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The American Journal of Managed Care February 2018
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Variation in Markups on Outpatient Oncology Services in the United States
Angela Park; Tim Xu, MD, MPP; Michael Poku, MD, MBA; James Taylor, MBBChir, MPH, MRCS(Eng); and Martin A. Makary, MD, MPH

Variation in Markups on Outpatient Oncology Services in the United States

Angela Park; Tim Xu, MD, MPP; Michael Poku, MD, MBA; James Taylor, MBBChir, MPH, MRCS(Eng); and Martin A. Makary, MD, MPH
Charges for oncology services vary widely across hospitals and impose financial burdens. Further legislation is needed to address disparities in access to high-quality cancer care.
ABSTRACT

Objectives: Price markups are a major cause of healthcare inflation and financial harm to patients, especially those who are self-paying or covered by commercial insurance.

Study Design: Retrospective analysis of publicly-available information on Medicare physician payments, representing 100% of Part B services provided to fee-for-service beneficiaries during calendar year 2014.

Methods: Outcomes were markup ratios for oncology services, defined as the ratio of submitted charges to the amount reimbursed by Medicare. For example, the overall cost-to-charge ratio for all Medicare-reimbursed services in 2013 was 3.4, or a 240% charge markup.

Results: Our analysis included oncology services provided by 3248 hospitals in all 50 states. There was significant variation in markup ratios by hospital across oncology specialty: radiology (median = 3.7; interquartile range [IQR], 3.1-4.5), hematology/oncology (median = 2.3; IQR, 1.8-2.9), medical oncology (median = 2.4; IQR, 1.8-3.0), pathology (median = 4.1; IQR 3.1-5.1), and radiation oncology (median = 3.6; IQR, 2.9-4.5). Higher markups were associated with for-profit status for medical oncology services (coefficient, 0.29; 95% CI, 0.12-0.45) and prestige status for radiology (0.53; 95% CI, 0.15-0.92) and pathology (0.65; 95% CI, 0.20-1.09) services.

Conclusions: High markups exist for oncology services, and further legislation is needed to protect patients from highly variable pricing and to address disparities in access to high-quality cancer care.

Am J Manag Care. 2018;24(2):e59-e60

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Author Affiliations: Johns Hopkins Department of Surgery (AP, JT, MAM), Baltimore, MD; Johns Hopkins School of Medicine (TX, MP), Baltimore, MD.

Source of Funding: This study was supported by the Alpha Omega Alpha Carolyn L. Kuckein Student Research Fellowship. The funder had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; or decision to submit the manuscript for publication.

Prior Presentation: An oral abstract has been presented at Medical Quality 2016 (March 30-April 2, 2016), hosted by the American College of Medical Quality.

Author Disclosures: The authors report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (TX, MP, JT, MAM); acquisition of data (AP, TX); analysis and interpretation of data (AP, TX, MP, JT); drafting of the manuscript (AP, TX); critical revision of the manuscript for important intellectual content (AP, TX, MP, JT, MAM); statistical analysis (AP, TX); obtaining funding (TX); and supervision (MAM).

Address Correspondence to: Martin A. Makary, MD, MPH, Johns Hopkins Department of Surgery, Halsted 610, 600 N Wolfe St, Baltimore, MD 21287. Email: mmakary1@jhmi.edu.
 
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