As Chemotherapy Administration Shifts to Hospitals, Report Predicts Higher Overall Costs, Lower Patient Adherence

With the growth of Accountable Care Organizations (ACOs) and cuts to reimbursement fees for chemotherapy that is administered in physician offices, a report from the IMS Institute for Healthcare Informatics predicts higher overall costs and lower patient adherence, even as efforts by associations like the Community Oncology Alliance (COA) mobilize their constituents this week in Washington, DC, to end those cuts.

The report, titled “Innovation in Cancer Care and Implications for Health Systems—Global Oncology Trend Report,” notes that because of hospitals’ higher costs and overheads, they receive higher reimbursement to administer drugs compared to physician offices. But, corresponding cuts in reimbursement fees for chemotherapy drugs to oncology practices have caused a change in practice profiles—over 40% of oncologists are now in practices with seven or more physicians, up from 29% in 2012, as smaller practices are aggregated and/or acquired by hospital systems. The report says oncologists attribute this trend to financial pressures and the desire to alleviate risk.

For typical therapies that are infused or injected by an oncologist, reimbursed costs for hospitals are at least double those for physician offices, sharply increasing costs to payers over the past two years. The average cost per month of branded oncology drug treatment in the US is now about $10,000, up from an average of $5,000 a decade ago, says the report.

As the result of increasing costs to payers, patients can expect greater cost shifting, depending on the patients’ insurance and benefit plan design. This can result in reduced levels of therapeutic persistence by the patient and higher overall cost of care. The report reviewed a list of 10 routinely used chemotherapies and found that the covered cost per dose increased by 189% in the hospital outpatient setting when compared to the oncologist’s office. The average increased cost to the patient is $134 per dose received in the hospital as an outpatient when compared to the oncologist’s office. But the report noted that multiple therapies may be given per treatment cycle when both chemotherapy and support drugs are considered, leading to greater financial burden on the patient.

COA has organized Virtual Hill Days this week, May 7-8, requesting its members to contact their Representatives to enlist their help to stop the sequester cut to payment for cancer drugs and other Part B drugs.