Community Cancer Care 'Much Cheaper' Than Hospital

Roxanne Nelson, BSN, RN

October 11, 2017

Cancer care is significantly more expensive when delivered in a hospital outpatient setting than in a community oncology practice.

A new study shows that it cost almost 60% more, or $90,144 per year, for a patient to receive chemotherapy in the hospital, and patients who received treatment in the hospital setting were more likely to visit the emergency department after treatment.

As cancer care is increasingly being pushed out of the community and into hospital settings, which are far more costly, it becomes increasingly difficult to control healthcare costs, note the author.

The study was conducted by Lucio Gordan, MD, medical director in the Division of Quality & Informatics at Florida Cancer Specialists & Research Institute, Gainesville, and Xcenda, a consultancy and managed markets agency. The report was released by the Community Oncology Alliance (COA).

"We did the study to show even more statistics and to refresh the idea that community cancer care is much less expensive than treatment in the hospital," said Dr Gordan. "It doesn't matter how you cut it, is it much cheaper."

Community cancer care is much less expensive than treatment in the hospital. Dr Lucio Gordan

In an interview, he pointed out that there is no evidence treatment in the hospital confers better outcomes. "Everyone loses in this system," he said. "We need to take this again to politicians and show them how much more expensive it is to treat patients in the hospital. A study by the Milliman group, for example, found that it cost Medicare $3.2 billion a year more to move patients out of the community and into the hospital."

In a statement, Ted Okon, executive director of COA, noted that "more than a decade of data have consistently shown that hospitals are a tremendous driver of excessive spending on cancer care."

It is crazy that our country continues to push more and more cancer care into the much more expensive hospital setting. Ted Okon

 "Congress and the administration need to step forward and address this by reining in abuses of the 340B program and implementing site payment parity," he said. "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 health care spending."

Downward Spiral

As previously reported by Medscape Medical News,  community cancer clinics have been on a downward spiral since 2008. Closings have increased 121% and consolidation into hospitals has increased 172%, according to COA.

From 2008 to 2016, 380 cancer clinics have shut their doors, and 609 community cancer practices have been acquired by hospitals, or at least become affiliated with them.

Higher Prices for All Cancer Sites

The cohort for this study was drawn from a random sample of medical and pharmacy claims obtained from the IMS LifeLink database, which includes longitudinal, integrated, patient-level medical and pharmaceutical claims for over 80 million patients from 70 health plans.

Eligible patients received chemotherapy, radiation therapy, and/or surgery and were diagnosed with breast, lung, or colorectal cancer between July 1, 2010, and June 30, 2015. The first date of chemotherapy served as the index date for each patient, and patients were required to have continuous eligibility for 6 months in the preindex period through the end of follow-up. They were followed for 1 year after the index date or until first-line chemotherapy was discontinued.

 All chemotherapy had to be delivered in the community or outpatient hospital setting.

A total of 4450 patients in the community practice setting cohort and 2225 in the outpatient setting group were included. Patient characteristics were similar in both groups.

The authors found that across all cancers, the total cost of care for a patient receiving chemotherapy within the hospital outpatient setting was 59.9% higher compared with the community setting, or $7512 more expensive per month ($20,060 vs $12,548; P < .0001).

The major driver of this cost differential between the community cohort and the hospital cohort was the lower per patient per month (PPPM) medical costs: $12,103 vs $19,471. The PPPM pharmacy costs were also slightly lower in the community cohort than in the group receiving care in the hospital ($445 vs $589). 

The mean PPPM cost for chemotherapy was significantly lower ($4933 vs $8443; P < .0001) in the community setting, and this was observed regardless of whether the drug was branded, generic, or a combination of branded and generic chemotherapy.

When looking at specific cancer types, the cost of breast cancer was 66% higher per month ($11,599 vs $19,279) in the hospital setting; for lung cancer, it was 54% higher ($17,566 vs $26,980); and for colorectal cancer, it was 46% higher ($15,629 vs $22,893; P < .0001 for all analyses).

Visits to the emergency department (ED) after chemotherapy treatment were also higher among patients treated in the hospital setting. Within 72 hours of chemotherapy ED visits were almost 40% higher (3.6% vs 2.6%), and within 10 days of chemotherapy they were 24% higher (9.8% vs 7.9%).

Dr Gordan pointed out that one of the main forces driving the shift of cancer care into the hospital outpatient setting is the 340B drug discount program. This program requires drug manufacturers to provide outpatient drugs at significant discounts to eligible healthcare organizations that are supposed to be treating high numbers of indigent and uninsured patients.

"It was well intentioned," said Dr Gordan, "but it is having a detrimental effect."

The number of participating hospitals/health systems has increased substantially since the implementation of the Medicare Modernization  Act  (MMA),  which revamped reimbursement  for  Medicare Part B drugs. The COA found that in 2014 and 2015, 74.5% of the acquisitions of community oncology clinics were by hospitals with 340B drug discount pricing.

With drugs discounted under this system, the belief was that the cost  savings  would  be  passed  along to patients and payers, Dr Gordan pointed out, but current evidence shows that the opposite is true — that costs for both have actually increased.  "They are selling the drugs at much higher prices and make a much larger profit and control more sources," he said.

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