MILLIMAN RESEARCH REPORT The cost burden of blood cancer care A longitudinal analysis of commercially insured patients diagnosed with blood cancer October 2018 Gabriela Dieguez, FSA, MAAA Christine Ferro, CHFP David Rotter, PhD Commissioned by The Leukemia & Lymphoma Society Table of Contents EXECUTIVE SUMMARY ............................................................................................................................................... 2 BACKGROUND ............................................................................................................................................................. 1 FINDINGS ...................................................................................................................................................................... 2 PREVALENCE AND COST OF BLOOD CANCER BY AGE GROUP ....................................................................... 2 INCIDENCE OF BLOOD CANCER ........................................................................................................................... 4 BLOOD CANCER CARE SPENDING FOLLOWING INITIAL DIAGNOSIS ............................................................... 5 PATIENT OUT-OF-POCKET COSTS FOLLOWING A BLOOD CANCER DIAGNOSIS ........................................... 9 The impact of insurance plan design on patient OOP costs .......................................................................... 10 CONSIDERATIONS FOR PAYERS ............................................................................................................................ 15 LIMITATIONS .............................................................................................................................................................. 17 SOURCES AND METHODOLOGY ............................................................................................................................. 18 DATA ....................................................................................................................................................................... 18 Truven Health Marketscan® commercial claims databases .......................................................................... 18 METHODOLOGY .................................................................................................................................................... 18 Identification of 2016 prevalent blood cancer population ............................................................................... 18 Identification of 2014 incident blood cancer population ................................................................................. 19 Service category assignment ......................................................................................................................... 20 Empirical identification of high-deductible plans ............................................................................................ 21 APPENDIX A: SERVICE CATEGORY DESCRIPTIONS ............................................................................................ 23 APPENDIX B: MONTHLY ALLOWED SPENDING BY BLOOD CANCER................................................................. 24 APPENDIX C: MONTHLY PATIENT OUT-OF-POCKET COSTS BY BLOOD CANCER ........................................... 26 APPENDIX D: ICD-9 AND ICD-10 BLOOD CANCER DIAGNOSIS CODES .............................................................. 29 APPENDIX E: SUPPORTING CODE LISTS ............................................................................................................... 31 1 Executive Summary A blood cancer diagnosis means high spending, both by payers and patients. These costs are driven by many factors across the healthcare system including service utilization, insurance coverage, and the use of in-network or out-of-network providers. This study offers metrics on the cost of blood cancer care that we hope will inform payers, providers, patients, patient advocates and policymakers. This study identifies the total healthcare allowed spending and patient out-of-pocket (OOP) costs from the year before a diagnosis of blood cancer through the three years after diagnosis. For this study, allowed spending is defined as amounts paid by payers and patients combined, non-inclusive of spending outside the realm of insurance coverage; most of the cost burden described by allowed spending falls on payers. We believe this is the first publication to present such information. We examine five blood cancer categories: acute leukemia, chronic leukemia, lymphoma, multiple myeloma, and bone marrow disorders (including precursors for leukemia like myelodysplastic syndrome, or MDS).Patients with leukemia face notably different treatment courses with different health system cost drivers depending on their specific diagnosis. For this reason, we chose to analyze acute leukemia and chronic leukemia as separate categories in this study. We identify newly diagnosed patients covered by commercial insurance and examine the composition of spending by and on behalf of these patients. While we isolate services directly related to cancer treatment, we also summarize all other health services to present a comprehensive view of how these patients interact with the current healthcare system. Using real-world claims data of people with commercial insurance, we performed a longitudinal study of 2,332 blood cancer patients with an initial diagnosis in 2014. Our analysis shows that: Blood cancer care is very expensive to the healthcare system: The average annual allowed spending for treating blood cancer is $156,000 per patient in the first year following diagnosis. The high spending persists beyond the first year. o The magnitude of spending varies widely with cancer type: Over the three years following diagnosis, patients had a cumulative average allowed spending that ranged from $200,000 for chronic leukemia to over $800,000 for acute leukemia. By comparison, the average cumulative cost in the 36 months from diagnosis for lung cancer was $250,000 and slightly less than $150,000 for colorectal cancer.1 o Allowed spending does not return to pre-diagnosis levels. The average allowed spending in 2014 per blood cancer patient pre-diagnosis was $1,600 per month or lower. This average, although higher than the average commercial member allowed spending ($343 per member per month), was low compared to post- diagnosis levels.1 Even in the third year after diagnosis, blood cancer patients had average allowed spending between $3,500 and $4,500 per month, well above their pre-cancer levels. Services that drive total allowed spending differ from those that drive patient OOP costs: Services billed by inpatient hospitals contributed the most to total allowed spending in the month of diagnosis but other service types contribute more as time goes on. 2 o Among the treatment therapies studied, anticancer drug therapy accounted for one-third of all allowed spending. Stem cell transplants contributed as much as a quarter of allowed spending across the total blood cancer patient population, predominantly in the fourth through sixteenth months (months 3 to 15 in our study) following diagnosis. o Patient OOP costs, however, were mostly driven by professional services (35% of all OOP costs in first 12 months following diagnosis), and to a lesser degree by services rendered in outpatient hospital settings (25% of all OOP costs in first 12 months). Professional services also had the highest portion of out-of-network service costs. Very high spending occurs immediately after diagnosis: In the month of diagnosis, average monthly allowed spending per patient ranged from about $12,000 for chronic leukemia to about $117,000. Patient OOP costs are high and are impacted by plan type and month of diagnosis: Patient OOP costs for blood cancer care average thousands of dollars per year and are strongly influenced by the patient’s insurance cost sharing. Patient OOP costs were highest in the month of diagnosis. o Plan type: Patients enrolled in high-deductible plans spent on average almost twice as much in patient OOP costs as those enrolled in traditional plans. The greatest differences between high-deductible and traditional plan patient OOP costs were found for services rendered by professional and outpatient hospital services. o Month of diagnosis: Patient OOP costs for blood cancer care spiked at diagnosis and then again at the beginning of each calendar year. This is due to the deductible and out-of-pocket limit that must be met each annual benefit cycle, which are typically calendar year cycles. This report was commissioned by the Leukemia & Lymphoma Society (LLS), which received support for this work from Pfizer, Inc., Genentech, Inc., and Amgen, Inc. The findings and conclusions reflect the opinion of the authors; Milliman does not endorse any policy. If this report is reproduced, we ask that it be reproduced in its entirety, as pieces taken out of context can be misleading. As with any economic or actuarial analysis, it is not possible to capture all factors that may be significant. We present national average data based on the 2013-2016 Truven Health MarketScan® commercial databases, which is representative of large group employer- sponsored insurance. These plans typically provide more generous benefits than small group and individual insurance. Therefore, these findings should be interpreted carefully before they are applied to any particular situation. Findings for particular populations