Chemo treatment moving into hospitals

Between 2005 and 2011, chemotherapy procedures in hospital outpatient settings for Medicare patients increased by more than 150 percent finds an analysis commissioned by members of the oncology community.

For some years, the cancer community has hypothesized that outpatient chemotherapy treatments have been migrating from less-costly physician community cancer clinics to more-costly hospitals and that that migration is happening because Medicare reimbursement for cancer care was changed in 2005.

[See also: The cancer center trend.]

The U.S. Oncology Network, the Community Oncology Alliance and ION Solutions commissioned the Moran Company, a healthcare research and consulting firm, to conduct a series of analyses to test the hypothesis.

Moran Company researchers used outpatient and carrier Medicare standard analytic files from 2005 to 2011 to identify claims for Medicare fee-for-service (FFS) chemotherapy administration procedures and chemotherapy drugs in hospital and physician office settings.

In their first report, Moran's researchers confirmed that relative to the physician clinic setting, chemotherapy procedures in the hospital outpatient setting increased from 13.5 percent in 2005 to 33 percent in 2011.

In that same time period, Medicare payments for chemotherapy administration in the hospital setting tripled from $98.3 million to $300.9 million while such payments in the physician clinic dropped from $507.5 million to $433.8 million.

Medicare payments for chemotherapy drugs have increased in both the hospital outpatient setting and the community physician clinic setting. Relative to the physician clinic setting, the hospital share of Medicare chemotherapy drug payments increased from 25.6 percent in 2005 to 37 percent in 2011.

[See also: Cancer drug shortages create greater risk, costs.]

Donald Moran, founder and president of the Moran Company, is quick to point out that the results Moran's researchers have produced so far just scratch the surface of this complicated situation, and more research and analysis is needed for a fuller picture.

However, the analysis does yield some food for thought, Moran said.

While researchers found no evidence of hospitals actively deciding to open up oncology lines of business because chemotherapy services will bring more money into the hospital, hospitals are buying up oncology practices in their communities and integrating them into their systems, said Moran.

"I don't think hospitals are getting into this because they're trying to pull volume away from the community doc because they think it's lucrative," Moran said. "But, as they build out hospital systems and begin to employ more doctors, more and more stuff is being integrated inside the hospital system."

With reimbursement to doctors essentially flat and the costs of chemotherapy administration high, he said, the economic viability of continuing to have chemotherapy services in doctors' offices is questionable, and such services in doctors' offices are likely to become rare when you couple economic considerations from the office perspective with the other forces driving various services into integrated health systems.

From a policy perspective, Moran said, lawmakers need to evaluate the increasing costs to the federal healthcare programs as more chemotherapy procedures take place in hospital settings.

"… everyone agrees that Medicare costs are probably rising as a result of this relative to what Medicare costs would be if this wasn't happening," Moran said. "Just on average, hospitals are more expensive places than physicians' offices to do just about anything.

"To the extent that forces are driving or reinforcing the tendency of care to move from offices to hospitals, that makes the Medicare program, the Medicaid program and all private payers have higher healthcare costs because things are moving to a more expensive setting."

Photo used with permission from Shuttershock.com.