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Location, Location, Location. That Also Applies to Cancer Treatment.

MHE PublicationMHE November 2021
Volume 31
Issue 11

Site of service has a major effect on the cost. Home infusion and oral formulations are challenging both hospital- and physician-based infusions.

For decades, cancer treatment drugs have been infused either at a hospital or in a physician-owned office or facility. For patients, the treatments were inconvenient and time consuming, to say nothing of the onslaught of side effects.

Cancer treatment is still a trying experience. Harsh chemotherapies remain in the armamentarium, although oncologists now have agents to better manage some of their side effects, notably nausea. But cancer treatment has also changed dramatically with many more oral formulations that can be taken at home and new opportunities to deliver infusions at home, partly due to the emergence of telehealth.

For the most part, patients have benefited. But the changes have set off a struggle among hospitals, oncologists and providers about which patients are going to be treated where and by whom. Payers have a stake in where cancer treatments are delivered because of large differences in price — and therefore their costs — depending on whether care was delivered at a hospital, doctor’s office or in a patient’s home

Payment for home infusions is still evolving, as is the medical community’s enthusiasm for it. Medicaid, the ACA exchange and commercial health plans are proving grounds. The Community Oncology Alliance and the American Society of Clinical Oncology have both raised concerns about patient safety.

Hospitals vs. physician offices

Home infusion is coming on strong, but most infusions still occur in a medical setting. Hospitals and oncologists have been battling over infusion patents for years, and there’s ample evidence that where the infusion takes place has a large effect on its price. Research findings published in the September 2021 issue of Health Affairs adds to that pile. James C. Robinson, Ph.D., M.P.H., a professor of health economics at the University of California, Berkeley, and his colleagues had access to a claims database that includes 130 million Blues plans members. Their analysis of claims in 2019 found that the prices the plans paid at hospital outpatient departments for 38 infused cancer treatment drugs were double the prices paid at physician offices. It’s not surprising that there is a difference, but the research documented it and showed how large it can be.

“Moving care from high-cost, hospital-based settings to lower-cost ambulatory settings is the lowest-hanging fruit in healthcare cost control,” Robinson said in an interview with Managed Healthcare Executive®. “This goes for drug infusions but also surgical and diagnostic procedures, in cancer and other forms of care.”

Robinson noted that technology has made it possible to deliver many drug treatments outside the hospital, but hospitals have purchased many of the outpatient centers and physician offices — and then raised the price of care delivered there. “This vertical integration rivals horizontal integration through mergers in explaining high (healthcare) costs,” he said.

In their Health Affairs article, Robinson and his colleagues, Christopher M. Whaley, Ph.D., a RAND health economist, and Timothy T. Brown, Ph.D., associate director for research of the Berkeley Center for Health Technology, note that health plans have combated high prices at hospitals with narrow network strategies — essentially, refusing to reimburse at the higher-priced settings. They calculated that a full-blown narrow network strategy for the infused drugs included in their study would have generated $1.28 billion in savings, or about a quarter of what the Blues plans spent on the medications. Narrow networks have drawbacks, though. They limit patient choice and can lead to surprise billing when patients inadvertently get care out of network.

Patients also shoulder some of the cost of infused cancer drugs because of deductibles and cost sharing; Robinson, Whaley and Brown discovered an odd twist when they looked at what the Blues plans’ patients paid in 2019. Despite much higher prices paid by the plans at the hospital outpatient departments, they found that the patient cost sharing was less, not more, at the hospital outpatient departments than at physician offices for 25 of the 38 drugs included in the study.

Strategies like uniform coinsurance (patients pay the same percentage of the cost regardless of the setting) and reference pricing (patients pay the difference between the price at the lowest-priced setting and the price at the setting where they are receiving care) are designed so patients have a financial disincentive to avoid high-cost settings. But such strategies open the possibility that patients will shoulder more of the cost of expensive cancer medications. Robinson, Whaley and Brown put it this way in Health Affairs: “Substantial savings are potentially available to them with this shift in care, but consumer cost-sharing strategies can impose very large financial burdens on patients.”

Home infusion thickens the plot

There’s no end in sight to hospital and physicians vying to take care of cancer patients. But home infusion is a relatively new development that challenges both. “For home-appropriate chemotherapy agents, which include monoclonal antibodies, clinical oversight can be provided by a nurse on-site during the infusion, with telemedicine providing connectivity to the oncologist,” says Andrew Hertler, M.D., chief medical officer of New Century Health, a specialty managed care company owned by Evolent Health. It’s often advisable that an initial infusion or two first be given in a clinical setting to ascertain patient tolerance, observes Hertler.

Still, many oncology practices have relied on revenues from drug infusions, so home infusion looms as a threat and the increasing number of oral formations perhaps more so. But Hertler says it’s possible to design payment models that realign reimbursements to pay oncologists for oversight and remove this disincentive. Although home infusion may be a major convenience for patients, for practices it has some built-in inefficiency, says Hertler: “In the clinic, a nurse can oversee several patients’ infusions at once. At home, it is one to one. Drug savings have to make up for the increase in manpower.” Telehealth may help offset some of the efficiency problems.

Physician assistants and nurse practitioners are another factor in how and where cancer treatment will be delivered in the future. As their numbers increase, so may the home-based care they can deliver that oncologists can’t because their time is too valuable and in short supply. “Going forward, I envision that each oncologist will provide oversight of several extenders — physician assistants and nurse practitioners — who will provide the actual patient care much of the time,” Hertler says. “Oncology will move to a team approach rather than the current model of each oncologist seeing every patient one-on-one. The oncologist will become more of a quarterback directing the team.”

Hertler also envisions artificial intelligence playing a futuristic role in oncology, affecting much more than the site of service. “An oncologist’s skill set involves interpreting data collected from pathology, imaging, laboratory, history and exam reports and recognizing a pattern, which leads to selection of the treatment plan most likely to work based on those many variables,” Hertler says. “AI and decision support is quite simply going to become better than the oncologist at this, never missing an input or making a mistake. Quite frankly, my skill set as an oncologist will become obsolete.”

Keith Loria is a freelance writer in the Washington, D.C., area.

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