Two of Spokanes largest medical clinics, the Rockwood Clinic and Cancer Care Northwest, have put on hold a pair of separate expansion projects here because of uncertainty about Medicare reimbursements for chemotherapy drugs.


That uncertainty has been created by recently passed bills to provide prescription-drug coverage to Medicare recipients, say Dr. Kevin D. Sweeny, president of the Rockwood Clinics board of directors, and Dr. Bruce Cutter, president of Cancer Care Northwest.


Medicare already covers infusion drugs, such as chemotherapy drugs, but the two physicians say the legislation could hurt clinics that supply and administer cancer drugs. Rockwood Clinic and Cancer Care Northwest say that together, they provide care for an estimated 90 percent of all cancer patients in the Inland Northwest.


We were going to expand over to another campus in conjunction with Bruces group, says Sweeny. He says Rockwood Clinic now has put a hold on that project. He declines to provide further information about it for now.


Meanwhile, Cancer Care Northwest has worked for months on plans to expand its 21,000-square-foot clinic at 601 S. Sherman, where its out of space, by about 25 percent, but has put that project on the shelf, too, Cutter says. The clinic is one of three that Cancer Care Northwest operates here.


Sweeny and Cutter say that Medicare prescription-drug bills, separate versions of which passed the U.S. Senate and House of Representatives in the last few weeks, call for eliminating profit margins completely from Medicare reimbursements for chemotherapy drugs. A compromise version of the legislation is expected to emerge from a House-Senate conference committee this fall, Cutter says. It would need to be approved by both the House and the Senate.


In addition to reimbursing health-care providers for cancer drugs, Medicare reimburses them separately for administering the drugs, and those reimbursements already fall short of covering costs, Cutter says. He says that if oncology practices no longer will be paid margins on the chemotherapy drugs they supply to Medicare patients, theyll have to stop providing chemotherapy to those patients.


In the U.S. economy, if the cost of providing a service exceeds the price you get for it, the service goes away, Cutter says.


Says Sweeny, We will be faced with providing service at a large loss. Thats an unsustainable situation.


While oncology practices charge high markups on some decades-old inexpensive chemotherapy drugsfor instance, Cancer Care Northwest charges $6 for one drug for which it pays $2most chemotherapy drugs now cost $800, $1,000, or $1,200 per dose or per purchase, and markups on those more expensive drugs are typically around 15 percent, Cutter says.


Theres a lot of money flowing through the system, Cutter says. You see lots of revenue, but very little income from a physicians point of view.


He claims that even with the margins Cancer Care Northwest receives on the drugs it supplies to Medicare patients now, cost-accounting figures show that it racks up a net loss of about 2 percent while supplying chemotherapy drugs to Medicare patients.


Lawmakers and many members of the public believe that when medical practices are squeezed financially in one area, they can make it up by raising their charges in another area, but thats not the case with Medicare reimbursements for cancer drugs, Cutter says. Cutter and Dr. Kirk Lund, a specialist in oncology and hematology at the Rockwood Clinic, say that chemotherapy drugs typically account for 75 percent of an oncology practices total costs. They add that older patientsthose on Medicareusually make up more than half of such a practices patient load, because cancer tends to strike older people.


Meanwhile, Cutter fears that private insurers will follow the governments lead. He says that more and more, private insurers tend to tell health-care providers theyll pay reimbursements equivalent to what Medicare pays.


Even a large-volume buyer of cancer drugs, like U.S. Oncology, a Houston-based giant thats affiliated with Cancer Care Northwest, cant withstand reimbursements that eliminate the profit margins on chemotherapy drugs, Cutter says.


He says that U.S. Oncology, the American Society of Clinical Oncology, and the Community Oncology Alliance all are fighting in Washington, D.C., against the proposed drug-reimbursement change.


Thereve been tremendous efforts made by the national leadership of the oncology industry, Cutter says. Its being said that we will at least be heard in conference committee.


The House version of the bill creates an additional issue in that it would implement a national drug-purchasing program, Cutter says. He contends that similar mandatory vendor imposition programs around the country have disrupted patient care, allowed counterfeit drugs to enter the marketplace, and are being abandoned in some markets.


Cutter and Sweeny say that the threat of tightened cancer-drug reimbursements comes on top of Medicares 5.4 percent across-the-board reduction in reimbursements for physician services implemented last year and 1 percent cut this year. They say Medicare is scheduled to slash reimbursements for physician services by 4.2 percent on Jan. 1.


Yet, while health-care costs have been rising steadily for years, theyre projected to spike dramatically when baby boomers begin moving through the Medicare system just a few years from now, Cutter and Sweeny say. They add that cutting reimbursements to providers now could keep the health-care industry from expanding sufficiently to handle fast-growing patient loads later.


Says Cutter, We are facing a health-care system that has the potential to implode.