UHG: $4B in Site of Service Savings

Susan Ladika

Health insurers are taking a lot of heat these days for this country’s extraordinarily high health care costs and the many ways those costs are burdening American families. A report by UnitedHealth Group last month attempts to change the subject to specialty drugs and how site-of-service change could cut costs by $4 billion a year. 

Hospitals charge more for physician-­administered specialty drugs, whether it is done at a hospital or a hospital-owned physician’s office. For years, insurers have said the same drugs could be given by physicians not affiliated with a pricey hospital or even at home by the patient with little if any risk of harm to the patient and difference-making cost savings.

UHG’s site-of-service math, savings per patient year

The insurer extrapolated from its own experience to calculate possible annual savings if specialty drug administration were moved from hospital-owned facilities to independent physician offices and patient homes.

Source: UnitedHealth Group

United put some numbers to that assertion by extrapolating its own per capita costs in 2018 and other factors to the entire privately insured population. 

The company’s number crunchers also baked in an assumption that half of hospital-based utilization could be switched to physician offices or patient homes. The company then set about to compute savings for the privately insured population with conditions that have some of the heftiest specialty drug price tags: multiple sclerosis, immune deficiency, rheumatoid arthritis, inflammatory bowel disease, and cancer chemotherapy. 

United estimates that site-of-service changes for multiple sclerosis could save $37,000 per privately insured patient per year. Its site-of-service math for rheumatoid arthritis put the annual savings at $28,000 and for cancer chemotherapy, $16,000. In relative terms, United figures that changes to site of service would reduce costs by 33% to 52%.

This is not peer-reviewed research. Patients and some provider groups say the switch to independent doctors—and especially to patient homes—is not as easy as insurers make it out to be. On the other hand, anyone who has gotten a bill for a hospital-based service has experienced some degree of sticker shock. Moving care out of the hospital into the community makes sense. 

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