trends in health care inflation & the cost of providing oncology … · 2018-05-18 · yes / no...

Emile Stipp Chairman: IAAHS

Chief Health Actuary: Discovery

Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/

Session Number: TBR10

Trends in health care inflation & the cost of providing oncology treatment in South Africa (and a part of the solution)

Insurer Overview

Oncology Experience

• Drivers of medical inflation • Insurer: impact of high cost cases

• Overall view of oncology in the insurer • Drivers of oncology inflation • High cost drug impact • One part of the solution

Agenda


Insurer Overview

Oncology Experience


• Overall view of oncology in the Insurer • Drivers of oncology inflation • High cost drug impact • One part of the solution


Drivers of medical inflation

-2%

0%

2%

4%

6%

8%

10%

12%

Oncology GP Specialist Allied Health Hospital Chronic and acute medication

Admin fee

3-year average annual increase in expenditure relative to inflation

CPIX

+

CPIX

-

CPIX CPIX

+ 12%

+ 10%

+ 8%

+ 6%

+4%

+ 2%

-2%


Redirecting spend toward areas of highest clinical need: High-cost treatment

Trans-catheter Aortic Valve

Implantation Gleevec

• Alternative to open heart surgery for high risk patients

• 37 cases funded so far

• R321,000-R552,000 per case

• Patients responding well: R355,000 per year for 4-6 years

• Patients not responding well: R710,000 for 18 months


http://www.time.com/time/magazine/0,9263,7601010528,00.html�

Redirecting spend toward areas of highest clinical need: Spend on oncology drugs, 2008-2010

Total cost (2008-2010): Top 10 oncology drugs by cost (Rm)

Gleevec®: Unique claimants and total expenditure

-

20

40

60

80

100

120

0

20

40

60

80

100

120

140

160

180

-

5

10

15

20

25

30

35

40

45

2002 2003 2004 2005 2006 2007 2008 2009 2010

Num

ber o

f uni

que

pati

ents

Am

ount

pai

d (R

m)

Amount paid Number of unique patients


Impact of high cost cases: Funding considerations

Funding ability of 10,000 healthy members:

High Allied

benefit users

Gleevec

treatment

TAVI cases

277 high Allied benefit users for 1 year

234 cancer suffers for 1 year

227 TAVI cases

* Defined as members in Resource Utilisation Band 1 (350,000 lives during 2011)


Drivers of medical inflation

-2%

0%

2%

4%

6%

8%

10%

12%

Oncology GP Specialist Allied Health Hospital Chronic and acute medication

Admin fee

3-year average annual increase in expenditure relative to inflation

CPIX

+

CPIX

-

CPIX CPIX

+ 12%

+ 10%

+ 8%

+ 6%

+4%

+ 2%

-2%


Oncology Experience

Insurer Overview


• Overall view of oncology in the Insurer • Drivers of oncology inflation • High cost drug impact


Overall oncology paid from 2008 to 2011

R474,634,079.70 R546,667,030.80

R802,361,287.70

R942,507,495.20

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

900,000,000

1,000,000,000

2008 2009 2010 2011

Tota

l Pai

d M

OB

(Ran

d)

Year

Paid MOB (Rand) Linear (Paid MOB (Rand))

Insurer Oncology Benefit Change

Executive & Comprehensive

plans:

R400K benefit threshold - all

additional treatment funded at

80% of the DH Rate

With the exception of PMB’s

Priority, Saver and Core plans

R200K benefit threshold - all

additional treatment funded at

80% of the DH Rate

With the exception of PMB’s

KeyCare plans

Cancer care within the KeyCare

Oncology Network (Tier 1 / PMB)


Oncology PLPM and cost per claimant month

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

0

5

10

15

20

25

30

35

40

2008 2009 2010 2011

Cost

per

cla

iman

t mon

th

Paid

MO

B pe

r Life

per

Mon

th (R

and)

PLPM Cost per claimant month Linear (PLPM)

Insurer Oncology Benefit Change


Breakdown of components contributing to oncology PLPM

58% 60% 56% 56%

13% 10%

7% 5%

16% 17% 23% 24%

13% 13% 14% 15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011

Drugs Hospitals Radiotherapy Other

Hospital: Includes radiation equipment fees, oncology treatment administered in hospital & facility costs Other: includes facility and professional fees


Cost of Specialty Drugs in Oncology

197,634,669 233,225,895

264,906,444

8,141,244

69,814,617

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

2008 2009 2010

Am

ount

Pai

d (R

and)

2008-2010

Benchmarked against 2008 Due to increased % of total drug spend


Review of high cost drugs for specific oncology conditions

Drug DTPMB Yes / No

Unique Patients (2008-2010)

Total Cost (2008–2010)

Average Cost / Patient (2008)

Average Cost / Patient (2010)

Δ Average Cost Per Patient (2008-2010)

Gleevec® Yes 240 100,670,062 188,462 234,530 24.44%

Velcade® No 58 11,321,510 109,933 195,025 77.40%

Sandostatin® Yes 60 14,869,756 138,803 177,806 28.10%

Herceptin® No 423 85,985,989 139,713 174,307 24.76%

Nexavar® No 43 7,463,647 129,405 159,994 23.64%

Erbitux® No 66 10,233,927 58,771 157,137 167.37%

Vidaza® No 28 4,636,879 - 153,630 0.00%

Sutent® No 45 4,988,683 53,759 129,625 141.12%

Alimta® Yes 208 18,802,106 65,078 81,553 25.32%

Avastin® No 169 12,901,841 69,020 70,177 1.68%

Temodal® No 218 17,583,674 67,833 62,887 -7.29%

Caelyx® Yes 251 13,561,322 40,483 55,131 36.18%

Eloxatin® Yes 693 34,982,860 38,322 47,284 23.39%

Mabthera® Yes 1419 93,171,889 49,015 47,161 -3.78%

Campto® Yes 353 17,795,958 37,856 39,859 5.29%

Thalidomide® Yes 222 12,221,408 33,900 38,813 14.49%

Oxaliwin®* Yes 207 7,479,436 7,316 35,016 378.63%

Taxotere® Yes 2351 82,119,502 27,734 34,753 25.31%


Specialty drugs in oncology: patients claiming

0.36

0.41

0.48

0.15 0.17

0.18

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

2008 2009 2010

Clai

man

ts /

100

0 Li

ves

Patients Claiming 2008-2010

Specialty Drugs - All Specialty Drugs - Oncology


Specialty drugs in oncology: annual cost per patient

42,942 44,408

48,435

55,267

60,721

72,092

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

70,000

75,000

2008 2009 2010

Paid

Per

Pat

ient

Per

Ann

um (

Rand

)

Annual Cost Per Patient 2008-2010

All SD Oncology SD


Specialty Drug Cost Factor (SDCF)

Drug Category 2010 Cost Per Patient

Per Annum SDF

Specialty Drugs

Total Amount Paid 334 721 061

17.0 Patients Treated 4 643 72 092

All Chronic Drugs

Total Amount Paid 1 401 353 174 Patients Treated 330 554 4 239

The SDCF for Specialty Drugs in Oncology is 17.0, which means that the average annual cost of providing Specialty Drugs for Oncology patients (R72 092) is 17-fold that of providing chronic drugs to patients not on Specialty Drugs (R4 239).


What does the future hold?

0

50

100

150

200

250

300

350

400

450

500

2003 2004 2005 2006 2007 2008 2009 2010 2011

Coun

t of d

rugs

(Cum

ulat

ive)

Cumulative Effect of High Cost Drug Influx

2003 - 2011

S21 HCD other


Observations

• We have over the last number of years redirected expenditure towards oncology in South Africa – the health benefits of some of the newer therapies are clear

• The major cost driver is the price of oncology drugs despite the increased volume of usage (diseconomy of scale)

• Cost increases adversely affect Insurer sustainability

• We continue engaging with pharma, DoH, Regulators and oncologists in an attempt to secure affordable pricing for SA

• One part of the solution: an integrated wellness program…

Joint IACA, IAAHS and PBSS Colloquium in Hong Kong

www.actuaries.org/HongKong2012/

The drivers of morbidity and mortality


Source:1Bradshaw, et al, MRC Policy Brief no 1, March 2003.

The Oxford Health Alliance’s 3-4-50 model

3 Behaviours

Smoking No exercise

Poor diet

50% of deaths worldwide

4 Diseases

Cancers, Diabetes, Lung disease, Heart disease

Problem is one of behavioural economics


Und

er c

onsu

mpt

ion

of

prev

entiv

e ca

re Lack of information

Over-optimism

Hyperbolic discounting

True efficacy of different health and wellness approaches is not well understood

People tend to overestimate their abilities and health status

Future rewards of a healthy lifestyle are significantly undervalued relative to cost today

Sickness Wellness

Benefits are immediate, price is hidden

Benefits are hidden, price is immediate

A Case Study: The Vitality Wellness Programme in South Africa


1

Know how healthy you are

2

Set personal health goals

3

Enjoy rewards

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Vitality studies conducted


VIP studies

• Cross-sectional study of 948 974 Discovery Health members from 2003 to 2007

• Determine the impact of engagement on medical claims experience and healthcare costs

• Risk-adjusted for covariates such as age, gender chronic status and health plan

• Done in conjunction with Harvard, University of Cape Town, University of the Witwatersrand and the Sports Science Institute of South Africa

VIP Study 1: Vitality engagement is correlated with lower healthcare costs


Risk-adjusted hospital admission costs for engaged vs not engaged

Not Engaged benchmark

VIP Study 2: Vitality engagement reduces the cost of managing chronic disease


70

90 92 90

79

Multiplemetabolicconditions

Hypertension Dyslipidaemia Cancer Mental illness

Beneficiaries with single conditions

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Hospital cost per non-Vitality member

P = 0.001 for multiple metabolic conditions, all single conditions are not statistically significant

Risk-adjusted hospital cost for chronic members: engaged vs not engaged

VIP Study 3: Fitter people spend less time in hospital and incur lower healthcare costs


6.125.88

5.385.19

4.574.0

4.5

5.0

5.5

6.0

6.5

NR INACTIVE LO MED HI

1.57 1.57

1.521.49

1.421.40

1.45

1.50

1.55

1.60


3031

30 30

262526272829303132


Th

ousa

nds

1. Admission per patient*• 9.6% lower in highly active

individuals vs inactive

2. Length of stay in hospital• On average 0.57 days shorter for

highly active individuals vs inactive

3. Cost per patient• Medical costs once hospitalised

R5,052 lower for highly active individuals vs inactive

Fit people make better patients – admissions, length of stay and costs are risk-adjusted

Vitality studies conducted


Longitudinal study

• Longitudinal study tracking 374 497 members of the Vitality Wellness Program between 2003 and 2007 who were on the plan for at least 36 months in the period

• 33 196 197 member months of data• Show the impact of engagement on medical claims experience –

comparing participant against themselves over the period

The longitudinal Vitality study - results


Evidence of lower morbidity for members with any level of engagement

Trends in claims; Year 1 = 100

*

80

90

100

110

120

130

140

150

160

(N=202,858) (N=142,918)

Year 1 Year 2 Year 3 Year 4 Year 5

The longitudinal Vitality study - results


Lower morbidity for engaged members

After

Active

Inac

tive

Act

ive

Inactive Active

Bef

ore

206 908 10 022

3 823 27 286

100

110

120

130

140

150

160

170

180

190

200

Year 1 Year 2 Year 3 Year 4 Year 5Inactive to Inactive Inactive to ActiveActive to Active Active to Inactive

Trends in claims; Year 1 = 100*

Data shows increasing engagement over time


0

10

20

30

40

50

60

70

80

90

100

Year 1 Year 5

% o

f mem

bers

High engaged

Medium engaged

Low engaged

Not engaged

49%

13%

26%

12%

30%

22%

28%

20%

Engagement levels amongst longitudinal study test participants over the investigation period

Conclusion

• For cancer, and several other major lifestyle-related diseases, an integrated wellness program offers a potential way to mitigate the costs of expensive treatments

• But there is clearly still a need for a multi-sector approach to the problem of increasing incidence and costs of cancer treatment


References

• Lambert EV, da Silva R, Patel D, Fatti L, Kolbe-Alexander T, Noach A, et al. Fitness-related activities and medical claims related to hospital admissions – South Africa, 2006, Preventing Chronic Disease 2009, Vol 6(4)

• Patel D, Lambert EV, da Silva R, Greyling M, Kolbe-Alexander T, Noach A, et al. Participation in Fitness-Related Activities of an Incentive-Based Health Promotion Program and Hospital Costs: A Retrospective Longitudinal Study, American Journal of Health Promotion, January 2011

• Patel D, Lambert EV, da Silva R, Greyling M, Nossel C, Noach A et al. The Association between Medical Costs and Participation in the Vitality Health Promotion Programme among 948,974 Members of a South African Health Insurance Company, American Journal of Health Promotion, September 2009


trends in health care inflation & the cost of providing oncology … · 2018-05-18 · yes / no...

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