Cancer Patients Paid $5.6B Out-of-Pocket Cancer Costs in 2018

October 26, 2020 - Cancer patients are paying higher and higher out-of-pocket costs for treatment and, according to the American Cancer Society’s recent report, payer-related costs are the most common contributor to this financial burden.

“As a leading cause of death and disease in the U.S., not only does cancer take an enormous toll on the health of patients and survivors—it also has a tremendous financial impact,” the report began. “With more than 200 different types of cancer, there is no ‘one size fits all’ cancer treatment—and therefore the costs of cancer treatment vary significantly from patient to patient. However, there are several consistent factors that contribute to patients’ overall costs for their care.”

The report listed insurance type, premium, deductible, co-pay, co-insurance, out-of-pocket maximum, in- versus out-of-network costs, and balance and surprise billing as the major overarching causes for patients’ high out-of-pocket costs.

Meanwhile, a treatment plan, geographic location, and treatment setting can all lead to vastly different bills for different cancer patients.

There are also various indirect costs such as transportation, housing, income, cosmetics, and caregiving.

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For example, urban areas have five times the number of oncologists that rural areas do. Patients in rural areas have to arrange and pay for more travel, especially with their one-way commute being on average twice as long as commutes of urban and suburban cancer patients.

“Insurance coverage is critical,” the report found. "In each of the scenarios, patients paid a considerable sum out-of-pocket for their care but would have paid significantly higher amounts if they had not had insurance coverage.”

Patients with employer-sponsored health plans from large businesses saw the lowest out-of-pocket healthcare spending. Their premiums and cost-sharing were also relatively affordable and their out-of-pocket maximum was lower and quicker to fulfill.

Patients with coverage from a small employer, a high deductible health plan, or an individual health insurance market plan faced higher out-of-pocket maximums and deductibles.

Medicare beneficiaries, including Medigap policyholders, pay high premiums but lower co-pays and co-insurance. Beneficiaries who did not have supplemental coverage were at a disadvantage and ended up paying more.

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Patients who had a short-term limited duration health plan deductibles that were nearly twice as high as the deductibles for any other plan type. Additionally, the health plan did not cover many of the expenses, leaving patients to shoulder the entire cost.

Those on any plan who could not cover their treatment costs could go into medical debt.

In a case study, a patient with lymphoma paid out-of-pocket healthcare costs from $6,446 in a large employer-sponsored health plan to $12,931 in a health plan on the individual health insurance market. These were all Affordable Care Act (ACA)-compliant plans.

In contrast, in a short-term limited duration plan that does not have to conform to ACA standards, the patient paid $51,660 out-of-pocket.

“Cancer patients are super-utilizers of their insurance benefits, and each patient in the scenarios who had an out-of-pocket limit reached their maximum quickly,” the report noted. “Once the maximum is reached, patients do not have to pay cost sharing for in-network, covered services. This is an important protection for many privately-insured patients.”

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The report broke down the cancer costs, recognizing that the type of cancer and treatment plan largely are driving cost factors.

For four of the six cancer case studies, drug costs took up over 60 percent of the treatment costs. For three of the case studies, imaging tests contributed from a little under 10 percent to around 20 percent of the costs.

In the colorectal case study, hospital costs and surgery took up about 90 percent of the patient’s spending; meanwhile, for pancreatic cancer, these costs contributed about 50 percent of the out-of-pocket treatment spending.

The study confirmed that using biosimilars can help decrease drug spending in certain conditions. In breast cancer over the course of two years, brand drug patient costs were over $74,000, but with biosimilars this spending dropped 21 percent.

Other unexpected costs that may contribute to cancer spending include preventive screenings.

“Almost all insurance plans are required to cover certain preventive and cancer screening services with no cost sharing for patients,” the report stated. “However, some patients encounter loopholes in these requirements that leave them with an unexpected bill for a service they thought would be free.”

The report included a few policy changes that can help make healthcare spending more manageable for cancer patients.

“The single most important thing policymakers can do to help cancer patients afford the costs of cancer is to ensure that everyone has access to affordable comprehensive health insurance,” the researchers wrote.

The report unearthed that cancer patients with insurance are twice as likely as the uninsured to have preventive care services that detect the cancer early, thereby decreasing costs. The opposite is also true that the uninsured have a lower survival rate because they do not get screened and by the time the cancer is discovered, it is too late.

The second policy recommendation builds off of the first by urging better preventive care services and screening processes. Precision medicine and care coordination are effective tools for catching and treating cancer early on in its development. Also, many payers have started sending in-home testing kits to members at risk of colorectal cancer.

Policymakers must also focus on making health care accessible by making it affordable—specifically by focusing on lower deductibles and taking a stand against non-comprehensive health plans.

The report also recommended supporting patients better financially through engaging providers in programs like the oncology care model and requiring price transparency on procedural costs.