Payers Spend Less for Chemotherapy in Physician Offices vs Hospitals

A recent study in JAMA Oncology found that chemotherapy costs were lower when the treatments were administered at physician’s offices and higher in hospital outpatient facilities. 

“The impact of price variation because of the site of care is an important driver of health care spending,” Aaron N Winn, PhD, of the Pharmacy School at the Medical College of Wisconsin, and colleagues wrote. “While patients may receive the same treatment in either setting insurers typically reimburse payments to [hospitals] at a higher rate than to physician offices.”

The researchers explained that this higher rate is usually justified by the higher overhead and administrative burden incurred by hospitals. However, they noted that critics argue that prices should be based on treatment value and not on overhead.

They studied data and insurance payments for 283,502 patients who received chemotherapy between 2004 and 2014. 

Study results showed that drug spending was significantly lower in physician’s offices, at $1466, compared to $3799 at hospitals. Additionally, day visit spending was also lower in offices, at $3502 vs $7973. Overall, the researchers determined that 6-month treatment–episode spending was significantly lower at offices, at $43,700 vs 84,660 in hospital outpatient departments.

“Potential targets for reduction of excess spending and creation of a more efficient health care system can come from private insurers following Medicare’s lead, which has started to equalize payments across sites of care,” Dr Winn and colleagues concluded.—David Costill