Can Economic Factors Influence the Choice of Prostate Cancer Treatment?

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New medical technology has the potential to improve health outcomes for patients, sometimes at costs lower than that of existing technology, sometimes at higher cost.   In the case of prostate cancer, a potentially serious condition that will be newly diagnosed in more than 238,000 men in the United States in 2013, proton beam therapy represents an innovation in treatment.  Unlike traditional radiation therapy, proton beam therapy more precisely targets cancer cells while leaving normal cells unharmed.   Recent research, however, suggests that this new technology may be no more effective than traditional radiation therapy, even though it costs about $30,000 more. As the Los Angeles Times reported in August, this has led one private insurer, Blue Shield of California, to stop covering proton beam therapy for early-stage prostate cancer.

Commenting on the Blue Shield of California decision in a post on The Incidental Economist blog, former HCFO grantee and health economist Austin Frakt noted that a decision by a health insurer to stop paying for a service after having previously covered it is unusual.  However, this decision may have little impact on overall spending for prostate cancer, since most patients diagnosed with the disease are covered by Medicare,*  and federal law requires Medicare to cover all services that are effective and medically necessary with no discretion to pay only for those that are most cost-effective.

Although Medicare may have a limited capacity to use coverage policy influence the type of prostrate cancer treatment a patient gets, other factors, including payment rates and the competitive structure of a given geographic area’s health care marketplace could possibly affect treatment choice.   An ongoing HCFO-funded project being undertaken by Jack Hadley, Ph.D., at George Mason University, is investigating these possibilities.  Using SEER data linked with Medicare claims, Dr. Hadley is examining if the choice and cost of treatment for beneficiaries newly diagnosed with prostate cancer are affected by (1) Medicare payment rates for each treatment option, (2) the extent of competition among specialists, (3) the ownership type of the treatment facility, and (4) the introduction of new treatment options, in particular proton beam therapy, in local markets.   In addition to informing discussions of the role payment and other Medicare policies in influence the choice of treatment options, the study will provide an opportunity to test the application of Machine Learning methodology, a type of artificial intelligence, to health services research.  

*According to the Surveillance, Epidemiology, and End Results (SEER) cancer registry, just over 57 percent of new cases are diagnosed at age 65 and older.  http://seer.cancer.gov/statfacts/html/prost.html