Medicare Bill Controversy Shuts UCLA Cancer Unit : Medicine: Red tape and miscommunication are blamed for the closing of a sophisticated neutron therapy center, one of just four in the United States.

A sophisticated neutron therapy facility at UCLA, built with nearly $17 million in National Cancer Institute money and offering superior treatment for certain cancers, has been shut down because another federal program--Medicare--has refused to pay patients’ bills, UCLA officials say.

The facility is one of only four of its kind in the country. The three others--in Houston, Seattle and Chicago--all receive Medicare reimbursement for patient care, according to UCLA officials, who blame the situation on poor judgment by Medicare’s fiscal agent for Southern California, Transamerica Occidental Life Insurance Co.

For its part, Transamerica blames poor communication by UCLA.

The bottom line is that Medicare patients in need of neutron therapy now must go out of state for care while a facility built and operated with public money sits virtually idle on the campus of the Wadsworth Veterans Administration Hospital in Westwood.

The situation may be short lived--Transamerica officials say they have changed their minds and are now trying to work out the terms of payment with UCLA. But it is illustrative of a larger issue involving the Medicare program, which currently gives local carriers broad discretion in deciding coverage, leading to great variation in the services available to Medicare patients from one state or region to another.

In an interview with The Times, Gail R. Wilensky, administrator of Medicare’s parent agency, the Health Care Financing Administration, said she is “very concerned” about the UCLA case and others like it that reflect inconsistencies in Medicare coverage.

Wilensky said she is convening a task force to report in six months on mechanisms to increase Medicare’s control over local carriers.

“My distinct sense is that what we are going to recommend is not what it looks like today,” she said.

Medicare’s willingness to pay was a make-or-break issue for UCLA’s A. Frederick Rasmussen Neutron Therapy Facility. Nearly 75 of the 100 patients treated annually were over 65 and therefore insured by Medicare. Overhead costs were about $100,000 a month, said Dr. C. Michele Burnison, co-director of the facility.

Acting on advice from the Southern California Radiation Oncology Society in early August, Transamerica reached an internal decision to pay for neutron therapy in early September, said Stanley Friedman, the company’s manager for professional and beneficiary services.

UCLA officials say they received a letter to that effect on Sept. 28--the day the facility was shut down. It was too late to stop the closure, and the payment the letter proposed was inadequate, according to Dr. Robert G. Parker, chairman of radiation oncology at UCLA. Parker, a neutron therapy expert, has supervised the UCLA facility since its groundbreaking in 1979.

Fast neutrons are generally used on large tumors that are not likely to respond to conventional radiation. It is, for example, the superior treatment for advanced, inoperable salivary gland cancer, said the National Cancer Institute’s director of radiation research, Dr. John E. Antoine. At one point, Antoine said, he wrote to Transamerica on UCLA’s behalf to try to persuade the carrier of the appropriateness of Medicare coverage.

Neutron therapy also appears to work better than conventional radiation on advanced prostate tumors, although the data is still being analyzed.

Because it delivers a more powerful irradiating jolt to the tumor, and is able to kill cancer cells in any stage of reproduction, the therapy is also considered promising for squamous cell carcinoma of the head and neck, melanomas, sarcomas and some thyroid and renal cancers.

A drawback of neutron therapy is that it damages nearby healthy cells in a way that prevents them from fully recovering. Conventional radiation also damages surrounding non-cancerous tissues, but not their recuperative powers. As a result, neutron therapy is not appropriate for tumors in the brain or spinal cord. And those administering it must be highly skilled in targeting the beam.

The UCLA facility began treating patients in July, 1986. Simultaneously, Parker said, the facility began negotiating with Medicare and other insurers for coverage.

Some private insurers paid, but because Transamerica repeatedly denied claims, the cost of treating Medicare patients had to be subsidized by the facility’s National Cancer Institute research grants, he said. These ran out in September, necessitating the closure.

The university officially describes the facility’s closing as “temporary, while reimbursement arrangements are being worked out.”

But Burnison, the co-director, said it will not be easy to reassemble the staff necessary to run the key piece of machinery, a high-energy cyclotron. Some employees have found jobs elsewhere, she said, anticipating the closure as negotiations with Transamerica continued to be fruitless.

“It is a big disappointment,” Burnison said. “We have struggled very hard to hold it together over the last few months.”

Parker said he is trying to keep the neutron team together by putting most of its members on his department’s payroll. But he too is worried about negotiations dragging on much longer. In an interview, he spoke of exasperating delays and inconsistencies on Transamerica’s part. When preliminary agreement appeared to have been reached on reimbursement early in September, for example, the company’s follow-up letter articulated a different position, Parker said.

Transamerica’s Friedman blames the protracted affair on UCLA’s failure to provide the kind of documentation that might have persuaded the company to reverse its position sooner.

Transamerica’s power to deny coverage comes from its position as Medicare’s carrier for Southern California. The federal program uses local insurance companies to process claims and pay bills. These carriers are guided in coverage decisions by Medicare, but have latitude in areas where coverage is not explicitly mandated.

For several years, Transamerica denied reimbursement on grounds that neutron therapy is “investigational”--a category that permits denial of Medicare payments. Transamerica did so even as carriers in Texas, Washington and Illinois recognized it as appropriate for certain tumors, according to UCLA and federal officials.

Richard Hedlund, a Transamerica senior vice president, said he would welcome more guidance from Medicare on coverage issues involving new technology.