Catalyst for Payment Reform

Health Care Cost Drivers: Cancer

Health Care Cost Drivers: Cancer

You’re probably aware that the U.S. spends a lot on cancer, but do you know how much?  In 2014 roughly $88 billion was spent in the U.S. on cancer-related health care.   On top of that staggering number, cancer patients paid nearly $4 billion out-of-pocket for cancer treatments.

Employers and other health care purchasers have become increasingly aware of cancer’s impact, especially as more members are accessing cancer care services.  In 2010, total cancer-related costs for employers were $264 billion, not to mention the indirect costs resulting from lost productivity.  Thus, it’s no surprise that cancer is one of the primary drivers for employers’ increased health care cost trend.  Let’s review a few reasons why.

  1. Cancer affects millions of Americans

More than 15.5 million Americans with a history of cancer were alive on January 1, 2016 and around 1.7 million new cancer cases were expected to be diagnosed in 2017.  Roughly 601,000 Americans were expected to die of cancer in 2017.  In addition to the devastating physical and emotional effects cancer has on individual patients and their families, the sheer number of those affected by this disease contributes significantly to the costs associated with treating it.

  1. It’s a complex condition that requires complex care

Cancer comes in many forms and varies in severity.  No two treatments are ever exactly the same and as a result there are different types and amounts of costs related to cancer care. Examples include: doctor’s appointments, cancer treatments such as radiation therapy, chemotherapy and surgery, medications and specialty pharmacy, laboratory and imaging, at-home care, and care management.  The costs of complex care can quickly skyrocket for both employers and employees.

  1. The drugs used in cancer treatment are exorbitantly priced

The prices of specialty pharmaceuticals used in cancer treatment are astronomical for employers, payers, and consumers.  For instance, the new cancer drug Car-T used to treat blood cancer patients is priced at $475,000. Not only are the drugs themselves expensive, but patients who delay filling their prescriptions due to the high price of these drugs not only suffer physically, but may even incur even larger costs later on.

Taking Action:  Purchaser Strategies

So, what can purchasers do to support their population and manage the cost of cancer?

  • Consider exploring center of excellence (COE) and accountable care organization (ACO) strategies for cancer care to infuse quality, case management, and value into treatment.
  • Consider services such as palliative care alongside curative treatments to increase patients’ quality of life and reduce costs stemming from inappropriate use of care (i.e. emergency room visits) and improper symptom management.
  • Reevaluate your specialty pharmacy strategy and work with your health plan, third party administrator or pharmacy benefit manager (PBM) to adopt specialty pharmacy-specific payment reform strategies such as: bundled payments, capitation payments that include pharmacy, and outcomes-based contracting with the provider and/or manufacturer.

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