A comparison of two methods for estimating the technical costs of external beam radiation therapy.

Abstract Purpose: To accurately assess the cost-effectiveness of treatment with external beam radiation, it is necessary to have accurate estimates of its cost. One of the most common methods for estimating technical costs has been to convert Medicare charges into costs using Medicare Cost-to-Charge Ratios (CCR). More recently, health care organizations have begun to invest in sophisticated cost-accounting systems (CAS) that are capable of providing procedure-specific cost estimates. The purpose of this study was to examine whether these competing approaches result in similar cost estimates for four typical courses of external beam radiation therapy (EBRT). Methods and Materials: Technical costs were estimated for the following treatment courses: 1) a palliative “simple” course of 10 fractions using a single field without blocks; 2) a palliative “complex” course of 10 fractions using two opposed fields with custom blocks; 3) a curative course of 30 fractions for breast cancer using tangent fields followed by an electron beam boost; and 4) a curative course of 35 fractions for prostate cancer using CT-planning and a 4-field technique. Costs were estimated using the CCR approach by multiplying the number of units of each procedure billed by its Medicare charge and CCR and then summing these costs. Procedure-specific cost estimates were obtained from a cost-accounting system, and overall costs were then estimated for the CAS approach by multiplying the number of units billed by the appropriate unit cost estimate and then summing these costs. All costs were estimated using data from 1997. The analysis was also repeated using data from another academic institution to estimate their costs using the CCR and CAS methods, as well as the appropriate relative value units (RVUs) and conversion factor from the 1997 Medicare Fee Schedule to estimate Medicare reimbursement for the four treatment courses. Results: The estimated technical costs for the CCR vs. CAS approaches for the four treatment courses were as follows: palliative “simple” $1,285 vs. $1,195; palliative “complex” $2,345 vs. $1,769; curative breast $6,757 vs. $4,850; and curative prostate $9,453 vs. $7,498. Accordingly, the CCR estimates were 8%, 33%, 39%, and 26% higher than the CAS cost estimates, respectively. The primary cause of the difference between the estimates was the daily cost of delivering a “complex” treatment. In fact, if corrected the difference between the estimates fell to 0%, 1%, 4%, and 0%, respectively. Similar results were observed for both methods when the analysis was repeated using data from another academic institution. Medicare reimbursement was also slightly lower than, but remarkably close to, the costs estimated by the CAS approach. Conclusions: For “complex” treatment courses, which represent the vast majority of external beam treatments, technical costs estimated using the CCR approach appear to be significantly higher than those estimated using procedure-specific cost estimates. Because cost-effectiveness analyses of radiation therapy tend to be sensitive to the cost of treatment, the use of higher costs will result in radiation therapy appearing less cost-effective.