On July 10, CMS released a proposed rule for an advanced payment model (APM) for radiation oncology (RO) services. Under the proposed rule, the Centers for Medicare & Medicaid Services (CMS) will launch a five-year pilot program beginning in 2020—the RO Model—which will allow Medicare to promote quality and financial accountability by bundling payments for select radiotherapy (RT) services. The model marks a significant departure from Medicare’s historical fee-for-service (FFS) payment approach and will be mandatory for all RT providers within a set of randomly selected geographic areas throughout the country. This post summarizes the must-know background and details of the proposal.
Background on Radiotherapy Payment Reform
The development of an episode-based payment model of this nature has been on CMS’s radar for nearly five years. The proposed RO Model is consistent with broader trends in the healthcare industry to cut costs and shift from volume to value through the use of APMs, including bundled payments. Moreover, CMS has strong evidence of the need for payment and service delivery reform in RT, pointing to the lack of site neutrality for payments in this area as well as variability in clinical care patterns (despite clinical guidelines).
Specifically, CMS’s call for payment reform in RT relates to increasing evidence that supports hypofractionation—the idea that that shorter courses of RT treatment (i.e., reduced numbers of fractions) are equally effective as longer courses. The current FFS payment system incentivizes selection of RT treatments that are more expensive or require more services, despite the availability of more affordable medically appropriate alternatives. Although there are several types of RT treatments today, some have demonstrated only marginal differences in terms of clinical outcomes. Given this, CMS has been eagerly looking for ways to encourage providers to shift from a volume- to value-based mind set, which, in the RT setting, translates to adopting clinical treatment patterns that are more in line with hypofractionation trends. The proposed RO Model does exactly that.
RO Model Details
The RO Model is designed to test whether changing reimbursement for RT leads to improved quality of care for Medicare beneficiaries and reduced spending for the program. For model participants, reimbursement for RT services would shift from the current FFS system to payments based on a defined episode of care. Key features of the proposed model are outlined below.
1. Episode Definition: The proposed rule defines an episode of care under this model as a 90-day prospective episode that is triggered when a patient receives an initial RT treatment planning service and then begins treatment. There will be both a professional and technical bundle for each episode. The episode payments:
- Will be based on cancer type.
- Will not be differentiated based on type of treatment.
- Are not intended to cover the total cost of a patient’s oncology care during the time frame.
The episode-of-care payment will be made in two installments, bundling reimbursement over the 90-day period for the following services: treatment planning, technical preparation and special services, treatment delivery, and treatment management. Consultative visits (E&Ms) will continue to be paid separately under the current FFS reimbursement system.
2. Payment Methodology: Under the RO Model, payments will cover the select RT services described above furnished during the 90-day episode. Episodic payments under the new model will be based on national historical base rates (“target prices”) set at the tumor site–specific level. These rates will take into account various types of modalities used to treat each cancer type, all of which will be considered equally in the calculations. The modalities to be assessed include EBRT, IMRT, SRS, SBRT, proton therapy, IORT, IGRT, and brachytherapy.1 Various adjustments (e.g., case mix, historical experience, geography) will be layered onto the base rates to derive the final episode payment. CMS has proposed using only hospital outpatient department (HOPD) data to set the base rates, due to reportedly stronger empirical quality and stability of outpatient prospective payment system (OPPS) rates compared to the physician fee schedule (PFS) rates.
3. Cancer Types Included: The proposed rule identifies 17 different types of cancer to be included in the RO Model, as listed below. CMS assessed several criteria to identify appropriate cancers for inclusion in the model, ultimately selecting those that are most commonly treated with RT, make up the majority of all cancer incidence, and have demonstrated ongoing pricing stability.
4. Pilot Duration and Participants: The five-year pilot would commence in early 2020 and run through 2024. The pilot will be mandatory for physician group practices, HOPDs, and freestanding RT centers located in core-based statistical areas that will be randomly selected by CMS.
Since the proposed rule was announced less than a week ago, the provider community is still in the process of reacting to it. As is typical with CMS proposals, some of the model details are difficult to decipher or unknown at this early stage. That being said, a few initial implications are worth discussing.
- Because payments will not be differentiated based on specific modalities, providers utilizing more expensive technologies (e.g., proton therapy) will likely be more affected than those already using more economical technologies (e.g., EBRT). Similarly, providers that have been faster to adopt hypofractionation are likely to be less impacted.
- Providers considering program expansion or new business plans should take these changes into account. Even if this model does not go through as proposed, the trend toward hypofractionation and APMs in RT will continue to put pressure on RO reimbursement in the near future.
- While ACO and OCM participants are not precluded from participating in the RO Model, there will be some overlap—requiring extra attention to appropriately navigate the different models. The proposed rule underscores the need for different allocation methodologies to apply or withhold payments depending on whether the RO Model episode occurs within an OCM episode or partially before or after an OCM episode. Provider organizations should be proactive in inquiring about their participation in multiple models to avoid struggles during implementation.
- It is expected that providers will express concern with CMS’s proposal to make participation in the pilot mandatory and to exclude freestanding RT data from its methodology for establishing national base rates for the episodes of care.
- Mandatory participation: CMS argues that mandatory participation will be key to driving performance within the pilot, while some provider-focused professional societies have already expressed concern about the scale and speed of the mandatory requirement (e.g., whether all RO providers will be required to adopt the program immediately upon its introduction versus using a phased approach).
- Use of HOPD data only: While CMS contends that PFS payment rates are less reliable than OPPS payment rates, providers are likely to argue that excluding pricing data from freestanding centers will misrepresent the universe of RT treatments and thereby produce inaccurate episode prices.
The proposed rule is scheduled to be published in the Federal Register later this week, at which point it will enter a 60-day public comment period. ECG will continue monitoring this space for updates and will share more news as it becomes available.
Abbreviations defined: external beam radiotherapy (EBRT); intensity-modulated radiotherapy (IMRT); stereotactic radiosurgery (SRS); stereotactic body radiotherapy (SBRT); intraoperative radiotherapy (IORT); image-guided radiotherapy (IGRT).