Provider Altruism and Discarded Cancer Drugs

• In Event: Health Care Spending and Costs

Abstract

This paper uses administrative Medicare claims data to study the consequences of very high out-of-pocket (OOP) costs on provider behavior and patient outcomes in the context of infused anticancer drugs (provided via IV). These drugs are expensive, dosed variably by body-size, and provided in large single-use vials. Since Medicare reimburses providers for the entire vial, including the discarded amount (Bach 2016), this creates an opportunity and incentive for providers to influence patient costs. On the one hand, providers may ``overbill" by manipulating doses up by small amounts to ensure the use of an additional vial. On the other hand, providers are also concerned with what treatment is best for their patients' health (e.g., Arrow 1963) and recent empirical work has suggested that this altruism extends to the financial consequences of medical care (Chen and Lakdawalla 2019). Therefore, providers may give slightly lower than recommended doses to avoid additional vials and lower patient OOP costs. We quantify dose manipulation using bunching methods and find that some providers engage in ``altruistic'' dose manipulation---providing slightly lower doses than a patients' body-size would typically require in order to avoid substantial amounts of discarded drug. Providers engaging in this behavior are directly sacrificing thousands of dollars of revenue per manipulated dose in order to lower costs for patients and/or Medicare itself. In future versions of this work we will characterize providers engaging in dose manipulation, and consider the implications of this behavior for the literature on physician altruism.

Author

• Geoffrey Schnorr, gcschnorr@gmail.com