Insurance companies ‘wait and see’ before fully covering Cyberknife
Southwest Washington Medical Center may take 10 years to realize a profit from its edgy new cancer technology.
The center spent nearly $5 million on Cyberknife, the high-density radiation, robotically controlled tumor eradication device. With it, what once took several weeks and caused undesirable side effects from radiation now takes about an hour, and is a painless outpatient procedure. Staff physician Chris Hoffelt said the investment in Cyberknife makes the hospital a mecca for cancer patients in the region. "Several of the patients I see are from well beyond 150 miles," he said. "It really is aligning the hospital with world-class centers."
That sounds great, unless you’re an insurance provider. While the Cyberknife was designed in the spirit of Hippocrates, its purchase by the hospital was driven in part by the spirit of Warren Buffett. And insurance companies do not take the Hippocratic Oath.
As a result, it’s going to take some time for the hospital to see any real returns on its investment. This is because insurance companies will not fully pay for treatments such as Cyberknife, and in some cases not even recognize them.
For the benefit of the sick
In the meantime, the federal government in 2004 agreed to fund all aspects of Cyberknife for two years as it goes through the rigors of proving itself as a viable treatment. Along the way, Medicare decides whether or not the new treatment is worthy.
"Insurance companies take their cues from Medicare," said Wendy Wifler, senior director of health policy and payment at Accuray, the Sunnyvale, Calif.-based manufacturer of Cyberknife.
The worthiness curve is determined through a progression of Medicare-determined billing codes. The first is a "new technology" code, called a T Code. This designation can cause insurance companies to stay far away from the treatment. The next progression is a "government" code designation. The G code gives a little more clout to the treatment, but still gives insurance companies an out when it comes to paying, because the procedure is not well-defined and is still considered experimental. Cyberknife is currently at the G 0339 designation, which covers through Medicare just about half of each $10,000 treatment. In the case of commercial insurance, even that amount is a very hard sell.
"Right now, we have to really fight for the patients in order to get them care," said Jeff Snyder, radiation oncology manager at Southwest Washington Medical Center. "Insurance companies can look at it and say, ‘Oh, this is a G code, we don’t cover experimental treatments.’"
Cuts like a knife
It could get worse. According to Wifler, Medicare payments to Cyberknife are right now in danger of being dramatically reduced. As the two-year government subsidy draws to a close, the government is reevaluating Medicare coverage of Cyberknife, and will spend six weeks deciding where to put its limited amount of Medicare funding. Wifler fears Medicare payments for Cyberknife services will be slashed by 20 percent as a result. The cut would take place by the first of the year.
"It’s never good to hear that a reduction (in payment) has been proposed," she said. "This is the third time it has been proposed and would be the first time it would pass. We really won’t know what the payment structure will look like until about the third week in January," she said.
Hospital CEO Joe Kortum acknowledged the gamble involved in purchasing Cyberknife, but remains confident that Medicare will get behind it in the end. He said the purchase decision was driven by the opinion of the medical leadership at the center.
"We have a wonderful cadre of neurosurgeons here that believe in this technology," he said. "We are quite convinced that Cyberknife represents a quantum leap in treatment technology."
Kortum said another factor that points to what he called the ethicality of the purchase is that there is a waiting list to buy the machines.
"We were lucky to be able to get in line to buy one," he said.
One more factor may augment Kortum’s confidence: Another milestone in making a new treatment profitable, and moving it from mere pledge to full-fledged member of the medical fraternity, is the designation of Current Procedure Terminology, issued by the American Medical Association. Hospitals apply in writing for this designation, and must show good numbers and treatment records to be awarded the label. Snyder hopes to have CyberKnife at CPT status by this time next year. Wifler said a CPT designation helps in determining coverage for a treatment.
"If the CPT designation becomes effective," she said, "the (government) could say it makes the G code obsolete."
Still, Wifler said, Medicare is the final arbiter on which has more weight, the G code or a CPT designation.
"Nobody has a good feel for what’s going to happen right now," Wifler said. "If they do, they’re not telling me."
Keeping fingers crossed
Regardless, Snyder said he is hopeful about the CPT designation.
"CPT is good because then the procedure is no longer considered experimental," he said. "And we’re about a year away from getting a CPT."
Snyder said once a treatment goes CPT, patient volumes go through the roof, as does the price of the equipment. He saw it happen 12 years ago with Positron Emission Tomography.
"At first, the government said ‘We don’t know what PET scans are gonna be good for, so we’re only going to fund it in one region at a time.’"
Because of this, interest in PET scans was reticent, he said, until the CPT code was awarded, and then it became very popular. Snyder predicts the same for Cyberknife.
"Cyberknife’s gonna get real busy, real quick," he said. In fact, maybe it already is. Six patients have received treatment since the device was launched in June, and five already were scheduled for this week as of Sept. 7. Still, Snyder allows that the CPT breakthrough won’t put the hospital in the black for some time.
"If we can get a break even on our investment in the next eight to ten years, then that’s a good thing," he said.
