Upholding LCA policy on PCa agents would save $33M

January 4, 2013

If least costly alternative (LCA) policies for certain prostate cancer drugs had not been rescinded in 2010, Medicare expenditures would have been reduced by more than $33 million over 1 year, a new government report suggests.

If least costly alternative (LCA) policies for certain prostate cancer drugs had not been rescinded in 2010, Medicare expenditures would have been reduced by more than $33 million over 1 year, a new government report suggests.

Between 1995 and 2010, luteinizing hormone-releasing hormone (LHRH) agonists covered under Medicare Part B were subject to LCA policies, which based the payment amount for a group of clinically comparable products on that of the least costly one. However, in April 2010, LCA policies for Part B drugs were discontinued following a court ruling stating that the use of an LCA policy was not authorized under Medicare law. Recently, Rep. Ken Calvert (R-CA) expressed concerns that the policies’ withdrawal may have created an unintentional incentive for physicians to administer costlier prostate cancer drugs, and he asked the Department of Health and Human Services’ Office of Inspector General (OIG) for an examination of the policy withdrawal and its impact.

From part of 2010 to 2011, the OIG identified the lowest Medicare payment amount among clinically comparable LHRH agonists used to treat prostate cancer and calculated the amount that Medicare would have saved if the more expensive LHRH agonists had been reimbursed at these lower amounts. Quarterly shifts in utilization were tracked from 1 year before the policies were withdrawn to 1 year after.

"If LCA policies for LHRH agonists had not been rescinded, Medicare expenditures would have been reduced by $33.3 million over 1 year, from $264.6 million to $231.3 million," the OIG said in a written report. "After LCA policies were removed, utilization patterns shifted dramatically in favor of certain costlier products."

The OIG pointed out that overall use of LHRH agonists to treat prostate cancer has been decreasing, a trend that began at least 1 year prior to elimination of LCA policies and continued for more than a year after.

"LCA policies may be a useful tool for conserving taxpayer funds, provided that patients retain access to appropriate care, but are not likely to be restored without legislative action," the report stated. "Therefore, we recommend that CMS consider seeking legislative authority to implement LCA policies for Part B drugs under appropriate circumstances."