Cancer Care Costs 60% Higher at Hospitals Vs Independent Orgs

Hospital-based cancer care for patients undergoing chemotherapy was 60 percent more expensive compared to the same treatment at community-based oncology practices, according to a recent study by Xcenda and Lucio Gordan, MD, Medical Director in the Division of Quality and Informatics at Florida Cancer Specialists and Research Institute.

The cancer care cost difference equated to $90,144 more per year for patients treated in hospital outpatient settings, the sample of medical and pharmacy claims from 2010 and 2015 also revealed.

“As a physician, I am constantly concerned about the financial toxicity of cancer care,” stated Gordan. “It is disappointing again to see data that hospital-based cancer care is considerably more expensive than the community practices. While, at the same time, more patients are being forced into hospitals. It is clear that the community oncology setting should be the preferred, first choice treatment setting for cancer patients.”

Researchers found that hospital-based cancer care was significantly more expensive because patients incurred greater medical costs per month. On average, medical costs for patients undergoing care in a hospital outpatient setting was $19,471 per patient per month.

Medical costs averaged just $12,103 per patient per month at community oncology practices.

Within the medical category, chemotherapy costs drove the spending differential. Chemotherapy costs at hospital-based settings were $8,443 per patient per month versus just $4,933 per patient per month at community practices.

Higher chemotherapy costs in the hospital-based setting appeared regardless of the type chemotherapy used.

Despite over 60 percent of all patients studied receiving generic-only chemotherapy and branded versus generic use being similar across both cancer care settings, community oncology practices reported $2,198 less for a generic regimen.

The independent practices also incurred $4,226 less for a branded regimen and $8,332 less for a combination branded plus generic regimen.

Physician visit costs also drove the cost differential between hospital-based and community settings. Spending on visits was 333 percent, or $2,551, more in hospital outpatient settings.

In addition to higher cancer care costs, researchers observed higher emergency department utilization among cancer patients treated at hospital outpatient settings. The rate of emergency department visits within 72 hours after chemotherapy among patients from a hospital outpatient setting was 40 percent higher compared to the rate among community practice patients.

The emergency department visit rate within 10 days after chemotherapy was also 24 percent higher among patients from hospital-based settings.

Researchers noted that the cost and care differences between hospital-based and independent practice cancer care may continue as hospital merger and acquisition activity increases. The number of physician-based community practices has significantly dropped since 2014, a recent American Society of Clinical Oncology recently reported.

Community oncology practices are joining hospitals and health systems because of the 340B Drug Pricing Program. The program provides discounted prescriptions to qualifying hospitals that serve greater proportions of low-income and vulnerable populations.

A recent survey by the Community Oncology Alliance (COA) found that 98 percent of practice leaders thought drug reimbursement rates were a significant threat to their organization’s viability. Eighty-seven percent also identified chemotherapy administration reimbursement rates as a top threat.

By 2014 and 2015, almost three-quarters of oncology practice acquisitions were conducted by hospitals in the 340B program.

The industry can counter oncology practice mergers and lower healthcare costs by alleviating the reimbursement challenges independent practices face, researchers stated.

“More than a decade of data have consistently shown that hospitals are a tremendous driver of excessive spending on cancer care,” stated Ted Okon, COA’s Executive Director. “Congress and the administration need to step forward and address this by reining in abuses of the 340B program and implementing site payment parity. It is crazy that our country continues to push more and more cancer care into the much more expensive hospital setting as we seek ways to reduce runaway healthcare spending.”