Receiving Chemotherapy in a Hospital Can Cost Up to 47% More Than in a Physician's Office

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Where Medicare patients receive their chemotherapy treatment makes a difference in the number of chemotherapy sessions that they receive on average.

Where Medicare patients receive their chemotherapy treatment makes a difference in the number of chemotherapy sessions that they receive on average. And the cost of that chemotherapy when delivered in the hospital outpatient setting costs Medicare between 25% to 47% more than those who receive their chemotherapy treatment in a physician’s office. On a per beneficiary basis, the difference in cost across settings was 25.9% in 2009, 46.8% in 2010, and 33.3% in 2011, according to a report issued by the US Oncology Network, the Community Oncology Alliance (COA), and ION Solutions.

Based on claims data from 2009 to 2011, the survey found that for the same set of patients the estimated chemotherapy spending was higher under the Hospital Outpatient Prospective Payment System (OPPS) than corresponding payments in the physician office under the Medicare Physician Fee Schedule (MPFS), despite lower unit payment rates for drugs in the OPPS. On an annual basis, spending per beneficiary on chemotherapy administration in the sample is roughly 50% higher in the outpatient hospital setting than in the physician office.

Additionally, patients in the hospital outpatient setting spent more days receiving chemotherapy (a 10%-13% higher frequency rate) than patients who received treatment in a physician office. It’s not clear, however, how the recent trend of more hospitals acquiring private physician offices might affect this frequency rate. The report was unable to determine whether the shift towards more hospital outpatient delivery was due to the fact that there are fewer private physician offices.

Patient cost sharing may have a modest effect because cost-sharing obligations are somewhat higher under the OPPS. The Moran Company, the organization that prepared the report, notes that factoring cost sharing into the equation lowers Medicare costs in both settings—beneficiaries have 20% out-of-pocket costs. The report notes that beneficiary cost-sharing differences for drug administration services narrow the spread between OPPS payments and MPFS payments by only 0.2%.

The report notes that while patterns of use can be analyzed, the reason usage patterns differ cannot be determined based on the limitations of the survey. In addition, the survey could not identify differences in beneficiary characteristics (ie, case mix), which might have an effect on utilization and spending.