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Differences in Spending on Provider-Administered Chemotherapy by Site of Care in Medicare
Yamini Kalidindi, MHA; Jeah Jung, PhD; and Roger Feldman, PhD
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Differences in Spending on Provider-Administered Chemotherapy by Site of Care in Medicare

Yamini Kalidindi, MHA; Jeah Jung, PhD; and Roger Feldman, PhD
Spending on chemotherapy drugs was lower among Medicare beneficiaries who received chemotherapy in hospital outpatient departments than among comparable beneficiaries receiving chemotherapy in physician offices.

Analyzing 2010-2013 Medicare claims data, we found that risk-adjusted chemotherapy drug spending was lower for patients receiving chemotherapy in HOPDs than for patients using physician offices. We explored 2 contributors to these differences: differences in the number of chemotherapy drug claims and spending per chemotherapy claim. We found that chemotherapy users in physician offices received more chemotherapy than those in HOPDs for most cancer types and that average spending per chemotherapy drug claim was slightly higher in HOPDs than physician offices for all cancer types. However, the differences in average spending per claim were not large enough to make substantial differences in total chemotherapy drug spending per beneficiary. These findings indicate that lower utilization per beneficiary was an important driver of lower risk-adjusted chemotherapy drug spending in HOPDs than in physician offices.

Our findings differ from those of the Moran report, which concluded that more and costlier chemotherapy treatments are used in HOPDs than in physician offices.3 It is important to note that the Moran report did not adjust for patient risk factors, including cancer type. As our results and prior literature indicate, the distribution of cancer types differs by setting9 and cancer drug utilization patterns differ by cancer type.10 Further, our data indicated that the frequency of chemotherapy among chemotherapy users with the same cancer was higher in physician offices than HOPDs for most cancer types except prostate cancer. Thus, adjusting for cancer type is of utmost importance in explaining the cost and utilization differences between the 2 settings.

Our findings also differ from prior research in commercial settings, which consistently found that chemotherapy costs were higher in HOPDs than physician offices.4-7 However, as mentioned earlier, spending differences in commercial settings are driven by price differences between HOPDs and physician offices rather than differences in the quantity of services.4,5 Medicare uses the same reimbursement rates for chemotherapy drugs in both settings. It is thus not surprising that chemotherapy spending per Medicare beneficiary is lower in HOPDs than physician offices.

Our analysis also showed that higher chemotherapy spending in physician offices was due to higher utilization. This result is consistent with research in commercial settings. Hayes et al found that the mean number of chemotherapy sessions in employer-sponsored plans was higher in community oncology clinics than in HOPDs.16 To our knowledge, our analysis is the first to explore differences in chemotherapy utilization by care setting and cancer type in Medicare.


We note several limitations of our study. First, we did not consider costs for other services that patients may have used when receiving chemotherapy. Prior research suggests that patients visiting HOPDs are likely to receive additional services (eg, laboratory tests) that might not be offered in physician offices.9,17 We did not analyze spending on those services. Second, our findings are not generalizable to the commercial sector, where payment rates for chemotherapy drugs differ substantially by care site.4,5 Third, we could not completely adjust for cancer severity, such as cancer stage, because detailed clinical information is not available in Medicare data. We partially addressed this issue by using a metastasis indicator, but our approach of identifying metastasis from diagnosis codes may have limited validity.18-20 Third, the choice of chemotherapy site could depend on patients’ preferences. Patients may prefer to use HOPDs because of the availability of other services or a short travel distance. Such patient characteristics might be related to chemotherapy use and spending to some extent. However, our study did not control for those factors. Finally, there was a shift in the site of cancer care from office-based to HOPD-based due to hospitals’ acquisition of physician practices during the study period.21 Although examining chemotherapy use and spending in those practices acquired by hospitals would be informative, it is beyond the scope of our analysis, and we leave it to future research.


Chemotherapy drug spending per Medicare beneficiary was lower in HOPDs than in physician offices, driven by less frequent use of chemotherapy. As the site of provider-administered chemotherapy shifts from physician offices to HOPDs, continuing assessment of cancer care spending by care site is necessary.

Author Affiliations: Department of Health Policy and Administration, Pennsylvania State University (YK, JJ), University Park, PA; Division of Health Policy and Management, University of Minnesota (RF), Minneapolis, MN.

Source of Funding: NIH/NIA grant number 1R01AG047934-01 and NIH grant number R24 HD041025.

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 (YK, JJ); acquisition of data (JJ); analysis and interpretation of data (YK, JJ, RF); drafting of the manuscript (YK); critical revision of the manuscript for important intellectual content (JJ, RF); statistical analysis (YK); obtaining funding (JJ); and supervision (JJ, RF).

Address Correspondence to: Yamini Kalidindi, MHA, Department of Health Policy and Administration, Pennsylvania State University, 604 Ford Bldg, University Park, PA 16802. Email:

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2. ASCO in Action brief: physician administered drugs – the evolution of buy & bill. American Society of Clinical Oncology website. Published February 22, 2013. Accessed July 1, 2017.

3. The Moran Company. Cost differences in cancer care across settings. Community Oncology Alliance website. Published 2013. Accessed July 1, 2017.

4. Bach PB, Jain RH. Physician’s office and hospital outpatient setting in oncology: it’s about prices, not use. J Oncol Pract. 2017;13(1):4-5. doi: 10.1200/JOP.2016.018283.

5. Fisher MD, Punekar R, Yim YM, et al. Differences in health care use and costs among patients with cancer receiving intravenous chemotherapy in physician offices versus in hospital outpatient settings. J Oncol Pract. 2017;13(1):e37-e46. doi: 10.1200/JOP.2016.012930.

6. Pyenson BS, Fitch KV, Pelizzari PM. Cost drivers of cancer care: a retrospective analysis of Medicare and commercially insured population claim data 2004-2014. Milliman website. Published April 14, 2016. Accessed July 1, 2017.

7. Jain RH, Bach PB. Hospital outpatient versus physician office cost for physician administered cancer drugs. Drug Pricing Lab website. Published January 4, 2017. Accessed July 1, 2017.

8. Chapter 5: Medicare Part B drug and oncology payment policy issues. Medicare Payment Advisory Commission website. Published June 2016. Accessed October 1, 2017.

9. Hammelman E. Cost of cancer care by setting of therapy. Avalere Health website. Published June 2014. Accessed July 1, 2017.

10. Jung JK, Feldman R, McBean AM. The price elasticity of specialty drug use: evidence from cancer patients in Medicare Part D. Forum Health Econ Policy. 2017;20(2):20160007. doi: 10.1515/fhep-2016-0007.

11. Rao S, Kubisiak J, Gilden D. Cost of illness associated with metastatic breast cancer. Breast Cancer Res Treat. 2004;83(1):25-32. doi: 10.1023/B:BREA.0000010689.55559.06.

12. Jacobson M, O’Malley AJ, Earle CC, Pakes J, Gaccione P, Newhouse JP. Does reimbursement influence chemotherapy treatment for cancer patients? Health Aff (Millwood). 2006;25(2):437-443. doi: 10.1377/hlthaff.25.2.437.

13. Goldman DP, Jena AB, Lakdawalla DN, Malin JL, Malkin JD, Sun E. The value of specialty oncology drugs. Health Serv Res. 2010;45(1):115-132. doi: 10.1111/j.1475-6773.2009.01059.x.

14. Hospital outpatient prospective payment system. CMS website. Published 2016. Updated December 2017. Accessed June 1, 2018.

15. Cancer surgery volume study: ICD-9 and CPT codes. California HealthCare Foundation website. Published 2017. Accessed October 1, 2017.

16. Hayes J, Hoverman RJ, Brow ME, et al. Cost differential by site of service for cancer patients receiving chemotherapy. Am J Manag Care. 2015;21(3):e189-e196.

17. Avalere Health LLC. Total cost of cancer care by site of service: physician office vs outpatient hospital. Community Oncology Alliance website. Published March 2012. Accessed July 1, 2017.

18. Thomas SK, Brooks SE, Mullins CD, Baquet CR, Merchant S. Use of ICD-9 coding as a proxy for stage of disease in lung cancer. Pharmacoepidemiol Drug Saf. 2002;11(8):709-713. doi: 10.1002/pds.759.

19. Nordstrom BL, Whyte JL, Stolar M, Mercaldi C, Kallich JD. Identification of metastatic cancer in claims data. Pharmacoepidemiol Drug Saf. 2012;21(suppl 2):21-28. doi: 10.1002/pds.3247.

20. Chawla N, Yabroff KR, Mariotto A, McNeel TS, Schrag D, Warren JL. Limited validity of diagnosis codes in Medicare claims for identifying cancer metastases and inferring stage. Ann Epidemiol. 2014;24(9):666-672, 672.e1-e2. doi: 10.1016/j.annepidem.2014.06.099.

21. Avalere Health LLC. Hospital acquisitions of physician practices and the 340B program. Alliance for Integrity and Reform of 340B website. Published June 2015. Accessed October 1, 2017.
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