In the final entry of our four part series, Technology Insights’ expert Chris Pericak reviews key considerations for launching and operating a proton therapy center in 2013. Miss the earlier entries? Read parts one, two, and three now.
Chris Pericak, Technology Insights
Facing heavy payer scrutiny and patient recruitment challenges for large-scale randomized controlled clinical trials, proton centers will need to augment clinical trials while refining strategies for engaging private payers.
Protons face high bar to solidify clinical merit via larger-scale comparative research
Facing heavy payer scrutiny and patient recruitment challenges for large-scale randomized controlled clinical trials, proton centers will need to augment clinical trials while refining strategies for engaging private payers. For tumor sites facing scrutiny, proper patient selection, recent data, and messaging will be very important.
Patients with co-morbidities, tumors near critical structures, or with previous radiation make excellent candidates for protons. If large studies are lacking, centers may rely on single arm studies or even comparative treatment planning models showing dose deposition for protons versus IMRT, though payment is not guaranteed.
Ultimately, proton centers must engage Medical Directors of private payers in peer-to-peer conversations to find the right treatment for each patient, emphasizing that their incentives are strongly aligned.
While reimbursement rate tumbles, coverage a risk to volumes, revenue
As long as protons remain in a fee-for-service environment, reimbursement and private payer coverage will be the key to revenue generation. Proton reimbursement from Medicare has been volatile in recent years, declining by nearly 32 percent in 2013, following a 15 percent increase in 2012 from 2011 rates.
Reportedly erroneous cost data supplied to CMS have hampered reimbursement. Many centers and organizations are strongly advocating for a return to 2012 levels.
During the comment period to the CMS rule, stakeholders argued that the decrease in the cost of proton therapy was due to flawed and incorrect data by one hospital during 2010 and 2011. However, CMS has not adjusted its rule for 2013. Time will tell if the “steady state” reimbursement rate for protons will remain around $24.5K per patient or be restored to our calculation of $35.9K in 2012.
Yet, with such a strong focus on reimbursement rates, much of the story is left untold. While the reimbursement rate tumbles, coverage remains a significant risk to revenue by directly impacting the extent to which volumes can be sustained or extended.
Depending on proton centers’ business model, reimbursement and coverage impact different centers in different ways. Some centers receiving philanthropic donation are comfortable with lower reimbursement rates, based on their operating model, but see much of future downside risk within payer coverage. Other centers with smaller operating margins or a strong mandate from private investors rely heavily on strong reimbursement to make the business model work.
For all centers, efforts to restore reimbursement to 2012 levels should be matched with efforts to engage private payers, as expansion of private payer coverage will be a core driver of revenue into the future. Further, into the future, payers will be demanding higher quality and lower cost care, moving beyond evidence of comparable benefit. As providers begin to take on greater risk, they will also demand a higher bar, eventually weighing the role of protons for population management.
Therefore, strategies that focus on enhancing the clinical message to gain coverage expansion will see payback over time, as we move from fee-for-service to risk-based payments models.
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