Changing the High Cost of Cancer Care: A Multi-Stakeholder Undertaking

For patients who survive cancer, annual medical costs can be nearly double those of non-cancer patients. Cancer survivors are also at risk of relapse, meaning they are likely to have to pay more for screening and testing than the average patient. They face additional cost burdens when receiving cancer treatments and endure expenses related to chronic health problems that come as a result of treatments, most notably chemotherapy and radiation therapy. A study conducted by the CDC confirms that cancer survivors are paying exponentially more than most Americans.

“It’s not surprising that cancer survivors would incur a greater economic cost and have a greater economic burden,” said Richard Schilsky, MD, FACP, FASCO, chief medical officer of the American Society of Clinical Oncology.

“Throughout their lifetime, they will still be going through treatments and checkups and long-term side effects and late effects that can come as a result of survival,” added study author Donatus Ekwueme, PhD, a senior health economist at the CDC’s division of cancer prevention and control.

But insurers are beginning to push back because the increased costs associated with some cancer treatments not only impact patients, but also oncologists’ practices and finances.

“Patients say, ‘I’ve been treated with Herceptin for breast cancer for several years and it was always $5000 for the drug and suddenly it’s $16,000—and I was in the same room with the same doctor, same nurse, and the same length of time,’” said Donald Fischer, MD, chief medical officer for Highmark, Pennsylvania’s largest health plan.

Highmark consultants found that when hospitals absorbed doctor’s practices, those physicians became more likely to charge chemotherapy as being administered at a “hospital outpatient center,” thus increasing the cost of the treatment. A 2013 Milliman study found that chemotherapy costs were 53% higher in hospital outpatient settings than they were in doctor’s offices.

Highmark decided to respond to the pricing tactic by refusing to pay more for drugs given to patients whose doctors work for hospital systems. Other payers, like WellPoint, have begun to provide a $350 financial incentive bonus to oncologists who prescribe less-costly chemotherapy regimens. Florida Blue has established an oncology-focused accountable care organization that rewards doctors based on the cost savings they achieve through meeting certain quality benchmarks. United Healthcare will utilize bundled payments for certain cancer treatments, including the cost of drugs.

Some pharmaceutical manufacturers worry that innovation and drug development will suffer if too much focus is placed on cost and treatment standardization. Some physicians also worry that the “1-size-fits-all” approach may affect quality. Nevertheless, with the annual cost of cancer care in the United States reaching more than $127 billion, the issue must be addressed. Insurers maintain that it is possible to lower costs without influencing innovation or quality.

“In many ways, insurers’ decisions to take direct action to minimize variations in care and excessive costs sets the stage for what is to come next in health care reform,” said Kavita Patel, MD, managing director for Clinical Transformation and Delivery at the Engelberg Center for Healthcare Reform at The Brookings Institution. “Not only does this represent a step toward broad payment reform in oncology, but marks a trend toward exploring new methods of payment in other specialties, and to align those efforts with primary care payment reforms.”

Around the Web

Cancer Survivors Face Mounting Costs of Continuing Medical Care: Study [Medical Xpress]

Insurers Take Up Fight Against Rising Chemotherapy Costs [PBS]

Changing the Way We Pay for Cancer Care [The Hill]