September 2016 Edition Vol.11, Issue 9

Study Finds Cancer Costs Dont Outpace Other Health Care

Study Finds Cancer Costs Don't Outpace Other Health Care

By Robert H. Carlson


The big surprise that emerged from the recent study conducted by researchers at the actuarial firm Milliman and commissioned by the Community Oncology Alliance (COA) was that over a 10-year period, the total cost of care for actively treated oncology patients has been rising at the same rate as non-cancer patients. 

The findings are in sharp contrast to the commonly held belief that cancer care costs have been rising faster than healthcare spending in other segments of the Medicare and commercially insured patient populations. 

The study's three key findings were:

  1. The percent increase in cost from 2004-2014 for actively treated Medicare fee for service and commercially insured cancer patients is similar to the corresponding increase for the non-cancer Medicare fee for service and commercially insured populations.
  2. The cost of chemotherapy drugs is increasing at a rate significantly higher than other cost components of actively treated cancer patients, driven largely by biologics, but the chemotherapy drug increase has been offset by slower growth in other component costs.
  3. The site of service for chemotherapy infusion has dramatically shifted from physician office to hospital outpatient settings, which has contributed to the increase in cancer care cost.

Percent Increase in Cost

The retrospective “Cost Drivers of Cancer Care” study analyzed claims data for the Medicare and commercially insured patient population covered between 2004 and 2014. 

Two data sources were used, the Medicare 5% sample claim database and the Truven Health Analytics MarketScan Commercial Claims Database (MarketScan).

Results showed that the per patient per year cost increases for the actively treated Medicare cancer patient population was 36.4% vs 34.8% for the Medicare non-cancer patient population. 

Similar results were seen in the commercially insured cancer treated patients vs non-cancer patients:  increases were 62.5% for the actively-treated cancer population vs 60.8% for the non-cancer population. 

"There has been a long-held belief in research and policy circles that cancer care costs in America have gone up disproportionately as compared to other health care costs. This study shows that this commonly held belief is not supported by the evidence," said Debra Patt, MD, MPH, MBA, practicing oncologist at Texas Oncology (Austin, TX), and COA board and study team member.

The Cost of Chemotherapy Drugs

Drug spending, which represented one-fifth of the total costs in actively treated cancer patients in 2014, increased at the highest rate of all component costs, mainly due to the new biologic cancer drugs.

“Historically, the cost focus has been almost exclusively on drug pricing, but that has to be considered in the context of all cancer care costs, including the site of care,” said Ted Okon, MBA, COA Executive Director. 

“If we're going to tackle the increase in the costs of overall medical care we can't look at just the drug side. In cancer care that's only 20 percent — it's meaningful, but it has to be put in perspective,” he said.

Most payers pay less if a chemotherapy infusion is administered in the physician office setting compared to the hospital outpatient setting. For Medicare in 2004, approximately 85% of chemotherapy was administered in a physician's office, but by 2014 that percent was reduced to approximately 56%, said David Eagle, MD, a hematologist/oncologist at Lake Norman Oncology in the Charlotte, NC area, and Past President of the Community Oncology Alliance (COA). 

The Milliman study examined changes in both spending and volume of chemotherapy drugs by site of service. The study shows that a 30% rise in chemotherapy infusions were being administered in the more expensive hospital outpatient setting, with a corresponding decrease in the less expensive practice setting. 

Figure 1 shows the shift in spending on chemotherapy drugs from the practice setting to the hospital outpatient setting.

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