Insurance and Cancer: Look at OOP, Not Just Premiums

Alicia Ault

April 13, 2017

WASHINGTON — For patients with cancer, rising deductibles, copays, and other out-of-pocket costs are as important as — if not more important than — increasing premium prices, said officials from the American Cancer Society (ACS) Cancer Action Network (CAN) at its annual policy meeting here.

A new study issued by ACS CAN shows that Americans spent $4 billion out of pocket for cancer treatments in 2014, amounting to 4% of the total $88 billion spent on cancer-related healthcare that year.

"People who haven't been through this would be startled at the overall cost of what they have to bear when they get cancer — I don't think they can imagine," Chris Hansen, ACS CAN president, told Medscape Medical News.

The report finds that lower insurance premiums might not ultimately be cost-saving for patients with cancer because they often have higher cost-sharing. "If people just focus on the premiums, they're telling such a very small part of the story," Hansen told Medscape Medical News.

"Affordability is not just premiums," agreed Jennifer Singleterry, ACS CAN senior policy analyst. "It's actually being able to afford the care once you're on the plan," she told Medscape Medical News

ACS CAN issued the report in part to influence the somewhat-stalled debate over whether to repeal, replace, or tweak the Affordable Care Act. "This report makes clear the importance of insurance coverage, but also offers insight into the extent that even insured patients struggle to afford treatment," said Hansen in a statement.

For the report, Avalere Health, a consulting firm working on behalf of ACS CAN, ran three hypothetical cost scenarios: one for a patient with breast cancer who had employer-sponsored insurance, another for a patient with colorectal cancer who is on Medicare, and a third for a patient with lung cancer who had purchased a plan through the Affordable Care Act's exchanges.

The scenarios used data from 2016 and also represented the highest possible out-of-pocket costs, as all three patients were hypothetically diagnosed in January, when deductibles and out-of-pocket maximums would not have yet been met.

For the year, the patient with breast cancer who had employer-sponsored insurance spent $1844 on premiums and $3975 ($2143 in January and $1765 in February) out of pocket, as part of a total $144,193 in treatment costs. The Medicare patient with colorectal cancer (who also had a Medigap policy) paid much more in premiums — $7205 — and much less out of pocket, at $1368. The total cost of treatment was $124,425.

The patient with lung cancer who had a plan through the exchange paid the most: about $10,000, including $3264 in premiums and $6850 in copays and coinsurance. That patient also had the highest total cost of treatment — $210,067.

In all three cases, the insurance covered most of the treatment cost, showing the value of being covered, according to the report. And out-of-pocket maximums — as required by the Affordable Care Act — also provide protection.

Drug Costs: Small Portion but Big Hit

The price of pharmaceuticals — in particular, of some cancer therapies — has received a lot of attention, but the report finds that drug costs account for only 12% of total expenditures for cancer.

Even so, pharmaceuticals can be a burden for patients. Copay and coinsurance amounts vary greatly depending on the treatment. The patient with an employer-sponsored plan would pay 20% of a drug's cost until the coinsurance maximum was met. The copays ranged from $5 to $100 per drug per month in the study.

The Medicare patient would pay nothing for drugs covered under Part B — that is, those delivered in an office or outpatient setting. For Part D drugs, copays or coinsurance are required. Copays were usually $15 per drug. But the coinsurance was 33% of the cost of a specialty drug and 40% for nonpreferred brand-name drugs. The patient paid anywhere from $4 to $760 per drug per month.

Under the exchange plan, the patient with lung cancer had reached the out-of-pocket maximum by the time she received drug therapy, meaning she paid nothing. Before that, however, the patient would have paid 40% of the cost of drugs administered under the medical benefit, and copays of $35 or $85, or coinsurance of 40% for drugs under the pharmacy benefit.

Barbara McAneny, MD, a past chair and current member of the American Medical Association (AMA)'s board of trustees, said at the meeting that drug costs are usually inflated by layers of consultants, benefits managers, and middlemen. She noted that the AMA has called for more transparency to illuminate those layers and an elimination of direct-to-consumer advertising.

"Transparency is important but transparency doesn't lower costs for patients," countered Kathryn Chandra, senior manager for policy and reimbursement at Genentech, at the meeting. Chandra said there has been too much focus on drugs in discussions of the rising cost of cancer care. "When we talk about affordability and cost, we look at the entire picture and we come up with a holistic solution, because just focusing on drug costs isn't going to solve the problem," she said.

Value-based payment plans for pharmaceuticals are one potential solution, but Dr McAneny said it was too soon to use that reimbursement scheme.

"As to variable payment based on the value, please do not put that on me as the doctor," said Dr McAneny, who also is chair of the board of the National Cancer Care Alliance, a group that helps independent oncology practices compete by sharing resources and best practices.

"There's no way I can operationalize that in my practice," she said, adding, "When I see three people with the same disease, there's currently no scientific way for me to know which of those is going to get the most value."

Dr McAneny has served as a consultant/advisor to Genentech and Eli Lilly. Kathryn Chandra is an employee of Genentech.

American Cancer Society Cancer Action Network annual policy forum. Presented April 11, 2017.

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