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The American Journal of Managed Care December 2018
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Cost Variation and Savings Opportunities in the Oncology Care Model
James Baumgardner, PhD; Ahva Shahabi, PhD; Christopher Zacker, RPh, PhD; and Darius Lakdawalla, PhD
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Cost Variation and Savings Opportunities in the Oncology Care Model

James Baumgardner, PhD; Ahva Shahabi, PhD; Christopher Zacker, RPh, PhD; and Darius Lakdawalla, PhD
Geographic variation in cancer treatment spending reveals that chemotherapy and hospital inpatient care may offer opportunities for savings for practices participating in the Oncology Care Model.

Objectives: This study seeks to identify service categories that present the greatest opportunities to reduce spending in oncology care episodes, as defined by the CMS Oncology Care Model (OCM). Regional variation in spending for similar patients is often interpreted as evidence that resources can be saved, because higher-spending regions could achieve savings by behaving more like their lower-spending counterparts.

Study Design: We used Surveillance, Epidemiology, and End Results Medicare data from 2006-2013 for this retrospective observational cohort study. Analysis focused on patients with non–small cell lung cancer, advanced (stage III or IV) breast cancer, renal cell carcinoma, multiple myeloma, or chronic myeloid leukemia.

Methods: Episodes were identified for patients with the 5 included cancers, following the episode definition used in the OCM. We estimated standardized episode-level spending for a standard patient across subcategories of care for each hospital referral region (HRR) defined by the Dartmouth Atlas. The contribution of each subcategory to interregional variation in total spending reflects that subcategory’s potential to yield savings.

Results: Chemotherapy and acute inpatient hospital care tended to be the highest contributors to interregional variation. Imaging, nonchemotherapy Part B drugs, physician evaluation and management services, and diagnostics were negligible contributors to interregional variation for all 5 cancers.

Conclusions: Chemotherapy and inpatient hospital care offer the most potential to reduce spending within OCM-defined episodes. Other sources of savings differ by type of cancer. Assuming patient outcomes are not compromised, low-spending HRRs may be models for lowering cost in cancer care.

Am J Manag Care. 2018;24(12):618-623

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