Variation in markups on outpatient oncology services in the United States.

OBJECTIVES: Price markups are a major cause of healthcare inflation and financial harm to patients, especially those who are self-paying or covered by commercial insurance.

STUDY DESIGN: Retrospective analysis of publicly-available information on Medicare physician payments, representing 100% of Part B services provided to fee-for-service beneficiaries during calendar year 2014.

METHODS: Outcomes were markup ratios for oncology services, defined as the ratio of submitted charges to the amount reimbursed by Medicare. For example, the overall cost-to-charge ratio for all Medicare-reimbursed services in 2013 was 3.4, or a 240% charge markup.

RESULTS: Our analysis included oncology services provided by 3248 hospitals in all 50 states. There was significant variation in markup ratios by hospital across oncology specialty: radiology (median = 3.7; interquartile range [IQR], 3.1-4.5), hematology/oncology (median = 2.3; IQR, 1.8-2.9), medical oncology (median = 2.4; IQR, 1.8-3.0), pathology (median = 4.1; IQR 3.1-5.1), and radiation oncology (median = 3.6; IQR, 2.9-4.5). Higher markups were associated with for-profit status for medical oncology services (coefficient, 0.29; 95% CI, 0.12-0.45) and prestige status for radiology (0.53; 95% CI, 0.15-0.92) and pathology (0.65; 95% CI, 0.20-1.09) services.

CONCLUSIONS: High markups exist for oncology services, and further legislation is needed to protect patients from highly variable pricing and to address disparities in access to high-quality cancer care.