DURHAM, N.C. -- Insurance companies typically should pay for expensive cancer therapies in children because the vast majority of treatments extend children's lives for 30 to 50 years, more than justifying the high initial cost, says a Duke Comprehensive Cancer Center researcher.
His study of patients in a large, comprehensive cancer center in Indianapolis shows that initial hospital treatment costs can top $75,000 per child. Yet the average cost per year of life saved is just $2,700, assuming 70 percent of children live for 50 years. [Life-span data compiled by an NCI-sponsored program called SEER (Surveillance, Epidemiology, and End Results Program).]
The problem is that insurers have little access to the types of data that would justify spending large amounts on curative cancer therapies, said Philip Breitfeld, M.D., associate professor of pediatrics in hematology-oncology at Duke. In fact, little such data exist anywhere on the actual costs of childhood cancers and other rare diseases, he added.
"Cancer looks costly, and it is on a short-term basis," he said. "But these high up-front costs skew the approval process against paying for expensive procedures that are medically necessary and ultimately cost-effective," said Breitfeld, who presents his data at the annual American Society of Clinical Oncologists meeting May 18 in Orlando. The study was funded by the National Library of Medicine and the Riley Memorial Association.
"If we were to compare these childhood treatments to almost any adult procedure, we would be able to show that childhood cancer care is extremely cost effective," he added.
Realizing the dearth of information, Breitfeld decided to study hospital use and factors that would predict higher costs of inpatient care in children with cancer. The study was conducted at Indiana University's Riley Hospital, the state's only comprehensive cancer center that draws children from throughout the state, making it representative of childhood cancer patients nationwide. At the time of the study, Breitfeld was director of pediatric hematology-oncology there.
Using the data he gathered, Breitfeld estimated that hospital costs for treating 10,000 children in the United States with cancer – the approximate yearly incidence – were about $800 million in the first three years following diagnosis.
This nearly $1 billion price tag could serve as a red flag to insurance companies, which base their medical decisions largely on a procedure's up-front costs instead of its long-term benefits, said Breitfeld.
"There is considerable interest in reducing health care costs, but few of us are analyzing data to determine what is an unnecessary expense versus what is a very large, but justifiable, expense. "
Large companies start the chain of events by pressuring medical insurers to keep down their costs per employee covered, added Breitfeld. Companies won't select a high-priced insurer, so insurers reduce their costs in order to obtain lucrative contracts with companies. Such pressure, in turn, causes insurers to deny payment for many high-priced procedures, in part because they lack data to justify the expense.
By conducting large-scale studies on health care utilization and costs, Breitfeld hopes to build a large body of data that will help insurers make informed decisions on when and how much to pay. Such data exist on common adult conditions, like heart disease and diabetes, but insurers know very little about how much money to allot, for example, to treat a rare immune disorder that may be expensive yet highly curable.
"The biggest push is a short-term economic one, not a medically based and analytic process," said Breitfeld. "The goal of our study is to stimulate more thoughtful decisions about when to question health care resource allocation decisions and when to accept them as valid."
Currently, he said, the decision-making process depends more on the patient's and doctor's ability to advocate for the procedure than it does the type of procedure itself. At larger, academic medical centers where many high-cost procedures are performed, there are specially trained patient advocates who lobby on behalf of patients in need of costly procedures.
If hospitals and insurers all had access to the same valid statistics, the negotiation process would become more standard and uniform, and less subject to the pressures of short-term economics, said Breitfeld.
His next step is to analyze the outpatient data he gathered in the same study, to determine who is utilizing these services and what factors predict higher treatment costs. In addition, he hopes to directly measure the national burden of these costs and determine a reasonable cost per procedure or disease.