OPINION:
The rising cost of health care is a burden felt by all Americans, but perhaps most acutely by those battling life-threatening illnesses such as cancer, who face lengthy and expensive treatments. The stress of exorbitant medical bills on top of a scary diagnosis can be overwhelming. In fact, 42% of cancer patients exhaust their life savings within two years of diagnosis. As a former secretary of the Department of Health and Human Services and the current president and CEO of the Leukemia & Lymphoma Society, we are committed to bipartisan policy changes to make health care more accessible and affordable for all Americans and their families.
A growing chorus of health economists, congressional payment experts, think tanks and patient advocates has pointed to a significant payment flaw contributing to high health care costs. Medicare pays hospitals significantly more for care provided in physician offices owned by hospitals than it does for similar care provided in physician offices owned by physicians themselves. This disparity creates unnecessary financial strain for patients and other unintended consequences that drive up costs and make it difficult for independent doctors to compete.
Fortunately, there is something Congress can do right now to help address those misaligned incentives and reduce health care costs for all patients throughout the health care system: Expand site-neutral payment for routine care. This win for the Medicare program would decrease wasteful spending and simplify the system by aligning payment rates — a dream come true for taxpayers, patients and opponents of government waste.
Medicare payment experts point out that this additional cost applies to all hospitals, regardless of differences in the quality of care or severity of illness of the patients they serve. It’s simply a matter of the name on the deed. By equalizing payments as “site-neutral,” it won’t matter where treatments are received. Patients and taxpayers will pay less.
These savings are neither hypothetical nor minimal. A recent study by Wakely and the Leukemia & Lymphoma Society found that a multiple myeloma patient receiving a standard course of treatment at an on-campus hospital outpatient department would have to spend $2,028 in out-of-pocket costs per year. With site-neutral payment reform, the out-of-pocket costs for that treatment would be reduced to $809, saving the patient more than $1,200 per year.
Cancer treatments often require frequent and ongoing care. The cumulative effect of higher costs in hospital outpatient settings can lead to significant financial hardship for patients and their families. With 51% of cancer patients incurring medical debt, the financial burden can force patients to choose less expensive or less convenient care, even if they prefer a different setting or provider. This limits patients’ choice and control over their health and can affect their overall care experience.
Patient choice is limited even further by the recent wave of hospital consolidation. These payment disparities incentivize hospital systems to gobble up smaller offices, leaving patients holding the bag. We have heard too many examples of cancer patients receiving treatment at an independent doctor’s office, only to find that the cost of the care has increased overnight after the office is bought by a hospital system. The chemotherapy infusion and even the provider administering it might be the same, but the bill is now higher. This additional cost often comes with no change in doctor or building, but confuses the patient receiving the same care, now with a higher price tag.
According to MedPAC, a nonpartisan adviser to Congress on Medicare payment policy, 35% of outpatient chemotherapy in 2012 was billed in a hospital outpatient setting. By 2021, that figure jumped to more than 50%, driven by these market distortions and payment discrepancies.
Since 2012, the complexity of outpatient cancer care has certainly increased. For patients taking specialized therapies associated with a greater risk of severe side effects — for example, cellular therapy or T cell engager therapy — a hospital outpatient setting is often appropriate and may require higher costs. Those cases should be reimbursed properly and sustainably.
The fact remains that categorically reimbursing hospital outpatient sites as if all patients require specialty care drives the artificial inflation of health care costs, a financial burden carried by real-life patients. Through site-neutral policy reform, we have the opportunity to do the reverse: generate significant savings for patients, taxpayers and the health care system. The Congressional Budget Office estimated that one version of site-neutral payment reform could save Medicare patients and taxpayers as much as $157 billion over 10 years.
Policymakers must act this year to implement these needed reforms. The savings gained and the peace of mind provided to cancer patients are too important to ignore. It’s time to ensure that financial burdens and outdated payment rules do not prevent Americans from receiving the care they deserve.
• Alex Azar is a former secretary of the Department of Health and Human Services. E. Anders Kolb is president and CEO of the Leukemia & Lymphoma Society.
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