Costs of Cancer Care: A View From the Centers for Medicare & Medicaid Services

Abstract

Fee-for-service Medicare pays for a very substantial portion of all cancer care delivered in the United States. By virtue of its size and visibility, its payment policies at times also influence those of other health care payers. As a result, Medicare affects both the overall economics and the incentive structures of oncology care. Three aspects of how Medicare finances cancer care are particularly germane to the issue of costs. First, Medicare finances all aspects of cancer care in independent payment units, paying separately for physician services, laboratory tests, procedures, imaging, radiation, drug administration, and drugs. Second, Medicare is currently managing and monitoring a very substantial overhaul in payment for cancer care, which aims to reduce or eliminate incentives that have favored aggressive and costly treatments in clinical situations where alternative therapeutic approaches might have been equivalent or preferable. Third, Medicare is trying to increase the focus on care quality and transparency, as improved efficiency and greater value is needed if costs of care are to be contained. Understanding these three aspects of cancer care financing can help clarify what Medicare is capable of doing to control the rising costs that are occurring in cancer today.