Study: Insurers Pay More for Cancer Therapies Administered in Hospital Setting

Blue Cross Blue Shield plans in 2019 paid more for cancer therapies administered in hospital outpatient settings than for those given in physician offices, according to an analysis published in Health Affairs this month. The plans could have saved $1.28 billion if those drugs were administered at the physicians’ offices.

“Plans paid 50% to 90% more in hospital outpatient departments than in freestanding physician offices for most of the drugs. The price differences for infused cancer drugs mirror price differences reported elsewhere for a wide range of health care services, including diagnostic tests, radiology, and ambulatory surgery,” investigators wrote.

Investigators used 2019 data from Blue Cross Blue Shield Axis, a claims database, to assess payment rates for cancer biologics, chemotherapies, and infused hormonal therapies for enrollees throughout the United States. They focused on the 38 most commonly infused cancer drugs, which accounted for about 80% of total Blue Cross Blue Shield spending for cancer therapies that year. Included were patients covered individually or through employer plans; Medicare and Medicaid beneficiaries were excluded.

Investigators found that across all 38 drugs, hospital outpatient department prices were twice as high as those paid by insurers in physician offices. For the 12 biologics that were assessed, hospital outpatient department prices ranged from a minimum of 54% to a maximum of 78% above physician office prices, with a median of 67%.

For chemotherapies, hospital outpatient departments were 72 percent and for which hospital outpatient department prices exceeded those in physician by as much as 182. Investigators noted there were three chemotherapies where prices charged for hospital outpatient were below those of physician offices.

Prices charged in hospital outpatient departments for hormonal therapies exceeded those charged in physician offices by a median of 87%.

Investigators estimated that a narrow-network strategy, which would deny coverage for hospital-based administration of these cancer drugs and would funnel patients instead to physician offices, would have generated savings to insurers of $1.28 billion in 2019.

The narrow-network strategy, investigators said, would limit cost sharing with patients, which could exceed amounts patients are able pay.

“The cancer drug price differences reported here, and in particular the high prices charged in hospital-based infusion clinics, reflect larger dynamics in the health care system,” investigators wrote.