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Employers Pay More When Patients Get Oncology Infusions in Hospital Outpatient Settings

Matthew Gavidia
Researchers from the Employee Benefit Research Institute (EBRI) estimate that if hospital unit prices matched physician office (PO) prices of cancer drugs, holding drug mix and treatment intensity constant, commercial insurers would have saved $9766 (45%) per user of these medicines in 2016, with statistically significant relative differences ranging from 128.3% (nivolumab) to 428% (fluorouracil).
Researchers from the Employee Benefit Research Institute (EBRI) estimate that if hospital unit prices matched physician office (PO) prices of cancer drugs, holding drug mix and treatment intensity constant, commercial insurers would have saved $9766 (45%) per user of these medicines in 2016, with statistically significant relative differences ranging from 128.3% (nivolumab) to 428% (fluorouracil), according to findings published in an EBRI Issue Brief

EBRI is an organization focusing on research and education within employee benefit programs and public policy,

In the issue brief, researchers highlight the implications of these cost savings for third-party payers, such as employers and commercial insurers, as they can cut their drug costs nearly in half by shifting patients to PO settings without necessarily affecting quality of care. In a separate study, drug level spending was $1466 for those in physician offices versus $3799 for those in HOPDs, stressing the significance of these price differences on healthcare budgets. As more organizations are transitioning toward value-based care, constructing payment mechanisms can promote growth through controlling costs. 

The distinct change in site of treatment from POs to hospital outpatient departments (HOPDs) for cancer patients in the United States has seen PO usage for chemotherapy infusions, among employment-based or commercially insured patients, decrease from 94% in 2004 to 57% in 2014. Corresponding with this transition, the difference in average cost to commercial carriers for chemotherapy administered in HOPDs versus POs increased from being 25% higher in 2004 to 42% higher in 2014. 

Researchers sought to examine how payments from third-party payers for infused oncology medicines differ by site of care for identical cancer medicines available on the market. To distinguish between differences in HOPD and PO oncology medicine costs, study authors developed an accounting cost deconstruction model that isolates elements of oncology claims payments in both sites of care. The model was comprised of 3 variables, each computed separately by site of care:
  • Drug mix: the proportion of users receiving each drug (note that patients taking more than one drug are counted as users of each drug taken)
  • Treatment intensity: the mean number of units of each drug administered annually to each user (which in turn can be decomposed into number of therapy sessions and units infused per session)
  • Unit price: the mean payment amount (plan + member) per unit of each drug


The study cohort included 18,915 users of the top 37 infused oncology drugs, treated in POs (51%) or HOPDs (49%), and prescribed to employment-based and commercially insured patients in 2016.

Study results found that for every product except the lightly prescribed brentuximab vedotin, the difference in the price of cancer drugs administered in HOPDs versus POs was statistically significant (P < .05), amounting to a weighted average unit price that was 86.2% higher in HOPDs.

Among the full sample of cancer drugs, actual payments averaged $13,128 in POs and $21,881 in HOPDs. When accounting for the drug-mix-weighted mean, the counterfactual reimbursement to HOPDs is 7.3% lower than the actual mean payment made to POs, indicating that most of the observed difference was due to price. 

In an interview with The American Journal of Managed Care®Jeremy Schafer, PharmD, MBA, SVP, director of the Access Experience Team at Precision for Value, noted that "high reimbursement, combined with expansion of 340B, is part of the reason why oncology practices have been purchased by hospitals, which then charge hospital reimbursement prices to payers," said Schafer. 

While transitioning toward more PO usage can theoretically assist in delivering more cost-effective care, Schafer highlights several complications such as availability of care and inflating oncology coverage costs. "Cancer patients have very high healthcare costs and are likely to hit the out-of-pocket maximum early which would remove the threat of a higher out of pocket charge for selecting HOPD," said Schafer. Schafer suggests that coalitions of employers pushing for lower reimbursement rates to hospitals or having reimbursement parity between physician practices and hospitals may be more effective, but only if employers prove willing to interfere with a member's cancer care.

Although the life and death nature of cancer may deter employers from intervening in care, these actions are warranted to promote change. "Patients and families facing financial hardships during cancer treatment is a startling common phenomenon. Patients and their families should ask questions of their oncologist around cost and whether there are options to receive the same care at a site where it would be cheaper," said Schafer.

Related Articles

Commercial Insurer Spending on Chemotherapy Lower in Physician Offices Versus HOPDs
HHS Releases Rules to Promote Price Transparency and Empower Patient Decision Making
The Value of Decision Support Teams and Payer-Institution Partnerships in Precision Oncology - Q&A With Kenna R. Mills Shaw, PhD
The Democratization of Precision Medicine: A Clinician's Perspective on the Future of Oncology Care - Q&A With Neil Vasan, MD, PhD
Dr Joshua Ofman: Improving Survival, Reducing Costs in Oncology Vital to Value-Based Care Transition
 
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