Cost of Care
Medicare Patients Charged More In Outpatient Care Settings
Patients receiving chemotherapy in hospital outpatient departments face up to 47 percent higher costs compared to patients treated in physician community cancer clinics, according to a report prepared by The Moran Company and released by The US Oncology Network and the Community Oncology Alliance.
Titled “Cost Differences in Cancer Care Across Settings,” the report analyzes Centers for Medicare and Medicaid Services data from 2009 to 2011.
The report focuses on payment rate differentials between cancer clinics and hospitals due to differences in the utilization of drugs and services, as well as methodologies employed by Medicare to set payment rates.
Key findings in the report include:
• On a per beneficiary basis, hospital outpatient chemotherapy spending was approximately 25 to 47 percent higher than physician clinic chemotherapy spending.
• If all physician clinic chemotherapy administration services had been paid using hospital outpatient department payment rates over the 2009 to 2011 period, Medicare would have paid 19 to 38 percent more for these services.
• Chemotherapy days per beneficiary were about nine to 12 percent higher in the hospital outpatient department than the physician clinic setting across the 2009 to 2011 period.
“Medicare data again confirms that outpatient cancer care in hospital outpatient departments costs significantly more than the same care in community cancer clinics,” said Barry Brooks, chairman of the contracting subcommittee for The US Oncology Network. “Medicare policies create perverse incentives for hospitals to acquire community practices and bill Medicare at a higher rate.
“Unfortunately for patients fighting cancer and for taxpayers, cancer care will cost more than it should until current government policies favoring hospital-based care are ended,” Brooks said.
The latest Moran Company report builds upon a June report that found 87 percent of cancer care occurred successfully in cost-effective community oncology practices.
By 2011, Medicare beneficiaries received nearly a third of their outpatient chemotherapy services in the hospital outpatient setting, according to a statement from The US Oncology Network.
The Moran report is consistent with recent studies by Avalere and Milliman, which indicate that cancer center closures and consolidations result in higher cancer treatment costs to Medicare, seniors and taxpayers. Hospital-based cancer care costs Medicare approximately $6,500 more and seniors $650 more annually.
“The Community Oncology Alliance has been collecting data about cancer clinic closures and hospital acquisitions for several years, which has demonstrated alarming trends in the number of cancer centers that have been forced to close or consolidate,” said COA Executive Director Ted Okon. ”The data show why the site of cancer care matters to patients and payers.
“Care is drastically shifting towards the higher cost setting,” Okon said. “We call on the Congress and the Administration to act immediately to reverse this trend before cancer care is unaffordable to seniors and Medicare.”
The Moran Company’s most recent report cites the difference in payment rates for chemotherapy services as attributed to differing policies adopted by CMS that set mechanisms by which payments to hospital outpatient departments and community cancer clinics are determined and updated.
The report said continuing disparities in the method of establishing payment rates for both settings are resulting in a widening payment gap that significantly favors hospital-based cancer care over care provided in physician-run community cancer clinics.
The Moran analysis finds this gap will continue to grow without any changes in Medicare policy by Congress.
“As community clinics struggle to keep their doors open, this report drives home the important role of community-based cancer care in providing cost-effective care to all patients fighting cancer,” said Jeff Vacirca, chief executive of North Shore Hematology Oncology Associates on Long Island.
“As lawmakers look to future Medicare reforms, it is clear Congress must act immediately to put community cancer clinics in a sustainable position to maintain cancer care access for seniors,” Vacirca said in a statement, on behalf of ION Solutions.