Blog Post

CMS Targets New Payment Model for Oncology


On February 12, 2015, the CMS Innovation Center released details for a new payment and care delivery model designed to improve coordination for cancer care. The Oncology Care Model (OCM) is aimed at physician practices that administer chemotherapy and bill for services under the Medicare Physician Fee Schedule. The OCM is built upon new reimbursement structures for services provided to cancer patients within episodes of care. The model creates financial incentives for providers based on their ability to improve coordination, access, and appropriateness of care while lowering the total cost for Medicare beneficiaries receiving treatment. The OCM will be a 5-year model that begins in spring 2016.

For those practices that participate in this model, the OCM will incorporate two new payment mechanisms:

  1. A $160 per beneficiary per month (PBPM) payment during the episode for infrastructure required to support care coordination
  2. Performance-based payments for lower total cost of care and improved quality during the treatment episodes

Performance measures will be calculated retrospectively. In addition to the PBPM and performance-based payments, the participants will receive regular Medicare FFS payments during the episode of care.

The performance-based incentives will be tied to benchmark expenditures for the practice. For the first 2 years, this will be a one-sided risk model in which practices will be eligible for bonuses if expenditures do not exceed 96% of the benchmark. Beginning in the third year, practices will have the option to participate in models with either upside-only or both upside and downside risk. In the two-sided risk model, practices will be responsible for expenditures in excess of 97.25% of the benchmark.

In order for a physician practice to participate in the episode-of-care model, the following requirements must be met:

  • Provide access to patient navigation
  • Document care plans that contain all components in the proposed Institute of Medicine Care Management Plan
  • Offer 24/7 access to a clinician who has real-time access to the practice’s medical records
  • Treat patients based on nationally recognized clinical guidelines
  • Pursue continuous quality improvement projects
  • Use an ONC-certified EHR and attest to Stage 2 of meaningful use by the end of the model’s third performance year

CMS is reaching out to interested participants and looking for payor participants as well. All types of cancer diagnosis have been initially included in this model. However, it is likely that high-volume cancer diagnoses will be considered first, given the ability to generate applicable benchmarks and statistically significant performance measures.

Practices interested in participating must submit a Letter of Intent to the CMS Innovation Center by 5 p.m. EDT on April 23, 2015. Applications are due by 5 p.m. EDT on June 18, 2015.

Does the OCM make sense for our practice?

The OCM is intended to produce “better quality care than usual, as evidenced by enhancements such as increased shared decision making, patient-centered communication, evidence-based care, beneficiary access to providers 24 hours per day, and coordination across providers and settings,” states CMS in the Oncology Care Model Frequently Asked Questions publication. For many practices, complying with the intent and requirements of the OCM will entail an investment in their practices. When evaluating whether to submit an application, organizations must first:

  • Understand the volume of Medicare beneficiaries in the practice
  • Examine trends in care patterns and cost per beneficiary to understand controllable variations in cost, as well as expected future changes
  • Assess compliance with national care treatment guidelines
  • Evaluate the physicians’ willingness to adapt clinical care patterns
  • Compare current performance metrics with those that will be required under the model
  • Gauge the investment required in practice infrastructure necessary to participate in the program
  • Determine whether other payors in the market will offer similar payment models
  • Assess the return on investment of the various projects required to participate in the program, vis-à-vis the anticipated incremental payments, under a variety of scenarios

Practices need to get a handle on the factors outlined above by mid-May in order to develop a gap assessment, determine their willingness to make the requisite investments, and complete the application. As well, interested practices will need to submit a Letter of Intent by April 23.

What does this development mean for the future of oncology reimbursement?

Oncology reimbursements will most certainly change in the future – and all providers (including hospital-based programs) must prepare for the evolution to performance-based, bundled payment structures. The interest by private and government payors in restructuring the payment for oncology services will continue to give rise to new reimbursement models. All providers can prepare for shifts in reimbursement by:

  • Investing in or securing access to patient care coordination and navigation resources
  • Accepting evidence-based clinical protocols as practice standards, and monitoring adherence
  • Adopting electronic medical record functionality to enhance information sharing, care coordination, and data capture for quality reporting
  • Developing systems to monitor cost of care by developing key partnerships

Change is a certainty.

The world of oncology reimbursement, and thus cancer care delivery, is going to change dramatically during the next several years. With this change comes a number of challenges, including the need to better coordinate care across settings, incorporate advanced data intelligence, and engage patients in more meaningful and effective ways. The OCM presents an opportunity and financial incentives for oncology practices to meet these challenges.