How Will We Pay for Cancer Care in 2018?

Craig Deligdish, MD

September 2013, Vol 4, No 7 - From the Editor

Just this month, the Institute of Medicine (IOM) published a report titled “Delivering High-Quality Can­cer Care: Charting a New Course for a System in Crisis.”1 This consensus report convened a committee of experts to examine the quality of cancer care in the United States and formulate recommendations for its improvement. The committee came to a number of conclusions and made 10 recommendations for the purpose of improving what it described as a system in “crisis,” which is associated with rising costs and growing demand.

In addition to reviewing a number of issues that impact the quality of cancer care, the IOM report addressed disparities and access issues for patients undergoing treatment for cancer.1 The report also examined factors that impact the cost of care; the state of outcomes reporting and quality metrics; and the growing need for survivorship care, palliative care, and family caregiving. The IOM report made several recommendations to improve the affordability of cancer care by reforming the current fee-for-service (FFS) system of payment and recommending that the Centers for Medicare & Medicaid Services (CMS) and others transition from an FFS reimbursement model to new payment models.

The Affordable Care Act (ACA) has provided CMS with a number of tools to encourage healthcare innovation. Recently, the Center for Medicare and Medicaid Innovation announced round 2 of the Health Care Innovation Awards for the purpose of funding applicants who propose new payment and service delivery models that provide better healthcare and lower costs through improved quality for Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) enrollees.2 Applicants were encouraged to propose new service delivery models, along with the design of a corresponding new payment model.

The ACA has further authorized the Center for Medicare and Medicaid Innovation to test innovative healthcare payment and service delivery models that have the potential to lower Medicare, Medicaid, and CHIP spending while maintaining or improving the quality of beneficiaries’ care. Thus far, the Innovation Center has worked to support care transformation efforts through similar initiatives that have covered a broad range of payment and service delivery models and has supported the creation and development of accountable care organizations, bundled payment models, and other initiatives that accelerate the development and testing of new payment and service delivery models.2

Round 2 of the Health Care Inno­vation Awards, which provides for nearly $1 billion in funding, specifically targets high-cost, physician-administered drugs; therapeutic services, such as radiation therapy; populations with specialized needs, including patients with cancer; and models that test approaches for oncologists to transform their financial and clinical models.

Public regional and national health plans are focusing great efforts on payment models that move beyond FFS, can be rapidly implemented, are scalable, and are sustainable. As part of this second round, CMS encouraged applicants to propose models that included shared savings for providers, shared risk, tiered value-based payment schedules, hybrid models, new patient models that support innovative care service delivery models, and other approaches that rewarded efficient, high-quality, evidence-based care.2

CMS further encourages proposals that provide for and incentivize shared decision-making and engage patients. As part of this program, CMS further encourages providers to propose programs that improve care and quality outcomes through the measurement of patient satisfaction; improve adherence to evidence-based practices; and improve clinical quality, patient access, and patient outcomes.

CMS has clearly made a tremendous investment in accomplishing the recommendations made by the IOM. Time will tell whether models will be developed that could be applied to cancer care and achieve the goals defined by the IOM and the Center for Innovation.

Also in September, the US Oncology Network, the Community Oncology Alliance (COA), and ION Solutions released a report prepared by the Moran Company showing that Medicare sustained significantly higher costs for patients receiving chemotherapy in hospital outpatient settings compared with the community cancer clinics setting.3 The report reveals that Medicare patients receive more chemotherapy treatments, with more expensive chemotherapy drugs, in hospital outpatient settings compared with the physician-run clinics, resulting in chemotherapy costs that are as much as 47% higher.3

Given the current consolidation in our country’s cancer delivery system, with an increasing number of patients being treated in the hospital outpatient setting, one wonders how cancer care will be delivered in 2018, and whether many of the new programs will be sustainable in the treatment settings where many patients will receive their care.

It also needs to be examined whether programs that reward quality, better measure and reward improved outcomes, and address the cost of care in a meaningful way, will be viable and scalable. Will payers be willing to pay more for the cost of the same treatment when it is administered in one setting versus another? These are compelling questions that will ultimately need to be answered, if we are to develop a sustainable system that provides high-quality, cost-effective care for all patients with cancer.


  1. Institute of Medicine. Delivering High-Quality Cancer Care: Charting a New Course for a System in Crisis. September 10, 2013. Accessed September 11, 2013.
  2. Center for Medicare & Medicaid Innovation. Health Care Innovation Awards Round Two. May 15, 2013. Accessed September 11, 2013.
  3. The Moran Company. Cost Differences in Cancer Care Across Settings. August 2013. Accessed September 11, 2013.