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Cost of Chemotherapy Administration Higher in Outpatient Setting Than in Physician Office

February 23, 2018

Commercial payers are spending almost twice as much on chemotherapy administered in hospital outpatient departments compared with therapy administered in physician offices, according to a large data analysis published in JAMA Oncology (online February 22, 2018; doi:10.1001/jamaoncol.2017.5544).

The impact of price variation due to site of care is a crucial driver of health care spending. Payers often reimburse payments to hospital outpatient departments at a higher rate than physician offices because of higher overhead costs. However, a common belief is that the value of services provided—rather than overhead expenses—should determine prices.

Aaron N Winn, PhD, department of clinical sciences, Pharmacy School, Medical College of Wisconsin, Milwaukee, and colleagues conducted an analysis to assess trends in the use of spending for infused chemotherapy in hospital outpatient department versus physician office settings from 2004 through 2014 among commercially insured patients. Insurance data from 283,502 patients who initiated treatment with infused chemotherapy and remained enrolled continuously for 6 months, without receiving infused chemotherapy in the preceding 6 months, were included in the study.

Researchers examined the association between site of care and spending outcomes and predicted reimbursement costs. They also adjusted for comorbidity by using the National Cancer Institute comorbidity index.

The rate of commercially insured patients receiving infused chemotherapy in hospital outpatient departments increased from 6% to 43% in the study’s duration, researchers noted.

Results of the analysis showed that spending at the drug level was significantly lower in offices compared with hospital outpatient departments ($1466 vs $3799, respectively; P < .001). Similarly, day-level spending was lower for patients treated in offices than for those treated in the outpatient setting ($3502 vs $7973, respectively; P < .001).


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Importantly, Dr Winn and colleagues found that total reimbursement during the 6-month treatment-episode was also lower in offices than in hospital outpatient departments ($43,700 vs $84,660, respectively; P < .001).

“Shifting the provision of infused chemotherapy from physician offices to hospital outpatient departments is increasing and is associated with increased spending for chemotherapy services,” authors of the study concluded. “Potential targets for reduction of excess spending can come from private insurers following Medicaid’s lead, which has started to equalize payments across sites of care.”—Zachary Bessette

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