Trying a New Answer to Cancer Costs

As cancer care costs continue to rise, UnitedHealth Group is looking for answers. It estimates that cancer drugs account for  35 to 40 percent of its spending on cancer treatment, and is testing a new way to compensate doctors for cancer care.

The Problem

• Spending on cancer treatment is rising 15 to 18 percent annually, nearly double the rate of general health care costs.

• Drugs account for an estimated 65 percent of an oncologist's income.

• Customarily, doctors purchase cancer drugs, infuse them in their offices and then bill insurers for their cost plus a 15 percent profit margin.

How can cancer costs be reduced while ensuring that patients receive proper treatment and doctors are  compensated fairly?

Their Answer is being tested in five cancer clinics for breast, colon and lung cancer. It works like this:

• Doctors decide in advance which drugs they would like to use in the patient's treatment plan, from generic chemotherapeutic agents to more costly branded drugs.

• UnitedHealth pays the doctors for whatever choice they make, but without the customary markup. Instead, the doctors receive a set fee that includes the profit they would have made, plus costs for managing patient care.

• If the doctors use a drug not in the treatment plan, United Health Group covers the cost of the drug, but will not increase the separate payment covering markup and patient management.

• In addition, treatment data would  be shared among participating clinics to identify the most effective methods.


Some groups argue that the plan could provide an incentive for doctors to withhold treatment from patients, especially if the separate payment doesn't cover enough costs.

I believe separating the ability to earn additional profit from prescribing more expensive drugs is a step in the right direction. We need to trust physicians to decide which drugs they prefer to use, cover the cost of those drugs and to provide them with collective data to support future decisions — without rewarding more expensive treatment options.

The outcome from the test program remains to be seen. In the meantime, UnitedHealth Group is to be applauded for seeking answers that respect physicians' judgment and support their financial success.

— Tom DeSanto

Source: Wall Street Journal, October 20, 2010. Graphic: Google Images

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