Insurers Push Back Against Growing Cost of Cancer Tx
Written by Editor   
Thursday, June 19, 2014 06:31 AM

As the cost of medication rises insurers are "pushing back" creating reimbursement programs that attempt to reimburse based upon what the insurance company believes should have been paid if a physician remained independent instead of working in a hospital.  Patient groups express concern that standardized drug regimens and flat payments may encourage providers "to make treatment decisions based on cost and less on the evidence,"  while the drug industry fears a loss of innovation that could lead to the development of new drugs.  This article focuses upon what has become the center point of healthcare in our current times – money.

Some cancer patients and their insurers are seeing their bills for chemotherapy jump sharply, reflecting increased drug prices and hospitals' push to buy oncologists' practices and then bill at higher rates.  

Like other insurers, Highmark found that when hospital systems bought doctors' practices, chemotherapy costs rose because physicians' offices were then deemed "hospital outpatient centers" and could charge more for overhead.  A 2013 study documented chemotherapy costs in hospital outpatient settings ran as much as 53% higher than in doctors' offices.

Now insurers are pushing back.  In what may be the first move of its kind, Highmark in April stopped paying higher fees for chemotherapy drugs given to patients whose doctors work for hospitals, instead paying the same price they would have had the doctor remained independent.  The move is being watched closely by insurers around the country, and "some will probably follow suit."

The drug industry has fired back, concerned that standardized regimens will discourage the innovation that it says has led to better survival rates, and some physicians also reject a one-size-fits-most approach, concerned about impact on quality.  To date, evidence of savings is inconclusive. Some insurers have reported significant savings, while others have not.

Patient groups also express misgivings about standardized drug regimens and flat payments, fearing they may encourage providers "to make treatment decisions based on cost and less on the evidence."

Other insurers are trying different ways to hold down costs. WellPoint, one of the nation's largest insurers, will soon begin paying oncologists a bonus of $350 a month per patient for sticking with specific, less-costly, chemotherapy regimens. Florida Blue has partnered with some doctor practices to create cancer-specific "accountable care organizations" that reward doctors if the new organizations save money while hitting quality targets.

And UnitedHealthcare, the biggest insurer by market share, is expanding a pilot project that uses flat, or "bundled," payments for the treatment of certain cancers – which include the cost of drugs.

Changing the way cancer care is paid for is a top priority for insurers and employers, with treatments costing the U.S. more than $127 billion each year. That is projected to grow 27% from 2010 to 2020 as the population ages.  That's important because the traditional way to pay for cancer drugs given in a doctor's office is to reimburse the physician for the average sales price of the drug, plus an added percentage to cover overhead and ade facto profit margin. In Medicare, for instance, the added percentage is 6%.  Highmark and others say that payment method creates an incentive to use higher-priced drugs -- and more of them.  "If you give a $10,000 drug, it's $600 [for the doctor]. If you give a $100 drug, you get a margin of $6."  Such "buy and bill" programs are being phased out in other specialties, but have continued in cancer care because insurers fear losing oncologists from their networks.

In March, the advisory group MedPAC (the Medicare Payment Advisory Commission) recommended that Medicare reduce or eliminate differences in payment rates between outpatient departments and physician offices for many services.