Highmark Lowers Hospital-Infusion Chemotherapy Rates

Hospitals and medical centers that provide chemotherapy infusion services to their cancer patients on an outpatient basis generally get paid more than oncologists and hematologists who provide the same services in a private office. This discrepancy has led one private insurer in western Pennsylvania to re-negotiate the drug acquisition prices it pays to hospitals that provide ambulatory chemotherapy infusion services.

Donald R. Fischer, MD, senior vice president of health affairs and chief medical officer at Highmark Health Plan said, “We are no longer going to pay the differential price for the drug itself based on the drug delivery setting.” He emphasized that there would be no change in what Highmark would pay for administrative, professional, or procedure fees. “The price of the drug will be standardized across our network.”

In a news release, Highmark announced that it will use “more rational payments for cancer by eliminating markups to the cost of certain oncology-related services, including infusion chemotherapy drugs.” The new payment rates will go into effect on April 1.

The Centers for Medicare & Medicaid Services (CMS) traditionally provides higher reimbursement rates to hospitals than to physicians in private practice. Private insurers tend to follow CMS’s lead, so Highmark’s move is an interesting development. What effect one insurer might have on runaway cancer costs remains to be seen, however.

“All we are tackling here is the price of the drug. And that’s still highly significant,” said Fischer. William Winkenwerder Jr, MD, president and CEO of Highmark Health said, "We estimate that this billing change will save our community more than an estimated $200 million annually, with no impact to the quality of cancer care."

The move comes in response to strong objections raised by its members, public officials, and the community at-large to the costly billing practices for oncology services that have significantly increased the cost of health care.

“We’ve received an incredible amount of support from the community saying, ‘It’s about time,’” said Fischer.