Giving cancer doctors lump sum payments slashed costs by a third, study shows

07/10/2014 5:36 PM

07/10/2014 5:36 PM

The costs of cancer care fell 34 percent in a study in which UnitedHealth Group paid doctors a lump sum to treat each patient, rather than for each drug or service they provided.

The study was designed to test the theory that paying doctors a percentage of the cost of medicines they prescribe encourages them to use more expensive treatments, rather than the best or most cost-effective ones. Five medical groups using the per-patient payments spent $64.8 million over the three-year study, compared with what the researchers estimated would have been $98.1 million under the per-treatment payments.

“It was a huge difference. We expected savings, but not this great,” said Lee Newcomer, the study’s lead author and senior vice president for oncology for UnitedHealth. “We were able to reduce the total cost of cancer care by a third despite increased drug spending.”

The study was published July 8 in the Journal of Oncology Practice.

Oncologists in private practice traditionally have made much of their income by marking up expensive chemotherapy drugs that they give in their offices, raising concerns about incentives to overuse high-priced, brand-name drugs when cheaper ones might work just as well. More recently, the cost of cancer therapy has come under scrutiny, and the American Society of Clinical Oncology made value in cancer care a major component of its annual meeting in early June.

With 1.6 million people in the U.S. expected to be diagnosed in 2014, the National Cancer Institute expects cancer therapy costs to reach almost $207 billion in 2020, up from $124.6 billion in the previous decade. Treating the disease now accounts for 11 percent of UnitedHealth’s commercial health plan spending and is expected to increase, the company said.

In a result the researchers called unexpected, chemotherapy costs for patients actually increased during the study while other costs — such as for hospitalization or therapeutic radiology — went down, more than offsetting them.

That could have been caused by feedback UnitedHealth gave the doctors during the study. UnitedHealth gave doctors information on their spending and the use of certain procedures, as well as how often patients were hospitalized.

The data helped the practices identify areas where they could be more efficient, said Bruce Gould, medical director for Northwest Georgia Oncology Centers, a group oncology practice that participated in the trial.

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