In a new article at JAMA Oncology Shah describes two treatments - one superior - and then reveals we pay $100,000 for the less useful thing and $10,000 for the most useful thing. He also reveals that most useful thing is radiotherapy. And it is "facing drastic reimbursement cuts, leading some centers to shut down." (Shah is a radiation oncologist.)
He doesn't really give a clear description of how and why the two prices are so different. (And why? Power? Malevalence? Accident? Don't assume evil when inattention will do.) Let's take a look at his article and write our own.
As ten-page white paper HERE.
(Essay by Chat GPT 6).
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Why Medicare Pays So Differently for Cancer Treatments—and Why It Matters
Summary
Chirag Shah’s new JAMA Oncology Viewpoint contrasts a relatively inexpensive radiation treatment with an expensive cancer drug, asking why their payments appear so disconnected from their benefits. The comparison also carries an urgent practical message: reimbursement cuts threaten access to effective radiation care.
The explanation begins with two different payment systems. Medicare generally pays for physician-administered drugs according to their commercial average sales prices. Radiation payment instead reflects administrative estimates of physician work, staffing, equipment, and hospital costs. Neither system routinely prices treatment according to the health it produces.
These differences can shape which discoveries attract investment, which services remain available, and whether providers gain financially from delivering better care with fewer treatments. But inexpensive, effective care is itself a success; the objective should not be to make radiation as expensive as drugs.
Reform should sustain efficient treatment, reward meaningful innovation, and reduce incentives for unnecessary activity or unjustifiably high prices. It should also make society’s choices visible: what additional benefit are we purchasing, at what cost, and what other opportunities are we giving up? Shah’s comparison raises a larger question than reimbursement fairness between specialties: whether our payment systems encourage the greatest achievable public benefit from the resources entrusted to healthcare.
Shah’s Provocation—and the Message It Carries
In a new article in JAMA Oncology, Chirag Shah describes two treatments and their outcomes, then reveals a striking contrast: roughly $100,000 for the treatment associated with the smaller survival improvement, versus roughly $10,000 for the treatment associated with the larger improvement. The inexpensive treatment is radiotherapy. Shah then warns that radiation treatment is facing reimbursement cuts that threaten the viability of treatment centers. Shah is a radiation oncologist.
He does not give a detailed explanation of how the two prices became so different. Why this disparity? Power? Malevolence? Accident? Perhaps we should not assume evil when accumulated inattention might explain a great deal.
Let’s examine his argument—and then ask the larger economic questions it opens.
A vivid comparison, with important boundaries
Shah’s radiation example is stereotactic body radiation therapy, or SBRT, for patients with a limited number of metastases. His drug example is pembrolizumab added to chemotherapy for advanced triple-negative breast cancer.
These are different clinical populations, not interchangeable treatments tested against each other. Pembrolizumab was used with first-line chemotherapy in the advanced-disease setting, rather than as end-stage salvage chemotherapy. Shah also compares estimated radiation reimbursement with a drug list price, not two directly comparable Medicare payments.
The comparison is therefore a provocative illustration—not proof that one treatment is ten times better value than the other. Shah acknowledges the clinical differences. Those qualifications matter without eliminating the underlying policy question. (Shah 2026; Cortés et al. 2022.)
The essay’s practical “payload”
The essay begins as a discussion of value in cancer care, but its practical message is also a warning about radiation reimbursement. Shah argues that a valuable treatment modality faces financial pressure while spending on systemic therapies rises.
That framing matters. A specialty’s appeal for sustainable payment becomes a broader question about whether society recognizes and preserves effective care. For a general reader, the treatment comparison makes a complicated payment dispute immediately understandable.
Publication in JAMA Oncology gives that argument visibility and authority. We cannot know the editors’ deliberations or how they influenced the presentation. We can observe the published result: an accessible comparison carries a consequential policy argument, while leaving much of the payment machinery unexplained.
The access warning deserves investigation. ASTRO, the radiation oncology professional society, reports financial strain and threats to treatment availability in practice surveys. These are important signals, but they do not by themselves establish how many closures were caused by payment cuts or how many patients will lose access. The question is which payment reductions remove excess reimbursement and which impair the capacity to deliver worthwhile care. (ASTRO 2026.)
Two Treatments, Two Different Pricing Rules
Drugs: start with the commercial selling price
For most separately paid, physician-administered drugs, Medicare’s standard payment allowance is 106% of the average sales price, or ASP.
Manufacturers report sales net of specified discounts and other price concessions. CMS uses those data to update payment limits quarterly. After the federal budget reduction called sequestration, provider receipts—including the usual patient coinsurance—amount to approximately 104.3% of ASP. Drug administration is paid separately. (CMS 2026; MedPAC 2023.)
The starting point is therefore a commercial transaction price. Medicare generally does not build the drug’s payment by adding the costs of ingredients, manufacturing labor, machinery, and overhead. Nor does the ASP formula assign a dollar amount to each additional month of survival.
A high commercial price consequently produces a high Medicare payment, even when the incremental clinical benefit is modest.
Freestanding radiation: start with the resources used
Radiation services in a freestanding center are paid through the Medicare physician fee schedule.
Physician work is expressed in relative value units, or RVUs, reflecting time, skill, intensity, and judgment. Practice-expense valuation incorporates assumptions about staff minutes, supplies, equipment use, and overhead. Geographic adjustments and a dollar conversion factor turn the relative values into payments.
This is standardized resource accounting. It estimates what delivering a service typically requires; it does not reimburse each center’s actual expenditures or run a stopwatch during each treatment.
A substantially better clinical outcome does not automatically increase the fee. The payment system is primarily asking, “What resources does this service consume?” rather than, “How much additional health does this service produce?” (CMS, Physician Fee Schedule.)
Hospital radiation: estimate costs, then group services
In a hospital outpatient department, the physician’s professional services still follow the physician fee schedule. The hospital’s technical payment follows the Outpatient Prospective Payment System, or OPPS.
CMS uses hospital claims and cost reports to convert charges into estimated costs through cost-to-charge ratios. Services are grouped into Ambulatory Payment Classifications, or APCs: categories reflecting clinical characteristics and resource requirements. Estimated group costs help establish prospective payments, with packaging and other adjustments.
A hospital charge is thus an input into cost estimation—not simply the amount Medicare agrees to pay. Again, the central calculation concerns resources and accounting, rather than survival gained. (CMS 2022.)
How Did We Get Here?
Politics, history, and separate policy systems
Pharmaceutical political power is a reasonable subject for investigation. But the payment disparity alone cannot establish that lobbying caused it, much less quantify how much of the difference lobbying explains.
“Accident” is also incomplete. Congress and CMS made identifiable choices about purchasing different categories of care. Those choices accumulated within separate systems, each with its own stakeholders, accounting traditions, and constraints.
The result can resemble a blind walk toward an outcome nobody explicitly chose. Each individual step has an explanation; the final arrangement may lack a coherent relationship to overall public benefit.
Political influence may help preserve particular arrangements. Administrative inertia may do the same. Neither requires assuming that someone deliberately designed a system to produce the least health for the most money.
Why drugs cannot simply be priced like machine time
There is a legitimate economic distinction behind part of this history. Pharmaceutical development is expensive and uncertain. Successful products must generate returns within a system where many candidates fail. Expected revenues influence research investment, as the Congressional Budget Office has explained. (CBO 2021.)
Paying a medicine solely according to the cost of producing one more dose could undermine discovery. But that does not establish that every existing price is necessary, or that every additional dollar of industry revenue finances sufficiently valuable research.
The relevant question is how much reward encourages worthwhile innovation—and how much represents payment beyond what is needed to obtain that benefit.
Where the Market Distortions Arise
Research: valuable discoveries may have weak business models
Imagine two research programs.
One develops a patentable medicine offering a modest improvement. The other establishes that patients can achieve equal or better outcomes with fewer radiation sessions, less toxicity, and fewer trips to a treatment center.
Both may be valuable. But the first can potentially generate substantial product revenue. The second may reduce the revenue of the organizations implementing it.
Patients and payers benefit from the second discovery, yet its developers may have no practical way to capture enough of that benefit to finance the research. Similar problems can affect better treatment selection, deprescribing, care coordination, and improvements in established therapies.
Commercially attractive research and socially valuable research overlap, but they are not identical. Payment policy can therefore influence which scientific questions receive investment long before a physician chooses a treatment.
This is an economic implication of the incentives, not a finding that every drug is overvalued or every radiation innovation underfunded.
Delivery: revenue can reward expense and activity
Percentage-based drug add-ons provide larger dollar payments for higher-priced products. MedPAC has identified the concern that this can favor expensive alternatives. Actual profit depends on acquisition costs and other expenses, so the add-on should not be confused with pure profit. Nevertheless, the incentive exists. (MedPAC 2022.)
Radiation has its own problem: payment by treatment session can reward longer courses when shorter courses are clinically appropriate. CMS has explicitly recognized this incentive in its analysis of radiation-payment reform. (CMS 2017.)
These incentives do not dictate every clinical decision. They do, however, affect the financial environment in which decisions are made—and which services institutions choose to expand.
A low price is not itself a distortion
An effective treatment delivered sustainably at a low price is a public success.
The objective should not be to raise radiation prices simply because drug prices are high. It should be to ensure adequate capacity, appropriate use, continued improvement, and patient access.
Higher payment without better access or outcomes might merely transfer more money to providers. Conversely, lower payment can be counterproductive if it closes an efficient center, increases travel, delays treatment, or shifts care to a more expensive setting.
The effects need measurement. “Lower spending” and “better value” are not interchangeable terms.
What Should Society Be Trying to Maximize?
Health gained, resources used, and opportunities forgone
A quality-adjusted life-year, or QALY, combines length and quality of life into a common measure. Such measures can help assess additional health gained relative to additional cost.
The economically relevant comparison is usually the next treatment against the best available alternative—not a crude ranking of unrelated trials. It should consider the whole course of care, including complications, subsequent treatment, and burdens on patients.
But healthcare also competes with other uses of society’s resources: education, housing, infrastructure, other medical services, and household consumption. A treatment can produce real benefit and still offer less benefit than an alternative use of the same resources.
Healthcare payments are not identical to resource consumption; some payments represent income transfers. Nevertheless, they require financing and influence where labor and investment go.
QALYs inform the discussion; they do not settle every value judgment
People may reasonably give additional priority to severe illness, equitable access, or protection against catastrophic expense. Some QALY methods can also disadvantage people with existing disabilities, and Medicare faces statutory restrictions on their use. (CMS 2023.)
A defensible public policy should make these choices explicit. If society wishes to pay more for particular circumstances, it should explain why and acknowledge the trade-off.
Avoiding comparison does not eliminate rationing or opportunity costs. It leaves the choices embedded in existing prices, budgets, and institutional arrangements.
Three Directions for Improvement
1. Pay adequately for care without rewarding avoidable expense
Drug handling and related payments could better reflect reasonable service costs and financial risk, rather than rising mechanically with product prices.
Radiation episode payments could allow providers to benefit from clinically appropriate shorter treatment courses. Such arrangements need safeguards against undertreatment, avoidance of complex patients, and inadequate access.
The goal is a sustainable delivery system whose financial incentives support appropriate care.
2. Reward worthwhile innovation, including innovations that reduce billing
Negotiation, competition, and assessments of added benefit can constrain prices while preserving rewards for meaningful discovery.
Public and nonprofit research funding is particularly important where successful innovation reduces utilization or cannot be protected as a marketable product. Studies of shorter treatment courses and better patient selection can generate large benefits without creating a lucrative stream of sales.
Medicare drug negotiation and international price-benchmark initiatives introduce additional pressure on drug prices. They do not, by themselves, create a common framework for judging the value of drugs, radiation, surgery, and other care. (CMS 2025; CMS 2026b.)
3. Explain the choices in language the public can use
Transparency should mean more than publishing thousands of billing codes.
For major treatment decisions, an independent public assessment should answer:
| Question | What the public should see |
|---|---|
| What does the treatment add? | Absolute benefits and harms compared with the relevant alternative |
| What does it cost? | Total net spending across the course of care |
| Why is payment set this way? | Commercial-price benchmarking, negotiation, or resource accounting |
| What behavior does payment encourage? | Higher prices, more activity, greater efficiency, or better outcomes |
| How certain are we? | Evidence limitations and plausible ranges |
| What priority are we choosing? | Health gains, access, severe illness, equity, or future innovation |
These assessments should separate three questions that are too often blurred: What does delivering the care require? What reward is needed to encourage its development? What additional benefit makes its cost worthwhile?
The Question Beyond Shah’s Question
Shah’s essay challenges us to examine what happens when effective radiation treatment faces financial pressure while drug spending rises. The larger challenge is to understand what our payment systems collectively encourage.
A system can be meticulous about the minutes assigned to a treatment machine while accepting a much larger drug price with limited scrutiny of its incremental benefit. It can encourage discovery of a billable product while offering little support for discovering that patients need fewer treatments.
The public should not need to master ASP, RVUs, and APCs to understand these choices. We should be able to explain whether healthcare spending is sustaining necessary care, encouraging worthwhile discovery, improving health—or preserving a price because that is how the rules evolved.
References and Further Reading
Shah 2026. “Rethinking Value in Cancer Care in the US.” JAMA Oncology. Published online October 1, 2026.
https://doi.org/10.1001/jamaoncol.2026.3866
Cortés et al. 2022. “Pembrolizumab plus Chemotherapy in Advanced Triple-Negative Breast Cancer.” New England Journal of Medicine.
https://doi.org/10.1056/NEJMoa2202809
ASTRO 2026. “New Survey Finds Medicare Policy Changes Threaten Access to Cancer Care Nationwide.” April 1, 2026. Professional-society survey and interpretation.
https://www.astro.org/news-and-publications/news-and-media-center/news-releases/2026/new-survey-finds-medicare-policy-changes-threaten-access-to-cancer-care-nationwide
CMS 2026. Part B Drug Payment Limits: Overview. March 2026.
https://www.cms.gov/files/document/part-b-drug-payment-limits-overview.pdf
MedPAC 2023. Part B drug payment presentation, including ASP, sequestration, and separate administration payment. March 2023.
https://www.medpac.gov/wp-content/uploads/2022/07/Part-B-drugs-March-2023-SEC.pdf
CMS. “Physician Fee Schedule.” Overview of resource-based payment and RVUs.
https://www.cms.gov/cms-guide-medical-technology-companies-and-other-interested-parties/payment/physician-fee-schedule
CMS 2022. Medicare CY 2023 Outpatient Prospective Payment System Final Rule Claims Accounting.
https://www.cms.gov/files/document/2023-nfrm-opps-claims-accounting.pdf
CBO 2021. Research and Development in the Pharmaceutical Industry.
https://www.cbo.gov/publication/57126
MedPAC 2022. Part B drug payment presentation discussing incentives associated with the percentage add-on. September 2022.
https://www.medpac.gov/wp-content/uploads/2021/10/Part-B-drugs-MedPAC-01-Sept-2022.pdf
CMS 2017. Report to Congress: Episodic Alternative Payment Model for Radiation Therapy Services.
https://www.cms.gov/priorities/innovation/Files/reports/radiationtherapy-apm-rtc.pdf
CMS 2023. Medicare Drug Price Negotiation Program: Revised Guidance. Discussion of comparative-effectiveness evidence and statutory protections.
https://www.cms.gov/files/document/revised-medicare-drug-price-negotiation-program-guidance-june-2023.pdf
CMS 2025. “CMS Releases Final Guidance for Initial Price Applicability Year 2028.”
https://www.cms.gov/newsroom/press-releases/cms-releases-final-guidance-initial-price-applicability-year-2028
CMS 2026b. “CMS Finalizes New Mandatory Drug Payment Model to Deliver Lower Drug Prices for Beneficiaries in Original Medicare Part B.”
https://www.cms.gov/newsroom/press-releases/cms-finalizes-new-mandatory-drug-payment-model-deliver-lower-drug-prices-beneficiaries-original
Hanlon's law: “Never attribute to malice that which is adequately explained by stupidity.”.\