Provider Altruism and Discarded Anticancer Drugs
Abstract
The large literature on cost-sharing in health insurance focuses on the consumption decisions of patients (e.g., Manning et al., 1987; Chandra et al., 2024) . However, medical providers influence consumption decisions, and can therefore either reduce patient exposure to cost-sharing or exacerbate it.We use Medicare claims data to study the consequences of high out-of-pocket (OOP) costs on provider behavior in the context of infused (Part B) cancer drugs. This setting is of interest for three reasons. First, prices are often in excess of $10,000 per infusion. Second, Medicare reimburses providers per unit of drug used and patients without additional coverage pay 20% of these costs OOP. Third, these drugs are typically dosed variably (e.g., per kg of body weight), and packaged in large single use vials. Most infusions use a small number of vials and the excess in the last vial is thrown away.
Since reimbursement is for the full vial, including discarded portion (Bach et al., 2016), this creates a financial incentive for providers to fraudulently report higher doses. However, standard models of treatment choice assume that providers are altruistic (e.g., Arrow, 1963; Chen and Lakdawalla, 2019). Providers may lower patient OOP costs by reducing doses to avoid an additional vial. Professional societies recommend this and state that slightly lower doses will not affect drug efficacy (https://ascopubs.org/doi/10.1200/JOP.2017.025411).
We quantify dose manipulation using bunching methods (Kleven, 2016). Preliminary results focus on roughly 2 million claims for 14 high cost drugs and demonstrate that providers engage in altruistic dose manipulation---lowering doses to avoid substantial amounts of discarded drug. Whenever a provider manipulates a dose down across a vial-size cutoff they forgo revenue equal to the cost of a vial ($500-$10,000 in our current sample) and patient OOP costs are lowered by up to 20% of that amount. Bunching estimates imply