Commercial Insurer Spending on Chemotherapy Lower in Physician Offices Versus HOPDs

The administering of infused chemotherapy is increasingly shifting from physician offices to hospital outpatient departments (HOPDs) and is associated with increased spending on chemotherapy services for commercial insurers, according to a research letter in JAMA Oncology.

The impact of price variation depending on site of care can be seen in healthcare spending. While patients may receive the same treatment in a physician’s office or HOPD, insurers typically reimburse payments to HOPDs at a higher rate than to physician officers. "Hospitals justify this payment difference because they incur higher overhead costs and treat more medically complex patient populations,” wrote the authors of the research letter.

As some argue that the value of the service provided, rather than the overhead expenses, should determines prices, the authors assessed trends in the use of and spending for infused cancer chemotherapy in physician office versus HOPD settings.

Using deidentified data from the MarketScan Commercial Claims and Encounters Database, which records patient and insurer payments for provided services, the authors identified individuals with at least 1 HOPD or physician office claim for physician-administered chemotherapy from 2004-2014. A total of 533,042 patients who received 9,390,408 chemotherapy treatments were identified.

The authors narrowed down the cohort to 283,502 patients who initiated infused chemotherapy and remained enrolled continuously for 6 months, without receiving chemotherapy in the preceding 6 months. A sensitivity analysis, including claims specific to breast cancer, was conducted.

Healthcare expenditures were measured in 3 ways: line item drug level, day level (the sum of all expenditures on the day a patient received chemotherapy), and 6-month treatment-episode level (sum of reimbursements for all services received within 6 months after treatment initiation).

Results showed that patients receiving care in physician offices were older than those receiving care in HOPDs (mean, 54 versus 51 years; P <.001). Those treated in physician offices had a statistically, but not clinically meaningful, lower comorbidity, with 95% having a comorbidity score of 0, compared with 94% for those treated in HOPDs.

For all 3 expenditure measures, spending was lower among patients treated in physician offices. Drug level spending was $1466 for those in physician offices versus $3799 for those in HOPDs. For day-level spending, costs were $3502 for those treated in physician offices versus $7973 for those treated in HOPDs. Total reimbursement during the 6-month treatment episode was $43,700 for those treated in physican offices versus $84,660 for those treated in HOPDs. The sensitivity analysis on breast cancer patients yielded similar results.

“Potential targets for reduction of excess spending and creation of a more efficient healthcare system can come from private insurers following Medicare’s lead, which has started to equalize payments across sites of care,” concluded the authors.

Reference:

Winn A, Keating N, Trogdon J, et al. Spending by commercial insurers on chemotherapy based on site of care, 2004-2014 [published online February 22, 2018]. JAMA Oncol. doi:10.1001/jamaoncol.2017.5544.