Reshaping Oncology Care Delivery and Payments - Episode 3

Reimbursement for Oncology Treatment

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The now-repealed Sustainable Growth Rate (SGR) formula was created via the Balanced Budget Act of 1997 to prevent Medicare physician payments from ballooning beyond the government’s ability to pay, explains Pecora. Unfortunately, the SGR caused huge payment uncertainty for physicians.

It was repealed in March via the passage of the Medicare Access and CHIP Reauthorization Act of 2015, which established performance incentives to encourage physicians to improve health outcomes and participate in cost-saving models of care.

Historically, there used to be a substantial margin on oncology medication prices that enabled oncologists to hire staff and enjoy an acceptable standard of living, comments Pecora. The pendulum has swung the other way, and margins on care delivery have shrunk dramatically, placing “incredible stress” on the healthcare system, he says.

The rise of immunotherapy agents, he adds, has compounded the problem. They work, but are incredibly expensive. Therefore, their increasing use for an array of cancer types and for combination therapy may lead to a higher cost burden, he explains.