July 2015, Special ASCO Edition

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Aetna Examines Cost by Site of Service

Value-Based Cancer Care

Contrary to the notion that chemotherapy infusion has largely become a hospital-based procedure, analysts from Aetna found that three-quarters of their patients still receive chemotherapy in the community. They also found tremendous variability, by site of service, in the cost of caring for cancer patients.

“There’s been much discussion about site-of-service distribution. At least for Aetna, and I think we are representative of national payers, we still have about 75% of patients getting chemotherapy in the office setting,” said Michael A. Kolodziej, MD, Aetna, Hartford, CT.

“Chemotherapy is expensive, and one of the factors influencing the cost of treatment is site of service,” he pointed out. Treatment is increasingly being delivered in hospital-based settings, which costs more—but for reasons not well understood—and this is an area of concern for payers, he remarked.

Study Details

Aetna evaluated 56,422 unique members treated between August 2013 and July 2014, of whom 76% received chemotherapy in the oncologist’s office and 24% in a hospital-based setting.

Significantly more women were treated in the hospital setting (P <.0001), and significantly more of the elderly received chemotherapy in the office (P <.0001). Risk scores, measured with a standard risk-adjustment tool, were higher in the hospital-based setting for breast cancer and some other tumor types (P <.0001), but there were no differences in site of service for colon and lung cancers.

Where Is Cost Highest, and Why?

The cost of chemotherapy and total cost of care were significantly higher in the commercial population treated in the hospital-based setting for all cancer types, both before and after risk adjustment (P <.0001), Kolodziej reported.

“There’s still a substantial impact of site of service,” regardless of comorbidities, he said. The concept that sicker patients are the ones being cared for in hospital outpatient departments “is just not true,” he said. Both chemotherapy costs and total cost of care were 50% to 60% higher with hospital-based site of service, and there was tremendous variability in the average chemotherapy allowed and the average total cost of care by site of service.

The average annualized chemotherapy cost ranged from $8788 to $55,820 for hospital-based delivery, and from $7272 to $19,692 for office-based delivery. Total cost of care varied from $81,616 to $293,814 and $51,733 to $106,868, respectively.

“We are presenting data that confirm the site-of-service differential. The most expensive hospital-based site of service was more than 280% more expensive per patient than the most expensive office-based site of service,” Kolodziej reported.

The variability from state to state was notable, he continued. The most expensive state, interestingly, was Kansas. According to Kolodziej, this is because “almost all chemotherapy delivery in Kansas has moved to the hospital, and hospitals have leverage.”

The “hospital allowed per patient” was $55,820 in Kansas; other high-cost states were South Carolina, Arizona, Georgia, and New Jersey. In comparison, states with the lowest “hospital allowed” for chemotherapy were Maine, Connecticut, Florida, Virginia, and Oklahoma, whose amounts were less than $20,000.

These differences “largely reflect the leverage at the contracting table,” he said in an interview. “These differences are related to contracting. If we level the playing field, insurers save money.”

Kolodziej suggested several strategies for doing so—such as steering members to low-cost providers or migrating to episode-based models.

“I don’t think there is 1 solution,” he said. “I think there are market-level solutions, and they will be phased in over time.”

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