healthcare LP in 2004 to advise urology groups on how to set up and run radiation facilities. In its marketing materials, Urorad told urologists that buying IMRT equipment could “potentially double their practice revenue.”

In one presentation titled “FAQ’S,” Urorad projected a practice’s annual return on investment at $425,000 per doctor, if each urologist in the practice treated an average of one-and-a-half new patients a month.

With the disappearance of Lupron profits “and rising overhead, urologists need to seriously begin considering new revenue sources, and there is no better revenue source available to urologists than IMRT,” the document stated.

Dr. Harrison, who acknowledges writing the marketing pitches, says the returns they cite are offset by the big up-front cost of building a radiation center, which he says can reach $5 million. “Urologists take significant risks” by taking out large bank loans to pay for the facilities, he says.

Dr. Harrison says Urorad has helped 15 urology groups build IMRT centers over the past six years, and generated revenues of $10 million in 2009. He says he is proud of the role his company has played in urologists’ adoption of IMRT because “it’s brought a good treatment to a lot of people.”

Urorad’s first clients included two Texas urology groups, one in McAllen and another in San Antonio. Texas has since become one of the centers of the movement, with six big urology groups that own linear accelerators and employ radiation oncologists.

Last year, Juan Reyna, who heads one of the Urorad-counseled Texas groups, Urology San Antonio, teamed up with Integrated Medical’s Dr. Kapoor to create a Washington, D.C., lobbying organization called Access to Integrated Cancer Care.

The impetus for AICC’s creation was a July 2009 proposal by the Centers for Medicare and Medicaid Services to reduce Medicare’s payments for radiological services. Radiation therapy, originally included among the services targeted for payment reductions, faced a cut of up to 44%.

AICC hired the law firm Sonnenschein Nath and Rosenthal to lobby against the cuts, paying it $160,000 in the fourth quarter of 2009, according to the Center for Responsive Politics.

AICC warned that the cuts would deprive patients in rural areas of quality cancer care. A group of five congressmen echoed that concern in a letter to Health and Human Services Secretary Kathleen Sebelius, warning of “catastrophic results for cancer patients across the country.”

The letter’s authors—Democrats Charles Gonzalez, Ciro Rodriguez, Henry Cuellar, Steve Israel and Joe Sestak—represent districts in Texas, New York and Pennsylvania, three of the states with the highest concentration of self-referral urology groups.

AICC also found a receptive ear in the Congressional Black Caucus, which wrote Ms. Sebelius on Oct. 9, 2009, protesting the cuts on the grounds that they would further reduce African-American men’s already-limited access to cancer care.

Three weeks later, CMS issued its final ruling on Medicare payment changes, largely exempting radiation therapy from the cuts. AICC called the decision “an enormous victory.”

But scrutiny of the urology groups is mounting, spurred by the American Society for Radiation Oncology, or ASTRO, which has denounced urologists’ practice of referring patients for treatment in facilities they own as unethical. ASTRO’s members also have a financial stake in the issue, since self-referral urology groups compete directly with them for radiation business.

In April, House Ways and Means Committee Chairman Sander Levin (D-Mich.) and two other congressmen asked the U.S. Government Accountability Office to study what impact self-referral groups are having on Medicare spending.

The experience of Lane County, Ore., may help answer that question.

In late 2007, the county’s biggest urology practice, the Oregon Urology Institute, hired a radiation oncologist from Colorado and opened a new radiation center, marketing it as “the only facility in Oregon focused exclusively on prostate cancer.”

The new facility soon coincided with a surge in Lane County’s prostate-cancer treatment costs. According to the Journal’s analysis, Lane County’s Medicare billing for prostate cancer more than doubled in 2008 to $3.8 million.

The increase was driven by a more than fivefold jump in the county’s IMRT costs. Oregon Urology accounted for most of the 55 IMRT treatments of Medicare beneficiaries that year in Lane county. Oregon Urology increased its Medicare revenues from the treatment of prostate cancer nearly six-fold in 2008 to $1.8 million, even though the number of prostate-cancer patients it treated only rose 14% to 183 patients.

Bryan Mehlhaff, a urologist at Oregon Urology, said he was surprised to hear that his practice had increased the county’s costs so much.

“We don’t over-order tests and procedures,” he said in a telephone interview. He added that Oregon Urology’s new IMRT business was especially brisk in 2008 because some patients delayed their treatments until the new technology became available, creating “pent-up demand.”

Terry Fitzpatrick, Oregon Urology’s administrator, said an increase in prostatectomies following a local hospital’s purchase of a surgical robot may also have contributed to Lane County’s higher prostate-cancer treatment costs in 2008. Oregon Urology’s surveys show that 99.5% of the patients treated with IMRT rated their care excellent, he added.

That may be so, says Christine Cha, regional medical director of radiation oncology at the Providence Cancer Center in Portland. But she says that if Lane County’s experience is replicated across the country as baby boomers flood into the Medicare program in coming years, “how are we going to pay for that?”

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