Chapter 4 delineates the processes that all oncology providers need to have in place to ensure that the psychosocial problems affecting their patients’ health care and outcomes are effectively addressed. These include processes that (1) support effective patient–provider communication; (2) identify individuals with psychosocial health needs; (3) link patients with service providers; (4) coordinate psychosocial and biomedical care; (5) help patients manage their illness; and (6) follow up to ensure the effectiveness of services. The need for these processes is already recognized by many group purchasers, insurers, and other policy makers, as reflected in their policies (see Table 6-1 and the discussion that follows). Other policies, however, do not reflect existing evidence on the need for and methods of delivering psychosocial health care.

Medicare policies are of particular interest for several reasons. Because 60 percent of new cancer cases occur among people aged 65 and older, Medicare is the principal payer for cancer care (IOM, 1999). Moreover, Medicare typically pays about 83 percent of what private insurers pay (MEDPAC, 2007); therefore, to the extent that Medicare payment rates allow for reimbursement of practice expenses related to the processes enumerated above, reimbursement by private payers should do so to a greater extent. Medicare also is a leader in technology assessment and coverage determinations; its decisions are often followed by private-sector insurers. Finally, Medicare’s policies on coverage determination and rate setting are more visible to the public than those of the private sector, enabling their study. This section reviews key Medicare reimbursement policies and their effects on the provision of psychosocial health services to individuals with cancer. The discussion encompasses both “traditional” Medicare payments to physicians—payments made to individual health care clinicians on a fee-for-service (FFS) basis after an individual patient has made an outpatient visit or undergone a procedure—and Medicare’s advance (prospective, capitated) payments to managed care and other health plans for the delivery of an array of inpatient and outpatient services that a Medicare beneficiary may need over a specified period of time (the Medicare Advantage [MA]