According to an article in the March 2015 Clinical Oncology News Something's Got To Give: Paying For Cancer Care, the rising costs of health care in the United States are unsustainable. Here are excerpts: When one considers that the median annual household income for a family of four in the United States is around $52,000 and a family’s annual health care costs, including insurance premiums, were about $23,215 in 2014 (Milliman Research Report May 2014), it is easy to see that individuals cannot afford wellness, let alone a serious illness. Although employers bear the brunt of health care costs in this country because they pay a higher percentage of an employee’s health insurance premiums, families can still expect high contributions and out-of-pocket expenses totaling a median of almost $10,000 a year, just under one-fifth of their annual wages. Nowhere is the cost of care more apparent than in the oncology sector, where annual direct medical costs are expected to increase to more than $173 billion in 2020 from $104 billion in 2006, according to “The State of Cancer Care in America: 2014,” a report by the American Society of Clinical Oncology (ASCO). The average monthly cost of cancer drugs newly approved by the FDA now exceeds $10,000, according to Jennifer L. Malin, MD, PhD, the medical director for oncology at Anthem Inc., the largest for-profit managed health care company in the Blue Cross Blue Shield Association. Furthermore, she said, according to an analysis by medical ethicist Ezekiel Emanuel, of 13 cancer therapies approved in 2012, only one improved survival by more than six months. Investigators at Emory University, in Atlanta, developed an economic model that found that cancer patients and insurers paid about $139,100 for a year of life in 2013. That same benefit in 1995 cost $54,100 (JAMA 2011;305:2347-2348, PMID: 21642689). No wonder medical expenses are the leading reason that Americans file for bankruptcy. High Volume Over High Value In 2005, 87% of chemotherapy was administered in a physician-owned community oncology practice; by 2011, only 67% of chemotherapy was administered in that setting, with 33% being administered in outpatient hospital settings, according to a May 2013 report by the Moran Group, a health care research and consulting firm in Arlington, Va. Insufficient Medicare reimbursement, exacerbated by the sequester cut to cancer drugs, lower reimbursements and drug margins to private practices than hospitalssee are reasons for the move from private practice to hospital-based care, according to a report by the Community Oncology Alliance (COA; “Practice Impact Report,” July 2013). The COA has been following these trends since 2008, and among 1,447 clinics, the 2013 report shows the following:

• 544 practices were acquired by hospitals;
• 395 practices reported struggling financially;
• 313 closed their doors;
• 149 practices merged or were acquired by another corporate entity other than a hospital; and
• 46 practices were sending Medicare patients somewhere else for treatment.

Despite the better reimbursements afforded hospitals, cancer care costs more in the hospital setting than in private practice. The Centers for Medicare & Medicaid Services (CMS) alone pays $6,500 more per patient per year for chemotherapy administered by a hospital, and cancer patients on Medicare pay $650 more when they receive chemotherapy in the hospital outpatient setting instead of from a community oncologist, according to a 2011 report by Milliman, an actuarial consulting firm. Although after-market increases for single-source drugs are smaller, introductory pricing for new oncology therapeutics has grown “progressively more insane,” he said. The last 10 drugs introduced to the market cost about $10,000 a month, he added. Reforming payment for cancer care, especially care that is becoming more molecularly subdivided into thousands of diagnoses compounded by stage and line of therapy, is a complex issue, these experts said. What is needed is a reimbursement model that incentivizes high-value over high-volume care, according to CMS, and most proposals to “fix” the system are centered on changing the fee-for-service model that currently pays for much of health care in this country. “How much more could we be doing for our patients?” asked webinar speaker Kavita Patel, MD. “We would all rather put our [focus] on our patient’s health outcomes, personal patient satisfaction and the quality of care they receive,” said Dr. Patel, a fellow and the managing director of clinical transformation at the Brookings Institute’s Engelberg Center for Health Care Reform, in Washington, D.C. Fee-for-service does not support much of the high-intensity services that the oncology team provides, she said. Care must be coordinated among a broader team than in most other disciplines. The team includes radiation oncology, surgery, internal medicine, pharmacy, nursing, social work and other care coordinators. “We all know that if [we were] given an alternative payment and finance mechanism, we could identify ... some of the things that would improve care,” Dr. Patel said. Under the current fee-for-service system, “it is really challenging” to provide high-value care, she said. Not only do fee-for-service payment models not reimburse for services that focus on improving health outcomes, patient satisfaction and quality of care, according to Dr. Patel, but many third-party payors exclude high-ranking cancer centers from their networks. For instance, Memorial Sloan-Kettering Cancer Center, in New York City, is only included in two of nine exchange plans in the city, she said. For the full article, click here.