How To Tame the Cost of Cancer Care

Recent advances in cancer treatment have significantly boosted survival rates and improved patient outcomes. Because of these promising developments, the high costs associated with innovative therapies pose a major challenge. Experts warn that the financial burden of cancer care in the United States is projected to soar to an alarming $245 billion by 2030, up from $185 billion today, according to a study published in Cancer Epidemiology, Biomarkers & Prevention, raising urgent questions about healthcare affordability and access for
patients nationwide.

Monique Gary, D.O., M.Sc., chief medical officer of Sure Inc., the maker of Bexa, a breast cancer detection device, notes that balancing the high costs of cutting-edge cancer therapies with ensuring equitable access for diverse patient populations can be a challenge.

“Advanced therapies can come with extremely high price tags,” she says. “While these treatments offer remarkable potential, their costs often limit access, especially for patients from historically underserved communities. Insurance coverage and high out-of-pocket costs can further exacerbate these disparities. Social determinants of health, such as income, geographic location, time off work and digital access, can significantly influence whether a patient can even reach or remain on these therapies.”

At the same time, health systems and payers are under pressure to manage limited resources while supporting innovation. This is where models such as site neutrality, innovation in care delivery, and value-based pricing can help.

Site neutrality

In the past two decades, the location of cancer care has shifted notably, with chemotherapy infusions at physician offices decreasing from 94% in 2004 to 57% in 2014, while hospital outpatient departments saw an increase, according to the American Society of Clinical Oncology. Hospital acquisitions of oncology practices have driven the trend, the use of the 340B Drug Pricing Programand market negotiations. Costs vary by setting, but hospital outpatient departments usually have higher charges due to technical and facility fees and, sometimes, the delivery of more complex care. Site neutrality is the phrase used to label proposals to equalize payments among care settings. Proponents say hospitals needlessly increase charges and tack on fees for services identical to those delivered elsewhere. Critics say higher hospital charges reflect more complex care and that site neutrality would threaten access to cancer care for vulnerable populations, especially in rural areas, by potentially reducing hospital services and infrastructure.

Christoph Dankert, MBA

Christoph Dankert, MBA, chief network officer of Carrum Health, a company that links patients to specialty care, believes that site neutrality is a lever that would decrease the cost of cancer care (and other specialty care) if paired with real provider competition, explaining that the same drug administered in a hospital outpatient department can be between 30% and 50% more expensive because of the facility fees than if it was administered in a community oncology setting.
“However, hospital systems are aware and are becoming part of the solution by investing in community access points for outpatient care, both in cancer as well as surgical care,” he says. Those access points don’t charge facility fees, and Dankert says competitive pressure from community oncology groups will help keep facility fees from creeping into these lower-acuity settings.

The impact of site-neutral payment on the cost of cancer care remains under active evaluation, and hospital groups are fiercely lobbying to prevent it. A 2023 report by the American Cancer Society examined this issue and found that services delivered in hospital outpatient departments were reimbursed at approximately three times the rate of those provided in physician offices. Some services were reimbursed at rates five to six times higher.

“Computational modeling based on a theoretical patient scenario suggested a decrease in out-of-pocket expense as well as in Medicare Part B spending if site-neutral payment was in place,” Gary says.

Since that time, there has been active consideration of legislative proposals aimed at implementing site-neutral payment reforms. Although these reforms could help lower Medicare costs and reduce patients’ out-of-pocket expenses, Gary says there are legitimate worries that they might fuel even more healthcare provider consolidation, resulting in decreased physician independence. If site-neutral payments reduce revenues, health systems may want to get even larger to increase their market power in hopes of reversing the decline, she says.

Nathan Goodyear, M.D.

Nathan Goodyear, M.D., a physician at the Williams Cancer Institute in Beverly Hills, California, a boutique cancer center offering unconventional minimally invasive tumor-targeted therapies, believes there is a dark side to site neutrality payments. “Hyperregulation stifles competition, which reduces patient choice,” he says. “An increase in patient costs will result from this decreased choice. I believe opening up the 50 state markets as laboratories of democracy — from the bottom up — will provide a more sustainable, market-driven reduction in healthcare costs through innovation, rather than relying on the top-down approach of site neutrality payment models. It would be very easy for site-neutral payments to morph into the failed model of capitation payments.”

Care delivery innovation

The COVID-19 pandemic significantly hindered innovation in cancer care delivery, not only due to supply chain disruptions and shutdowns but also because of a sharp decline in capital investment and funding, Gary says.

“The pandemic disrupted and altered the delivery of cancer services, leading to delayed diagnoses, reduced utilization and a marked decline in clinical trial enrollment,” she says. “The long-term effects are still unfolding, with medical mistrust, which was intensified during the pandemic, remaining a significant challenge.”

Despite these setbacks, COVID-19 also prompted several meaningful pivots, such as remote patient monitoring, decentralized clinical trials, hypofractionation in radiation oncology and novel drug delivery systems.

“Telemedicine, in particular, saw an exponential increase in its value proposition, creating more opportunities to address patient concerns and reducing certain barriers to care, especially for those who have limited access to technology,” Gary says. “These developments persist even after the pandemic and have the potential to expand access to underserved communities, particularly those affected by social determinants of health that limit their ability to participate in cutting-edge cancer care.”

Gary points to hypofractionated radiation therapy, which delivers higher doses in fewer sessions, reducing treatment time, patient travel and healthcare resource use without compromising outcomes. Telemedicine and remote patient monitoring have also lowered costs by reducing hospital visits. Additionally, decentralized clinical trials improve patient access and diversity while lowering logistical costs.

“These innovations not only improve patient convenience but also help healthcare systems manage resources more efficiently over
time,” she says.

Timothy Showalter, M.D., a radiation oncologist at the University of Virginia School of Medicine and chief medical officer of Artera, a Santa Barbara, California, artificial intelligence (AI) company focusing on cancer, says adopting evidence-based short-course regimens has reduced treatment duration and costs without compromising outcomes. “Similarly, innovations like AI-based risk stratification tools help clinicians avoid overtreatment, reducing both physical and financial toxicity for patients,” he says. “Such strategies contribute both to patient well-being and long-term system sustainability.”

Value-based pricing

In value-based pricing, the value of cancer care drugs is assessed, including factors such as reduced side effects, improved quality of life, increased survival and disease remission rates.

With value-based payments, Dankert notes a bundled payment for relatively straightforward, early-stage cancer treatment will include diagnosis and assessment, treatment costs including the cost of drugs, excision surgery, postoperation follow-up and posttreatment follow-up.

“Drugs make up a significant portion of medical costs, but most folks don’t include them in cost estimates or cover them piecemeal,” he says. “We include them in our payment model. This leads to providers picking biosimilars and really thinking about the effectiveness of drugs and their alignment with treatment pathways.”

Regarding value-based care, Dankert notes that one approach at Carrum Health is provider-held warranties. “We require our providers to take on risk for outcomes by providing a two-year warranty on treatment that covers readmissions, complications and disease progression within reasonable bounds, which incentivizes them to focus on delivering the best quality and most cost-effective care, leading to optimal patient outcomes,” he says.

Showalter notes that financial incentives are essential to drive innovation in cancer therapeutics, but without a framework for evaluating true patient value, there’s a risk of creating breakthroughs that few can afford. “Value-based pricing encourages both innovation and accountability, helping ensure that advancements actually reach — and benefit — patients across all communities,” he says.

Gary believes that adopting value-based pricing for newly approved cancer therapies could significantly impact drug development and patient care. “For pharmaceutical companies, it creates pressure to focus on developing drugs that offer meaningful improvements in patient outcomes. It may also discourage investment in therapies that show only minimal benefit in early clinical trials,” she says. “From a patient care perspective, this model has the potential to increase access to more effective treatments and ensure that healthcare dollars are spent on therapies with real clinical value.”

Still, there are concerns that value-based pricing could unintentionally stifle innovation, particularly if funding and success are tied too narrowly to predefined clinical end points, leaving less room for exploratory or broader observational outcomes.

The final word

Goodyear points to three considerations in healthcare policy reform that can help control cancer treatment costs without compromising quality of care. “First, competition historically drives costs down. When patients have more options, the power of the dollar shifts to the patient as a consumer, which they can then leverage through choice,” he says. “Second, government needs to decentralize many aspects of the delivery of care. The result is 50 markets competing for patients versus one. Third, innovation in care delivery, competition, and cost controls will elevate the quality of care for cancer patients.”

Others believe healthcare providers and policy makers can better collaborate by establishing transparent, outcome-driven pricing frameworks that reflect the real-world value of cancer treatments.

“Providers bring clinical expertise and patient-centered perspectives, while policy makers offer regulatory and reimbursement structures that can incentivize innovation without creating undue financial burden,” Gary says. “For these pricing models to be effective and sustainable, ongoing collaboration must include robust data sharing and the systematic collection of real-world evidence, helping to ensure that reimbursement aligns with meaningful clinical benefits rather than just drug costs or theoretical efficacy.” These partnerships should actively address barriers to care access — such as financial toxicity, geographic disparities and social determinants of health — to work toward sustainable pricing models that do not inadvertently limit availability of cutting-edge treatments to only a privileged few, he says.