This document discusses several key factors related to managing oncology costs and quality, including: 1) Sites of service for cancer care include physician offices, hospital outpatient departments, academic medical centers, and dedicated cancer facilities. 2) Hospital acquisition of physician-owned oncology practices has decreased the number of freestanding practices. 3) Costs of chemotherapy are generally higher in hospital outpatient departments compared to physician offices.

1. Managing Oncology
Cost and Quality
John Hennessy, WellRithms

2. Site of service
• Physician office
• Hospital outpatient department
• Academic medical center
• NCI-designated cancer center
• Dedicated integrated specialty cancer facility

3. Demographics
• Hospital acquiring physician owned oncology
practices
• Decrease in freestanding practices to about half
what it was ten years ago; 2015 ASCO Oncology
Census reported 45% of those surveyed were in a
hospital-owned practice, 60% in the Midwest
• Often the same facility is suddenly a hospital
outpatient department

4. Cost Implications
• Avalere (2012): chemotherapy average cost $19,640 in
physician office, $26,300 hospital outpatient
• Milliman/Genentech (2013): hospital costs 28-52%
higher than physician office (adj/met breast/colon/
NSCLC)
• Moran (2013): chemotherapy cost/day 25-40% higher;
chemotherapy cost/episode 25-47% higher
• GAO (2015) recommends payment parity between
physician office and hospital outpatient setting

5. Drug Delivery models
• Physician office buy-and-bill
• HOPD buy-and-bill (340b)
• Specialty pharmacy
• White bagging
• Brown bagging

6. Out-of-Network
• Why does your network look like it does?
• Network adequacy: health plan network breadth
traded off against limited discounts
• In network may not mean affordable; selective
discounting and layered contracts (fully-funded vs.
ASO)
• Provider politics: Emory eliminates employee
coverage at CTCA-Georgia; UPMC vs. Highmark/
Allegheny

7. Why Out-of-Network?
• Patients choose their oncologist based on:
• PCP recommends one oncologist
• PCP suggests a choice of oncologists
• Patient asks friends for recommendations
• Patient searches internet
• Patient seeks advice/info from advocates/advocacy
group

8. Why Out-of-Network?
• Consumer Direct Advertising
• “We’ll work with your insurance…”
• Speak with a board-certified oncologist at NO
COST to get your questions answered and
determine if you are a candidate…”
• Second opinion advertising

9. Other factors
• Financial toxicity
• Logistical toxicity
• SPD/benefit design
• Clinical trials