Colliding federal policies are fomenting a nasty money war that's pitting community oncologists trying to treat patients in less expensive clinic settings against hospitals trying to woo patients in through costlier emergency departments.

In Albuquerque, Barbara McAneny, MD, says evidence of this fight came in an orange postcard a local hospital mass-mailed to area homes. And Tracey Weisberg, MD, of Southern Maine's New England Cancer Specialists is in the middle what she calls "a horrible" fight over a similar issue.

Battles are popping up all over the country, says Ted Okon, executive director of the nonprofit Community Oncology Alliance in Washington, D.C., which advocates community cancer care. It's a trend brought on by a "warped system" of federal incentives that encourage hospitals to acquire private oncology practices and take over cancer care from community doctors at an increasingly rapid pace, he says.

"I've seen cases where a hospital stops referring patients to [community] physicians because the hospital's doctors are building their own [hospital-based] cancer practice," often "forcing physicians to join them," he says. "Hospitals are realizing they can capture more of that revenue, and they will do anything to acquire an oncology practice."

The Conflict in a Nutshell

On one hand, new payment models and cancer demonstration projects promoted by the Centers for Medicare and Medicaid Services and some commercial payers seek to lower cancer costs for patients whose chemotherapy complications can be safely and more cheaply treated in clinic settings. Similar models seeking to avoid hospitalizations for cardiology and pulmonary patients are anticipated later this year.

On the other hand, CMS and some health plans pay hospital settings up to 40% more than they do community oncologists for the same cancer services. That dollar difference is incentivizing expansion of oncology service lines in hospital settings.

Plus, federal policy allows disproportionate share hospitals to buy drugs at enormous discounts under the 340B program without requiring them to pass those savings on to patients. That's a discount that's not available to community cancer doctors.

Okon calls the 340B program "the goose that laid the golden egg for hospitals, prompting them to drive as much cancer care volume as they can."

There's a lot at stake, because cancer care costs are rising, from $124 billion from all payers in 2010 to $157 billion by 2020.

A Big Orange Postcard

The trend is happening in real time. Hospitals in 2012 provided more than 30% of cancer care, compared with 17% in 2008, according to a report from the Berkeley Research Group, an Emeryville, Calif.-based think tank. Some project that percentage will soon be a 50/50 split.

"Acquisition of physician-based oncology practices by 340B hospitals," is the first factor contributing to the shift, the report says.

The second is "higher Medicare reimbursement rates for and greater utilization of chemotherapy administration in hospital outpatient departments compared with physicians' offices. This trend is driven by Medicare rate setting policy and hospital utilization patterns and has been reported in studies performed over the last 3 years."

McAneny and her staff of 15 doctors at New Mexico Oncology Hematology Consultants don't want their patients near a hospital unless they absolutely need to be. They instruct patients to call a 24/7 triage clinic if they experience chemotherapy side-effects before they call 911 or drive to the ED.

If they do find themselves in an ED, they're to give the ED physician a "gold card" with a number to call McAneny's office before being sent for expensive imaging and other testing.

Since she started the Come Home model in seven cities and 78 physicians 2 years ago with a $19.76 million CMS grant, hospitalizations and ED have been halved compared with other oncology practices in their regions, saving $10 million a year for all payers, she says.

But nearby Lovelace Health System, she says, has tried to thwart her program. The 606-bed system recently mailed a 6" X 9" orange postcard to area residents that reads: "If the side-effects from your cancer treatments seem critical and can't wait for your doctor, a trip to the emergency room could save your life."

The postcard lists 11 common chemo complications, most of which McAneny says can be treated in her clinic or in the patient's own home, at a lower cost than in the ED, where more than half the time, patients are admitted.

Does she feel that Lovelace was trying to head her off, deliberately obstructing her program by scaring patients into the hospital? "Absolutely," she says. "Why else would they do it?"

In an e-mail response, Lovelace officials said the postcard was part of a campaign that addressed "a wide range of serious health issues where an emergency department visit would be called for, including strokes, heart attacks, heart disease, illness and injury, and cancer."

They insisted that the mailing was "in no way designed to undermine anyone whose efforts are directed against cancer," and "did not address any alternative facilities, protocols, or practitioners."

'Actively Soliciting ... Behind Our Backs'

In Southern Maine, Weisberg says physicians affiliated with MaineHealth, a network of eight hospitals in her area, "[are] actively trying to break apart my group and employ us so they can give chemotherapy drugs there, and make bigger revenue, benefiting from profit margins they get from the 340B drug pricing."

"It isn't fun, and it's counter to what we're trying to achieve. The hospital administrators don't get it, or they choose not to. They have one idea: Employ the doctors so that they can push chemo in their facilities and receive bigger fees."

MaineHealth president William L. Caron, Jr. refutes that assertion:

"Unfortunately, Dr. Weisberg mischaracterizes our motivations. Clinical leadership across the MaineHealth system has spent the last 2 years developing the optimal evidence-based care model for oncology across the 12 Maine and New Hampshire counties we serve, many of which are rural areas. MaineHealth is committed to ensuring that all patients, regardless of their ability to pay, have the highest level of care as close to home as possible."

McAneny notes that several recent studies show that when chemotherapy patients go to an ED because of a complication, they often don't get sent home. "They have a 60% chance of being admitted," she says. "Those doctors look at our poor, skinny, bald patients and say, 'You look terrible. You need to be in the hospital.' And once you've told them that, [the patients are] scared. And they want to get admitted, too."

For cancer patients especially, hospitals can be dangerous places because their treatments may weaken their immune systems, McAneny says. "They can catch C. diff and MRSA and they have a higher risk of blood clots, not to mention that it's depressing to spend part of your remaining life in a hospital. They just lie in bed and become debilitated. And when you're sick, you become debilitated faster."