Cancer hospital payments too high, Government Accountability Office report says
Outpatient payments for cancer hospitals were 37 percent higher than teaching hospitals for the same range of services, report finds.
Photo of MD Anderson Cancer Center sign from Wikipedia.
Medicare inpatient and outpatient payments are significantly higher for cancer hospitals exempt from the inpatient prospective payment system, according to the Government Accountability Office in a recent report that raises wider concerns about differences in how cancer hospitals get paid.
The GAO, at the request of lawmakers, compared Medicare payments to the nation’s 11 Inpatient Prospective Payment Systems-exempt cancer hospitals to reimbursement for similar cancer patient cases at local teaching hospitals.
For 2012, the agency found that the cancer hospitals, like Dana Farber and MD Anderson, were reimbursed “substantially higher,” on average receiving 42 percent more per discharge than what would have been paid to a local teaching hospital for patients of the same complexity.
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Outpatient payments for cancer hospitals also were higher than teaching hospitals, on average by 37 percent for the same range of services. The differences varied quite a bit, from 6 percent in Philadelphia -- between Fox Chase Cancer Center and local teaching hospitals -- to 90 percent in Houston -- between MD Anderson and local teaching hospitals.
The GAO also found no correlation between the proportion of Medicare payments for cancer care and Medicare profit margins at teaching hospitals, which led analysts to suggest that inpatient prospective payments “or an alternative payment methodology may be reasonable for cancer care.”
Story continues below chart:
| Cancer hospital | Medicare inpatient discharge payment | Inpatient payment to local teaching hospital for comparable patient | Difference (%) |
|---|---|---|---|
| Cancer hospital | Medicare inpatient discharge payment | Inpatient payment to local teaching hospital for comparable patient | Difference (%) |
| City of Hope, Los Angeles | $27,170 | $18,376 | 47.90% |
| Dana-Farber, Boston | $20,772 | $19,274 | 7.80% |
| Fox Chase, Philadelphia | $13,279 | $12,440 | 6.70% |
| MD Anderson, Houston | $23,418 | $12,268 | 90.90% |
| Memorial Sloan Kettering, New York | $19,918 | $16,612 | 19.90% |
| Moffitt, Tampa | $15,821 | $14,521 | 9% |
| Ohio State CCC, Columbus | $20,729 | $13,083 | 58.40% |
| Roswell Park Cancer Institute, Buffalo | $19,987 | $17,604 | 13.50% |
| Sylvester CCC, Miami | $15,543 | $12,929 | 20.20% |
| Average | $20,686 | $14,540 | 42.30% |
In 2012, if Medicare beneficiaries treated at the 11 cancer hospitals had instead been cared for at local teaching hospitals, the Medicare Trust Fund would have saved $500 million, the GAO said.
“Until Medicare pays (exempt cancer hospitals) to at least, in part, encourage efficiency, Medicare remains at risk for overspending,” GAO analysts wrote.
Among the cancer hospitals examined by the GAO are the Dana Farber Cancer Center in Boston, Memorial Sloan Kettering Cancer Center in New York, Fox Chase Cancer Center in Philadelphia, Moffitt Cancer Center in Tampa, MD Anderson Cancer Center in Houston, and Seattle Cancer Care Alliance.
When Congress established the prospective payment exemption in 1983, cancer hospitals were considered to be too unique, and served an important niche treating complex cancer patients.
“There was concern that cancer hospitals would experience large payment reductions under the PPS, which would result in a decline of their disease-specific focus,” the GAO said. But, the agency argued cancer care and Medicare’s payment system have changed since then, with advances in diagnosis, surgical and radiation treatment, chemotherapy and medicines that allow for more localized delivery of care.
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“The primary setting for cancer care has shifted from the inpatient setting to the outpatient setting,” the agency noted. Most cancer patients received chemo and radiation therapy in outpatient settings without staying in a hospital bed.
The GAO is recommending that Congress consider requiring Medicare to pay the 11 exempt cancer hospitals with the same reimbursement as PPS teaching hospitals, or to at least give the HHS authority to modify how Medicare pays cancer hospitals. “To generate cost savings from any reduction in outpatient payments to PCHs, Congress should also provide that all for gone outpatient payment adjustment amounts be returned to the Supplementary Medical Insurance Trust Fund,” the GAO said.
The cancer hospitals at the center of the GAO study, though, argue that they are still providing unique, advanced oncology services and clinical trials to some of the nation’s most complex cancer patients, warranting the additional payments.
The GAO report “fails to consider the critically important issue of treatment outcomes as an indicator of effectiveness and efficiency with taxpayer dollars,” said Don Leedy, executive director of the Alliance of Dedicated Cancer Centers, representing the 11 exempt cancer hospitals
Over the course of a patients’ treatment, Leedy said, Medicare payments at dedicated cancer centers “are comparable to cancer patients treated at any hospital,” while a patient’s likelihood of five-year survival is 17 percent higher than at other hospital, including for breast, colorectal, lung and prostate cancers.
Twitter: @AnthonyBrino
