High Out-of-Pocket Expenses for Cancer Patients on Medicare

Roxanne Nelson, BSN, RN

November 30, 2016

Because most new cancers cases and cancer-associated deaths occur in adults older than 65 years, much of the cost of cancer care is shouldered by Medicare.

But having Medicare does not necessarily equate to affordable cancer care.

New findings show that depending on the type of supplemental Medicare coverage, cancer patients may find themselves with significant out-of-pocket (OOP) expenses.

For beneficiaries insured by traditional fee-for-service Medicare but without supplemental insurance, mean annual OOP expenses were $8115.

In comparison, mean annual OOP expenses were $2116 for those who had Medicaid, $2367 among those insured by the Veterans Health Administration, $5976 for Medicare beneficiaries insured with a health maintenance organization, $5492 with employer-sponsored insurance, and $5670 for patients with Medigap insurance coverage.

OOP expenditures represented a mean of 23.7% of the household income for beneficiaries who lacked supplemental insurance, with 10% of those beneficiaries incurring OOP costs that were 63.1% of their household income.

The new findings come from a study published online November 23 in JAMA Oncology.

Traditional Medicare coverage does not include an OOP maximum. More than 4 million beneficiaries lack any type of supplemental insurance and are particularly vulnerable after a diagnosis of cancer or another major illness, the authors note.

"Having a cap on OOP costs could be very helpful for seniors and has been part of multiple reform proposals, including policy organizations such as the Kaiser Family Foundation as well as institutions such as our own school of public health," said study coauthor Amol K. Narang, MD, an instructor of radiation oncology and molecular radiation sciences at Johns Hopkins School of Medicine, Baltimore, Maryland.

The oncology community needs to better understand those health services that drive out-of-pocket costs for cancer patients. Dr Amol Narang

Understanding the financial burden faced by many of their patients is imperative for oncologists. "The oncology community needs to better understand those health services that drive out-of-pocket costs for cancer patients, which likely vary significantly by cancer type and likely by region as well," Dr Narang told Medscape Medical News. "We need to understand which of these services provide value to patients, and for those services that don't, how to redesign care delivery to minimize such services while still ensuring high-quality care."

Cancer Care Crisis

Medicare reform proposals that would restructure the benefit design for hospital-based services and incorporate an OOP maximum would help, but currently, that does not seem to be forthcoming. "There has been less focus on Medicare reform, although proposals that would increase cost sharing among beneficiaries may make them more vulnerable to high out-of-pocket costs," said Dr Narang.

The high cost of cancer care in the United States affects patients across the board. More than a third (37.1%) of cancer patients are "seriously or very seriously" concerned about bankruptcy because of medical bills, according to a survey sponsored last year by the international nonprofit organization Cancer Support Community (CSC).

Going a step further, the Institute of Medicine issued an updated report on the cancer care delivery system in the United States and said it was "in crisis." One significant driver of that crisis is cost, which is likely to keep rising, the report concluded.

Highest OOP Costs for Hospitalization

For their study, Dr Narang and colleague Lauren Hersch Nicholas, PhD, MPP, also from Johns Hopkins, prospectively collected survey data from 18,166 Medicare beneficiaries who participated in the Health and Retirement Study (HRS), a nationally representative, longitudinal panel study of US residents older than 50 years.

The cohort included 1409 individuals who were diagnosed with cancer during the study period.

The mean annual OOP expenditure was $3737, and the financial burden was 11.4% for all HRS participants. A new diagnosis of cancer or other common chronic illness was associated with increased odds of incurring costs in the highest decile of OOP expenditures (cancer: adjusted odds ratio, 1.86; P < 0.001; chronic noncancer condition: adjusted odds ratio, 1.82; P < .001).

For cancer patients, the highest OOP costs stemmed from inpatient hospitalization, which was the primary driver of high OOP expenditures and represented 42% of their total OOP expenditures.

The amount of OOP costs for inpatient hospitalization varied considerably, ranging from 12% of total OOP costs for patients with either Medicaid or Veterans Health Administration coverage to 46% for those lacking supplemental insurance.

Other OOP costs also varied, depending on the type of supplementary insurance, but the differences were much lower.

Interventions Needed to Mitigate Financial Distress

In an accompanying editorial, Jonas A. de Souza, MD, MBA, and Rena M. Conti, PhD, both from the University of Chicago, in Illinois, note that the current article points to three areas that are a priority for future research in "helping formulate interventions to prevent or mitigate financial distress among patients with cancer."

The first is that more research is needed to better define which care components induce financial distress and which patient population is most affected.

"Much recent emphasis has been placed on patient financial distress associated with new anticancer drugs, while other studies have suggested that nonpharmaceutical care components may also be important contributors to patient financial toxicity," they point out.

The second priority is to gauge a systematic understanding of what types of charitable aid are already available and are being provided to cancer patients. This is important for assessing how best to target new interventions, the editorialists write.

Third, there is a need to study experiences of financial distress reported by patients in association with the organizational context in which their cancer treatment is provided. As an example, more than one third of hospitals are eligible to generate revenue from the 340B drug discount program, and others receive additional Medicare or Medicaid payments in order to provide care for vulnerable patients.

"Whether and how these safety-net practices are proactively alleviating financial distress among patients with cancer in the community is an unanswered question," the editorialists write.

They conclude that it is imperative that the healthcare system ensures that patients have "access to the promise of dramatically improved quality of life without bankrupting their ability to pay for life's other necessities or exacerbating national disparities in health and wealth.

"The study by Narang and Nicholas is an important step in building a rigorous evidence base aimed at preventing or ameliorating financial distress among patients with cancer," conclude the editorialists.

The editorial was funded by the Commonwealth Fund, the National Cancer Institute, and the Leukemia and Lymphoma Society. The study authors and editorialists have disclosed no relevant financial relationships.

JAMA Oncol. Published online November 23, 2016. Full text, Editorial


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