The Future of Radiation Oncology Payments: Insights from Jason McKitrick of Liberty Partners

By: Ron DiGiaimo, MBA, FACHE, and Briauna Driggers

The Current State of PFS for Radiation Oncology

​The Physician Fee Schedule (PFS) determines how physicians are paid for their services and is essential in the healthcare reimbursement process. However, in the field of Radiation Oncology (RO), the current state of PFS has been facing consecutive years of significant challenges. 

​As seen in the chart below, since 2001, the costs of equipment, supplies, staff, and related practice costs have increased significantly, while the updates to the Physician Fee Schedule have lagged far behind. This has resulted in a significant financial strain on specialists as a group, particularly RO practices, impacting their ability to provide high-quality care.

Image 1: Data originally gathered from Federal Register, Medicare Trustees’ Reports, Bureau of Labor Statistics, Congressional Budget Office. Note: Updates from the Consolidated Appropriations Act of 2024 have been incorporated.

​The existing PFS also penalizes the use of shorter, more efficient treatment regimens. Only a few years ago, breast cancer patients were treated with courses that lasted up to 7 weeks.  Those same type of patients are now treated in anywhere from one to three weeks. While this is fantastic for those affected by this disease, the current PFS reduces physician/facility payment for these shorter treatments to only a fraction compared to the longer treatments.  The same scenarios are found in treating prostate cancer and various other diagnoses. This is particularly troubling given that more Medicare beneficiaries than ever are receiving radiation therapy. Approximately 60% of cancer patients will receive radiation as a modality of treatment in the course of their disease.  

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Introducing Jason McKitrick

​To gain deeper insights into these issues, we spoke with Jason McKitrick, Partner at Liberty Partners Group based in Washington DC; Jason is a seasoned healthcare advocate with extensive experience in navigating the complexities of healthcare policy. He has been a leader in the fight against cuts to RO payments since 2012 and before as an advocate for specialty healthcare. Initially, he and his peers focused on RO, but his broader exploration revealed a more systemic issue.

​"The problem isn't just about radiation oncology; it's about the entire PFS system being ill-equipped to handle high-cost supplies and equipment in office-based interventional settings"
- Jason McKitrick

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Image 2: The values presented for 2021-2025P (proposed) are adjusted to reflect the effects of the Consolidated Appropriations Act, 2021, 2022, 2023, and 2024. The estimates presented reflect the cumulative impact of changes in relative value units since 2006, as published by CMS in its regulatory impact tables included in the annual PFS rules. The cumulative impact of changes reflects averages at the specialty level and does not account for changes in volume, mix, intensity of services, or site of service over the same timeframe. The cumulative impact at an individual practitioner or practice level may be different from what is presented.

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So, How Did We Get Here?

The Physician Fee Schedule was established in 1992 to manage professional fee reimbursement in free-standing office settings. Over time, the healthcare landscape evolved, and high-tech treatments that were once confined to hospitals began to be offered in community-based settings. American Oncology Resources “AOR” and Physician Reliance Network “PRN” (later merged to become US Oncology “USON”) as well as 21st Century, OnCure and a few other national oncology management firms helped drive and create access to care across the nation during this period. While this shift benefited patients by providing more convenient care, it also created significant reimbursement challenges. This is because funding did not shift from Medicare fee schedules for hospitals to the fee schedule used for physician offices; Place of Service 11 reimbursed via the Medicare physician fee schedule “MPFS” (i.e. the Physician Fee Schedule) even as the costs for high-tech equipment and supplies did shift to physician offices.

Image 3: Reimbursement is calculated as the average PFS non-facility fee compared to the average PFS facility fee plus the average hospital outpatient department OPPS fee. Two hundred seventy-three of the 300 CPT codes for which total reimbursement is less than direct costs were included. Twenty-seven codes were excluded as they were added to the fee schedule after 2019.

The “Physician Fee” schedule was never designed to cover the costs of expensive equipment and supplies. For example, if Dr. Smith provides radiation therapy, he might be paid $300 for his time, but the $3,000 cost of the equipment he uses is not adequately covered under PFS. In this scenario, the $3000 practice cost is based on the need for a private practice physician to procure the equipment or supplies necessary to provide interventional treatment services like radiation oncology. The aforementioned dynamic of unfunded cost-shifting from hospital fee schedules to the PFS since 1992 has led to a dilution of the PFS over time, negatively impacting all private practice providers, including primary care (i.e. those practicing in Place of Service 11). Efforts in recent years to shore up primary care reimbursement only have exacerbated the negative impact on office-based interventional care due to PFS “budget-neutrality.”  For example, funding increases within the PFS must be offset elsewhere within the PFS, so for a Radiation Oncology practice to go up in reimbursement, a urology practice must go down; Or, if a Cardiology practice goes up, Anesthesia goes down, etc. 

Image 4: 2025 PFS final rule total non-facility reimbursement and total direct costs. Radiation treatment delivery assumes 25 fractions for a typical prostate cancer patient.

​As a result, office-based interventional services like Radiation Oncology have been left behind. There are over 300 services within the PFS for which Medicare reimbursement does not even cover the direct costs of providing those services. This systemic issue has made it increasingly difficult for RO and other free-standing practices to remain financially viable.

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Time for a Solution: The Radiation Oncology Case Rate ROCR Proposal

​The Radiation Oncology Case Rate (ROCR) Value-Based Payment Program Act has been introduced in response to these challenges by the American Society of Therapeutic Radiation Oncology (ASTRO). ROCR aims to revolutionize the payment model for Radiation Oncology by shifting from a per-fraction (per treatment) to a per-patient (total course of treatments) payment system. Most importantly for the PFS, ROCR would pull high-cost equipment and supplies used for radiation oncology out of the PFS. Ideally, this change seeks to stabilize payments, improve care quality by increasing physician decision-making ability to modality not hindered by reimbursement, and reduce disparities.

Key Points of the ROCR Act
   Stability: Provides a more predictable and stable payment structure to ensure the sustainability of RO practices.
   Simplicity: Offers a straightforward and manageable solution, unlike the CMS RO Model criticized for excessive cuts and administrative burdens.
    Alignment with Clinical Guidelines: Promotes the use of quality assurance and improvement standards.
   Reduction of Disparities: Helps underserved patients access and complete treatments, leveling the playing field across different care delivery settings.

​Jason McKitrick is optimistic about the growing interest in pulling high-cost equipment and supplies from the PFS. "ROCR is a step in the right direction for PFS reform and ensuring that high-quality care is available to all patients, regardless of where they receive treatment," he said. ROCR also proposes annual updates based on medical inflation trends, further contributing to its goal of providing stable and equitable payments.

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Summary

While organizations like ACRO support further perfection of the ROCR bill through the legislative process to address any remaining member and stakeholder concerns, the introduction of the ROCR Act provides hope for the future. By addressing the systemic issues within the PFS and providing a more equitable payment model, ROCR has the potential to transform the landscape of Radiation Oncology. Other efforts to remove high-cost supplies and equipment from the PFS – such as the AMA RUC’s long-standing recommendation to remove high-cost supplies from the PFS – also could lay the groundwork for removing high-cost radiation oncology equipment from the PFS.
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As Jason McKitrick and his colleagues continue to advocate for these essential reforms, the healthcare community watches closely, hopeful that these changes will lead to a more sustainable and effective system for all. The journey toward PFS reform may be long and complex, but the benefits it promises for the future make it a fight worth pursuing. Letting your national societies and political leaders know of the need for payment reform and support of the ROCR proposal is critical for its success.  

Image Sources

1. AMA. (2024). Accessed September 6, 2024.
2. ACRO Advocacy. (2024). Accessed: August 6, 2024.
   
3. Cureus. (2024). Accessed: August 6, 2024.
   
4. Cureus. (2024). Accessed: September 6, 2024.