Cancer Care and Your Employee Health Costs

The average cost of a course of branded cancer drugs has doubled over the past decade, reaching $10,000. That’s per month, not year.

The cost of cancer drugs has gotten so high that even physicians are starting to notice. The American Society of Clinical Oncology discussed the cost versus benefit of various cancer drugs at its recent annual meeting. According to a report by Bloomberg News Service, Clifford A. Hudis, president of the society, noted there is often a “lack of a direct linear association between their price and their benefits.” He said the society wants “to bring all parties in a room and start to understand what we need to do to have a more rational system” and will be focusing studies more on this area.

But when it comes to the cost of treating an employee with cancer, your costs don’t end with high-priced cancer drugs. “Employees with cancer have an average of approximately four other conditions that complicate their care management strategies,” says the Integrated Benefits Institute (IBI). “In terms of their impact on productivity, the most serious co-morbid conditions are: depression (16% of employees with cancer), chronic fatigue (22%), obesity (19%), anxiety (14%), chronic back or neck pain (23%), high cholesterol (30%) and hypertension (24%).”

Further, the Council for Disability Awareness says cancer accounted for 14.6 percent of all new disability claims in 2012, second only to musculoskeletal/connective disorders.

Cancer also has many indirect costs. The recent Medical Costs and Productivity Losses of Cancer Survivors* study estimated that about 30 percent of employees undergoing cancer treatment never return to work. Productivity also suffers. A University of Arizona study found that cancer is responsible for approximately $7.5 billion in lost productivity every year.

So what can employers do to control their cancer-related employee health costs?

  1. Look at the cost/value payoff of cancer drugs. Some high-cost drugs can more than pay for themselves if they are effective in helping patients avoid surgery or complications and return to work. Employers can work with their insurers to ensure drug formularies, or lists of covered drugs, include drugs that have proved effective for specific conditions. Plans should also require approval for reimbursement of drugs that are experimental or have less of a track record for a particular condition.
  2. Evaluate your prescription drug benefit structure. The insurance exchanges created by the Affordable Care Act could put some downward pressure on drug pricing. Most managed care plans require insureds to pay a flat copayment for each prescription filled. However, many exchange health plans require employees to pay a percentage of the cost of high-priced drugs, until they reach their out-of-pocket maximum. (In 2014, that’s $6,350 for an individual and $12,700 for a family). Adopting a similar structure for your health plan could help make employees-and their physicians-more aware of their prescription drug spending.
  3. Consider case management. Treating cancer often involves surgery, radiation and complicated drug regimens. Patients are often exhausted, which makes compliance harder. A case management program in which a nurse counselor works with the patient’s physicians and the patient can improve outcomes by helping cancer patients better understand their treatment options and better comply with their treatment plan.
  4. Encourage prevention. Under the Affordable Care Act, health plans must provide certain preventive services, including cancer screenings, with no out-of-pocket costs to participants. Employers can encourage employees to take advantage of these services, which can often catch cancers in their earlier, more treatable, stages.
  5. Encourage wellness. The National Cancer Institute lists tobacco use, alcohol and poor diet, lack of physical activity or being overweight as some of the most common risk factors for cancer. Targeted wellness programs can encourage and help employees modify their behaviors to reduce lifestyle risks.
  6. Offer appropriate coverage. Employees dealing with cancer incur many expenses, even if they have a good health insurance plan. A recent study of patients at Duke Cancer Institute and three affiliated rural clinics found patients had median out-of-pocket costs of nearly $600 a month for their treatment.

Cancer patients can also have expenses that aren’t limited to medical bills. They might miss work, require additional help around the house and have extra transportation expense. Disability insurance can replace a portion of an employee’s income when he or she cannot work due to a covered illness. And cancer or critical illness insurance can help employees with some of their other expenses. These policies pay benefits directly to insureds when they receive a diagnosis of a covered illness. This means insureds can use their benefits for whatever they need-whether covering deductibles and copayments, paying for transportation expenses or covering the income of a spouse who loses work to provide care.

Employers can provide both disability and critical illness insurance on an employer-paid or entirely employee-paid (voluntary) basis.

*Source: U.S. Centers for Disease Control, Morbidity and Mortality Weekly Report, June 13, 2014.

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