Radiation Cost Study Shows Inefficiency of Fee-For-Service

Oncology Business News®September 2015
Volume 4
Issue 8

Costs of radiation treatment for breast, lung, and prostate cancer patients vary greatly based on reasons not connected to patient characteristics.

James Murphy, MD

Costs of radiation treatment for breast, lung, and prostate cancer patients vary greatly based on reasons not connected to patient characteristics, suggesting broad inefficiency in Medicare payment expenditures, a team of researchers from University of California, San Diego School of Medicine reported in the Journal of Oncology Practice.

“For all three cancer subtypes, patient- or tumor-related factors accounted for < 3% of the variation in cost. Factors unrelated to the patient, including practice type, geography, and individual radiation therapy provider, accounted for a substantial proportion of the variation in cost, ranging from 44% with breast, 43% with lung, and 61% with prostate cancer,” the authors wrote.

They concluded that their findings are further evidence that the fee-for-service payment system is afflicted by “misaligned incentives,” and that blended payment models, bundled payments, and accountable care organizations may be more suitable alternatives.

“We found that variability in Medicare reimbursement for radiotherapy does not depend on individual characteristics of patients or their cancers,” said James Murphy, MD, assistant professor at UC San Diego School of Medicine and radiation therapist at Moores Cancer Center at UC San Diego Health. “Rather, reimbursement was tied to the provider, geography and technology used to treat patients. This strongly suggests inefficiency within the current Medicare reimbursement framework for radiation therapy.”

Up to two-thirds of cancer patients receive radiation, and the rise in spending on radiation therapy in recent years has far outpaced that of other medical specialties. “This cost growth has drawn scrutiny and resulted in increased interest in the health economics of radiation oncology,” the authors wrote.

The study evaluated 55,288 patient records from the SEER-Medicare linked database. Patents were ≥ 66 years and diagnosed between 2004 and 2009 with nonmetastatic biopsy-proven cancer, and with Medicare claims for radiotherapy within 1 year of diagnosis. Only patients who were continuously covered by Medicare Part A and B coverage were included.

Patients had undergone various types of external-beam radiation therapy, including standard conformal radiation and the more advanced intensity-modulated radiation therapy (IMRT), stereotactic body radiotherapy and proton therapy, as well as brachytherapy delivered with external beam radiation or alone as definitive treatment.

The median cost of a course of radiation therapy was $8,600 ($7,300 to $10,300) for breast, $9,000 ($7,500 to $11,100) for lung, and $18,000 ($11,300 to $25,500) for prostate cancer.

The authors stated that the type of radiation received accounted for a large portion of variation in cost, ranging from 15% with prostate to 27% with breast and 30% with lung cancer.

Anthony Paravati, MD

The study looked at patient populations in SEER regions in 12 different states. For breast cancer, cost variation attributed to patient factors in California was just 1%, whereas cost variation unrelated to patients was 41%, and cost variation attributed to radiation type was 28%. For prostate, the respective numbers were 3%, 59%, and 17%; and for lung, 1%, 34%, 39%.

Patient- and tumor-related characteristics were highly reliable predictors of cost, though they had relatively little overall impact on cost. “No patient or tumor-related factor affected the cost of radiation therapy by > $1000,” the authors wrote.

The type and length of radiation therapy substantially increased cost as did the location of the radiation clinic. For prostate cancer, the authors wrote, “treatment in freestanding radiation oncology clinics resulted in an additional $11,800 in Medicare reimbursement compared with hospital-associated clinics.

The authors stated that costs of radiation care in an efficient payment system ought to vary based on patient, disease, and patient case complexity, but said that the variation they discovered in Medicare payments did not depend on these factors.

“This study found that the largest drivers of cost variation were factors unrelated to the patient, namely location of care and individual provider,” they wrote.

Given that high cost forms of radiation therapy are being deployed, they anticipate that the radiation field of oncology will soon be the target of future reform activity.

“Understanding why costs vary for radiation therapy helps policy makers evaluate the efficiency of the current fee-for-service Medicare reimbursement system. Such insights are likely to shape policy reforms in the near-future,” said Anthony Paravati, MD, lead author of the study.

They cautioned that the study did not factor in patient outcomes. “For example, if more expensive radiation therapy were to reduce toxicity or improve disease control, the existing payment model would achieve the goal of providing value-based reimbursement.” The link between cost and quality of care represents a future research question the authors hope to answer.

Paravati AJ, Boero IJ, Triplett DP, et al. Variation in the cost of radiation therapy among medicare patients with cancer [published online August 11, 2015]. J Oncol Pract. pii:JOP.2015.005694.

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