Data and Study Sample Distribution of Various Physician-Administered This study makes use of the Ou 2019 I tpati BM® en t Ma Drr ku etg scs, an ® bC yom Si m te erco iaf l C Ser laimv s iand En ce counters Database September 9, 2021, #405 (CCAE). The CCAE database contains member enrollment information as well as adjudicated inpatient and 70% outpatient medical and pharmacy claims. We constructed an analytical dataset of adults (ages 18–64) who were continuously enrolled in employment-based health plans in 2019. Members in capitated plans were 58% 60% excluded. A total of 10.8 million individuals met these criteria. Shifting From Hospital Outpatient Departments to 50% Physician Offices Equates to Significant Cost Reductions Conclusion 40% There are a number of actions these third-party payers can take: 34% Employers are continually seeking to manage health care costs as part of overall expense oversight efforts. Accor • ding They to r ca ec n exe ent res rt ea prr ec ss h f urre on om the E hospi m ta plls oye to sh e Bene ift frf oim t R d eise sca ount rch I ed ns cha titur tge e, on con e w tra ay t cts ba o ds o t ed on a his m im ght ul be tipl te o o ffo cus 30% on the use Me of di ca horspi e tt o so al ou mte o pattihe enrt p dr epa ospe rtm cten ive c ts (aH se O rPD ates) . H vs. owphy evesi r, ciinc an rea ofsi fing ces cons (POol s)i f da ort ip ohys n of i hea cianl-tad h ca mirn e p istrer ov ed ide rs outpatient m ake drug s i s ( t ha PA rde OD r f sor ). employers and insurers to exert any kind of pricing pressure on hospitals. 20% • In the absence of such market power, employers and insurers can attempt to engage pa 9% tients through 10% increased price transparency. However, price transparency by itself has been found to be insufficient in Physician-Administered Outpatient Drugs (PAODs) reducing hospital prices unless combined with plan design changes intended to steer patients to less costly 0% sites of treatment. Furthermore, recent public policy efforts to address pricing transparency found that 34 An increasing number of medications are being developed as either injectables or intravenous drugs. Hospital Outpatient Departments Physician Offices Other percent of hospitals have not posted usable pricing data and another 12 percent posted data that fell well Physicians often administer these medications; thus, they are largely paid for via the medical benefit. A 1 short of the requirements. Source: Authors’ analysis of IBM MarketScan administrative enrollment and claims subset of these physician-administered outpatient drugs (PAODs), known as specialty medications, provide data. a highly sophisticated treatment, generally when there are few or no other treatment options available. Some • Employers and insurers could move patients from HOPDs to other sites of treatment by removing the of the benefits of specialty medications include the reduction of the number relapses, prevention of HOPDs from their network. Such an arrangement is most common in staff-model health maintenance disability progression; symptom management; maintenance and/or improvement of quality of life; and, organizations (HMOs) but can be applied more generally to any network plan. Providers could respond by sometimes, disease remission or cures. These specialty medications have piqued the attention of employers, lowering their prices so that they may return into the network. This strategy has its limitations as well. It more so than PAODs overall, because of their relatively high costs. may not work well in areas with limited provider choices or in areas where powerful hospital systems Over the full sample of PAODs, aggregate savings would be $14.1 billion each year, or $110.03 per member, per limit payers’ ability to exclude certain high-cost provider locations from their network. year, for all PAODs if price differentials between HOPDs and POs were eliminated. In other words, employers In evaluating prices for the top 72 PAODs, EBRI finds an annual median price differential — or markup — of could cut spending by $14.1 billion by shifting patients away from more costly HOPD settings or by negotiating Ultimately, employers and workers bear the brunt of cost differences when HOPDs perform services that can be more than $5,000 for PAODs provided within HOPDs vs. POs. This markup reaches as much as $78,700 for one site-neutral pricing for specialty medications. This represents 1.5 percent of total health care spending on workers provided in less costly POs. specific oncology injection. Together, these 72 medications account for nearly one-half of all claims and nearly and their families. three-quarters of all spending on PAODs paid via the medical benefit. About EBRI: The Employee Benefit Research Institute is a private, nonpartisan, nonprofit research institute based in Washington, DC, that focuses on health, savings, retirement, and economic security issues. EBRI does The average unit price differential of the PAODs was 200 percent. In other words, on average, plan payments to not lobby and does not take policy positions. The work of EBRI is made possible by funding from its members HOPDs were triple what plan payments were to POs for the same unit of medication. The median unit price and sponsors, which include a broad range of public, private, for-profit and nonprofit organizations. For more differential was 100 percent, or double for HOPDs vs. POs. information go to www.ebri.org or connect with us on Twitter or LinkedIn. Estimated Savings This is important because just over one-half of PAODs are administered in HOPDs, while one-third are Top 72 Physician-Administered Outpatient Drugs (PAODs) $10.3 billion A Thank You To Members: This study was conducted through the EBRI Center for Research on Health administered in a PO and 9 percent are received in other settings, such as a patient's home. If POs replaced $14.1 billion Benefits Innovation (EBRI CRHBI), with the funding support of the following organizations: Aon, Blue Cross All Physician-Administered Outpatient Drugs HOPDs, savings would be $80.21 per member, per year, for the 72 drugs examined. In the aggregate, employers Blue Shield Association, ICUBA, JP Morgan Chase, Pfizer, and PhRMA. and workers would collectively save $10.3 billion annually if price differentials between HOPDs and POs were Potential Savings From HOPD Markup of 72 PAODs (per eliminated for the 72 PAODs examined. member, per year) $80.21 1.1% Endnotes Percent of Aggregate Spending Porential Savings From HOPD Markup of All PAODs (per 1 See https://www.wsj.com/articles/methodology-how-the-wsj-analyzed-hospital-pricing-data-11625583571. member, per year) $110.03 1.5% Percent of Aggregate Spending ### EBRI’s on Twitter! @EBRI or http://twitter.com/EBRI EBRI blog: https://ebriorg.wordpress.com/ E EB BR RI I on on T Twitt witte er r: : @ @E EB BR RI I o or r htt http:/ p://t /twit witter ter..c com/ om/E EB BR RI I B Blog: log: htt https ps:/ ://ebr /ebrior iorg. g.wor wordp dpr re es ss s..c com/ om/ © 2021, Employee Benefit Re search Institute, 901 D St. SW , Suite 802, Was hington, DC 20024, 202/659-0670 www.ebr2 3 i.o rg