One of the Obama administration’s numerous experiments to reduce the cost of Medicare has provoked fury from cancer doctors.

The administration announced last month it would be trying out a new model to reimburse doctors and providers for the cost of medications administered at outpatient facilities, typically expensive cancer treatments that are delivered intravenously at cancer clinics.

The current system pays doctors the average sales prices of the drug plus 6 percent. The new model will pay doctors the average sales price plus 2.5 percent and a flat fee of $16.80 for every day the medication is used.

Guiding the new proposal is the belief that the current system encourages doctors to opt for the most expensive drugs. Medicare plans compare the two new systems side-by-side, with some doctors staying in the current reimbursement model and others taking part in the new one.

Cancer doctors, pharmaceutical firms, and some groups for cancer patients are claiming that the proposal will result in providers being undercompensated for their work and that patients will suffer as a result.

"It is remarkably insulting that some people today think that cancer physicians in large numbers are saying, 'What's the most expensive way I can treat this patient?'" Dr. Allen Lichter, CEO of the American Society of Clinical Oncology, told ABC News. "It will severely damage oncology practices across the country, and it will not solve what we have long recognized is a serious problem, that cancer drug prices are skyrocketing."

Opponents warn that the new policy will shutter small area cancer clinics, which they claim will disproportionately impact patients in rural areas. U.S. Sen. Chuck Grassley, R-IA, invoked complaints from rural constituents and urged the Obama administration to scrap the plan.

But some medical interests, such as primary care doctors, are inclined to support the plan, as are health policy experts who see reining in the nation’s rising health expenditures as unsustainable and a threat to the functioning of the U.S. health care system.

The AARP, for instance, one of the most reliable defenders of preserving Social Security and Medicare benefits, supports the experiment.

"We've done a lot of talk about prescription drug spending, but we really haven't moved to the action part,” Leigh Purvis, an AARP health policy analyst, told ABC. “This is really the first time we've seen talk translated into action."

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Cancer doctors upset about new Medicare payment model

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