If projections are correct, the health care industry is on the verge of a seismic change in cancer care costs. For years, payers have focused their cost-saving energies on expensive ailments such as musculoskeletal conditions, chronic diseases and cancer. But new predictions indicate that cancer treatment expenses could surge by 34%1 to 50%,2 eclipsing the costs of many other health concerns and necessitating additional attention.
By one estimate, overall oncology spend is likely to exceed $246 billion per year by 2030. This is up from the roughly $200 billion the U.S. currently spends on annual cancer care.3 Not only does this potential rise have important implications for payers, but it also threatens to make quality oncology care an unaffordable commodity for many plan members.
The reasons for these projected changes are many and varied, as are the ways that payers can prepare for the shifts to come. Here, we outline the industry factors that are driving this uptick and the concrete steps that payers can take to safeguard against prohibitive oncology spend.
Why oncology costs are expected to rise
One of the biggest drivers of increasing cancer spend is innovation. Waves of new treatments are being discovered, approved and put into use with unprecedented frequency. As one Mayo Clinic oncologist put it, “Ten years ago it was 10 a year; today the pace is one a week.”4 But this flurry of medical advancements comes at a great financial cost.
Why are these treatments so expensive? Many are specific to particular forms or sites of cancer, or to certain populations who suffer from them. As payers well know, drugs that treat highly specific conditions tend to be costly. While targeted cancer therapies and immunotherapies help strengthen the efficacy of oncologic treatment, they have the potential to leave behind patients who simply cannot afford them.5 One estimate indicates that a full course of treatment with the latest oncology drugs could cost up to $250,000,6 dwarfing the U.S. median household income of $70,784.7
But new treatment advancements aren’t the only factor in the explosion of oncology spending. As the U.S. population continues to age, cancer rates are expected to increase. Since 2000, the national median age has jumped by more than 3 years.8 And as people age, their cancer risk climbs. In fact, increased age is the most important cancer risk factor. The chance of a cancer diagnosis climbs from 350 in 100,000 at age 45–49 to 1,000 in 100,000 after age 60.9 The bottom line? Americans are getting older — and as a result, their cancer prevalence will also increase.
Finally, the vast majority of cancer treatments are provided via the standard fee-for-service model, meaning there is little incentive to keep costs to a minimum. And since most cancer drugs are reimbursed on a buy-and-bill basis, with providers administering pre-purchased medications to patients on site, there's a strong incentive to use them. That’s a worrisome combination.
What payers can do to soften the blow
It should come as little surprise that the name of the game is prevention. To thwart the looming cancer costs surge, payers need to strongly encourage members to:
- Maintain their schedule of annual screenings
- Keep a close eye on any potential symptoms or causes for concern
- Mitigate any and all cancer risk factors within their control
After all, as many as 42% of all cancer cases — and 45% of all cancer deaths — are caused by risk factors that can be potentially modified by changes in diet, exercise and medication.10 Bolstering your messaging to members about the importance of their habits and behaviors can go a long way toward steering them in the right direction. Providing members with up-to-date information across multiple channels to address common barriers and concerns around screenings can also help. As an example, the top reason that people don’t get colon cancer screenings is because they’ve heard the test is difficult or painful.11
But early detection is critical for payers, as well. By leveraging every form of data available — from electronic medical records to claim information and lab results — payers have a chance to guide members to appropriate forms of testing or treatment before their cancer develops any further, reducing the potential for costly late-stage treatment protocols. Research makes it abundantly clear that the later the oncology diagnosis, the more costly the treatment will be.12
Another important strategy for payers: offering managed care programs that assist with cancer treatment and aftercare. These programs provide an array of benefits, chief among them assistance in ensuring maximum value in every treatment avenue. Through a strategic system of utilization management metrics, high-touch care management services and expert payment integrity and claims review processes, managed care programs attack unnecessary spending from all sides, all while providing superior oncology care.
The best of these programs embraces evidence-based approaches that buck the status quo when needed to deliver the best quality care and the most favorable outcomes. A decade’s worth of data makes it abundantly clear that managed care works — particularly when it comes to oncology. Payers that bring managed care programs into their portfolio of offerings will likely see fewer ED visits, fewer inpatient admissions and readmissions, and an overall decrease in gross cancer spend.13
In addition, shifting to a value-based care (VBC) model of health care reimbursement is a crucial step in reducing oncology spend. This model rewards health care providers for the results they deliver — not the volume of procedures they bill for. Currently, unnecessary procedures and overtreatment account for $210 billion in excess medical spending every year.14 VBC can play a critical role in taking a bite out of that figure, particularly since regulatory bodies are working to limit the scope of prior authorization. All of this makes VBC’s implications for ballooning oncology care promising.
Finally, partnering with Centers of Excellence that specialize in cancer care can be a boon to payers looking to both manage costs and increase favorable patient outcomes. These data-driven, value-focused oncologists and surgeons can provide members with the highest possible standard of care and can be especially valuable for rare and complex cancers.
It’s clear that many of the factors driving the surge in cancer costs are beyond anyone’s control — and many are net positives in the world of cancer treatment. But as the next few years shape up to be some of the costliest on record for oncology care, payers can remain mindful of both their messaging and their methods. While reminding members to stay on track with their preventive care, they can position themselves to deliver the best possible cancer treatments at the greatest possible value.
Learn more about Optum Oncology Care Management Programs for Health Plans.