Chemotherapy costs lower when treatment provided in physician’s office

Chemotherapy treatments for privately insured patients delivered in an outpatient hospital setting cost 24 percent more than when the treatments are provided in a doctor’s office, according to a new study conducted by Avelere Health.

“Our study documents that chemotherapy treatment in an oncologist’s office costs less than in a hospital regardless of the length of treatment,” said Eric Hammelman, Avalere vice president and a study author, in a press release. “At a time when the healthcare community is focused on managing costs, these findings show the importance of where care is delivered, and raise important questions about how best to manage cancer treatment.”

According to the data presented by Avalere, the average cost between 2008 and 2010 for patients in private health plans for outpatient chemotherapy was $35,000 versus $28,200 for those receiving treatment in a physician’s office. The study also revealed that the average length of the course of chemotherapy lasted 3.8 months for patients treated in a doctor’s office versus 3.4 months in a hospital outpatient setting and that treatment’s in a physician’s office are cheaper no matter the length of treatment duration.

The study suggests a number of potential reasons for the disparity in costs between the two settings including patient acuity, billing practices and institutional norms. As an example, the authors note that patients treated in the hospital outpatient setting often needed to be admitted for inpatient care, at a higher rate than patients treated in a doctor’s office. The study was not able to determine -- based on a lack of controls available for the data -- what the range of those factors might be. The study showed that the greatest disparity in chemotherapy costs was in the treatment of genitourinary system cancers, which averaged $8,960 when delivered in a physician’s office versus $19,592 in a hospital setting – a 118 percent difference. Only lung cancer treatments were shown to be less expensive in an outpatient setting: $32,382 versus $32,913 at a doctor’s office -- a disparity of 1.6 percent.

According to Avelere, their findings of the costs to private payers for chemotherapy treatments are consistent with 2011 Milliman research, which used different data and found the total healthcare costs for Medicare and seniors receiving chemotherapy were higher in an outpatient hospital setting than costs for patients receiving chemotherapy in a physician’s office.

“As we think about refashioning our healthcare system, we have to take into consideration not only cost, but quality and value as well,” said Ron Hunt, MD, president of the National Association of Managed Care Physicians, in a statement. “The cost of cancer care involves many elements, all of which must be considered as we seek ways to encourage quality and efficiency in cancer care delivery.”

Avalere Health was commissioned by the Community Oncology Alliance (COA), in partnership with the National Association of Managed Care Physicians (NAMCP) Medical Directors Institute, to analyze data provided by NAMCP members. The data for the study came from three large commercial managed care plans and one large self-funded employer, covering an estimated 9 million individuals.

Funding for the research was provided to COA from Amgen and Millennium Pharmaceuticals.

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