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 (continued)

“We hope this study will help change that trend if the information can be used to educate policy makers,” said Dr. Eagle. “If the goal is to bend the cost curve in oncology, certainly the last thing we should be doing is paying more for the exact same service.”

Dramatic Shift in Site-of-Care

The study also examined cost trends in the site of service for chemotherapy infusion. The proportion of chemotherapy infusions administered in the hospital outpatient department setting nearly tripled, increasing to 45.9% from 15.8% in the Medicare group. In the commercially insured population, the proportion was even more pronounced: from 5.8% to 45.9%.

In terms of cost, the study confirmed that patients treated in the hospital outpatient department incurred higher costs than patients treated in the private practice setting. The difference in cost was $13,167 (37%) higher in 2004 and $16,208 (34%) higher in 2014 for Medicare patients; and $19,475 (25%) higher in 2004, and $46,272 (42%) higher in 2014 commercially insured patients.

“The research showed that if the site-of-care mix between community and hospital in 2014 reverted to the 2004 mix, the savings to Medicare would have been $2 billion,” said Dr. Eagle.

The average annual per-patient per-year (PPPY) allowed costs for infused chemotherapy patients was significantly higher when chemotherapy infusions were delivered entirely in the hospital outpatient setting vs the office setting (Figures 2 and 3).


The shift in site of care to the hospital outpatient setting has added to the rise in PPPY costs for both the Medicare and commercial patient populations. Dr. Eagle stated that COA has seen examples of an oncology practice acquired by a hospital, with the same patients seeing the same doctor at the same clinic and getting exactly the same chemotherapy drug, but the hospital setting was demonstrably more expensive. 

“That won't create any net savings — if anything, the cost of care goes higher,” he said.

Changes in reimbursement have put more pressure on practices, with more physicians being driven toward the hospital setting noted Dr. Eagle.

“A community practice can only take so many reimbursement cuts. Community practices have done everything they can to adapt, but to have a viable practice you have to have a reimbursement level that supports that practice.

“When that equation doesn't add up any more, then practices are under pressure to fold into a hospital,” he said.

Education Outreach

The COA has an ongoing broad effort to educate policy makers on this topic. In June and July, Dr. Eagle along with Dr. Patt, presented these study data in Washington, DC, in briefings with congressional staff members in the House Committee on Energy and Commerce and also with senior officers at the Centers for Medicare & Medicaid Services, to educate them on this issue.

“There is obviously a lot of interest in the cost of cancer care, particularly in the shadow of Medicare Part B Drug Proposal for changes in reimbursement,” said Dr. Patt, who was also a member of the study team.

“It is evident that per capita spending in oncology is less when patients are treated in a physician office setting in comparison with the hospital outpatient department,” said Dr. Patt.

Trend to Partnering

“The trend over the past few years has been for community oncology physicians to find partners — academic medical centers, hospital systems, or large provider networks — so they can continue to survive and continue to provide good care,” said Lee S. Schwartzberg, MD, a hematologist/oncologist and Executive Director of the West Cancer Center, Memphis, TN.

“This is due in part to cuts in reimbursement that make it difficult to operate at a scale that allows the practice to stay open, and that has driven a lot of practices to find a strategic partner,” he said.

In the case of Dr. Schwartzberg's own practice, the physicians have a professional service agreement and co-management with a hospital. “We are not owned by the hospital, it is an inter-relationship with the hospital.”

He said his group made a conscious effort to avoid affecting their patients by changing reimbursement, as the charges and costs are typically higher from hospital-based providers.

“So we kept our contracts with the local and regional payers, which did not hurt the patients, and their co-pays and insurance and cost of drugs stayed the same. This was favorable because we are working with the hospital, and in our case we got 340B pricing.”

Dr. Schwartzberg said the solution his group found may not be for everyone.

“It worked for us, it did not penalize the patients, and it allowed us to work with a bigger partner to provide better care to the entire community, including patients who are uninsured and under insured,” said Dr. Schwartzberg. “But in other settings, in other communities and circumstances, there are practices that need to partner with a hospital and then bill under hospital-based billing.”

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