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Two-Sided Risk in the Oncology Care Model
Kashyap Patel, MD, ABOIM, BCMAS; Maharshi Patel, MBA; Taylor Lavender, BS, PA; Dhwani Mehta, MS, RD; Asutosh Gor, MD, Sashi Naidu, MD; and Chuck Newton, BS
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Two-Sided Risk in the Oncology Care Model

Kashyap Patel, MD, ABOIM, BCMAS; Maharshi Patel, MBA; Taylor Lavender, BS, PA; Dhwani Mehta, MS, RD; Asutosh Gor, MD, Sashi Naidu, MD; and Chuck Newton, BS
The US healthcare system remains one of the most inefficient healthcare systems in the world. The Bloomberg Health-Care Efficiency Index ranked the United States 54th among 56 countries in 2018, tied with Azerbaijan and only ahead of Bulgaria. This occurs even though the United States spends $10,244 per capita annually on healthcare, a figure representing 17% of the gross domestic product.
The US healthcare system remains one of the most inefficient healthcare systems in the world. The Bloomberg Health-Care Efficiency Index ranked the United States 54th among 56 countries in 2018, tied with Azerbaijan and only ahead of Bulgaria.1 This occurs even though the United States spends $10,244 per capita annually on healthcare, a figure representing 17% of the gross domestic product.2

Our expensive yet inefficient healthcare system has been blamed on a fragmented, disorganized, and uncoordinated delivery system, with silos and redundancies that create inefficiency.3 Despite rapid advancements in treatment, the discovery of new drugs, and new technology aimed at improving patient outcomes, the overall performance of the US healthcare system in aligning incentives has not met expectations.

Although these inefficiencies have become evermore glaring, oncology care is advancing at a rapid pace; improvements in survival rates in many types of cancer have led to more than 15.5 million US cancer survivors as of January 2016.4 In 2018, the FDA approved 19 new cancer drugs and biologics, and 38 new indications,5 as well as new molecular tests and companion diagnostics that will ultimately scale personalized treatment in oncology. 

Reports from the National Academy of Medicine, formerly the Institute of Medicine, concluded that cancer treatment in the United States lacks in consistent quality and is neither patient-centric nor well-coordinated.3,6 The fee-for-service (FFS) payment model, used for decades in oncology and elsewhere in the United States, was not designed emphasize value or quality in cancer care. Under FFS, medical services are not bundled; they are paid for individually, thus incentivizing the provision of high-quantity, not necessarily high-quality, healthcare. The rapid, but hurried and disorganized, multidirectional advancements in payment models, such as pathways and capitations, were never formulated to affect the quality of care under the volume-driven model. Hence, despite many efforts to explore improving outcomes by using pathways and capitated models, outside of scant models demonstrating desired outcomes, most capitated models did not fulfill payers’ expectations.7-9 

In the United States, total spending on cancer care rose from $27 billion in 1990 to $124 billion in 2010, with projections of around $157 billion by 2020.10,11 Total costs of cancer care for the US population are predicted to increase across all phases of care.12 Cost drivers include technological innovation, rising hospital costs, and demographic shifts; as the population ages and people live longer, the risk of malignancy rises.13 In the United States, oncology drug expenditures, excluding supportive care agents, rose 18% from 2014 to 2015, one of the largest single-year increases on record, driven by both the first full year of implementation of the Affordable Care Act (ACA) and the arrival of programmed cell death protein-1 inhibitors.14 

Under the ACA, CMS established the Center for Medicare & Medicaid Innovation (CMMI) to test innovative payment models to incorporate the value element in the delivery of healthcare. CMS has developed value-based care (VBC) programs that reward healthcare providers with incentive payments for improving the quality of care, reducing costs, and improving the patient experience for Medicare beneficiaries. In October 2016, CMS finalized the rule for the Medicare Access and CHIP Reauthorization Act (MACRA) (Figure 1) of 201515 that implemented the Quality Payment Program (QPP) (Figure 2).16,17 An underlying tenant of VBC is to move away from the FFS model and toward performance-based payments. These programs tie payments to provider performance based on meeting specified quality metrics and practice reforms, with some practices already entering into payment arrangements that include financial and performance accountability for episodes of care involving chemotherapy administration to patients with cancer. 

The QPP began in January 2017, with payment adjustments based on performance (to be fully implemented by January 2019). The QPP offers payment according to 1 of 2 tracks: (1) the Merit-based Incentive Payment System (MIPS) linked to performance including following defined, evidence-based clinical quality measures, and (2) Advanced Alternative Payment Models (AAPMs) that provide financial incentives to clinicians to provide high-quality and cost-efficient care (Figure 2).16,17 

The Oncology Care Model 

The Oncology Care Model (OCM), which launched on July 1, 2016, is one pilot program that is intended to shift reimbursement away from volume and tie payments to value under the broader umbrella of transitioning to VBC. The OCM is a cancer care delivery model that encourages participating providers and practices to align financial incentives to improve care, add the quality component, and enhance the patient experience while reducing the costs of care. The OCM with 2-sided risk is considered an AAPM.18,19 It is a voluntary pilot and a part of CMS’s broader initiative to improve the effectiveness and efficiency of cancer care.20 This program aims to provide higher-quality, more coordinated oncology care at the same or lower cost to Medicare than traditional FFS payments. When the program was announced and CMMI invited requests for applications in the spring of 2015, more than 400 oncology practices from across the country submitted letters of intent to participate in the 5-year pilot (2017-2022). Overall, 196 practices (covering 3200 oncologists; approximately 20% of all practicing oncologists from different settings) were selected to participate in the OCM. In addition, CMS encouraged private commercial payers to participate; 17 payers initially signed up, and 16 national and regional payers began implementing the OCM in 2017. At the time of launch in July 2017, 192 practices and 14 commercial payers were participating in the OCM.20 

The OCM and the QPP have differences that are significant to oncologists (Figure 3). The OCM incorporates a 2-part payment system for physician practices: a per-beneficiary Monthly Enhanced Oncology Services (MEOS) payment and a performance-based incentive payment (PBP) (Figure 4). The MEOS payment allows practices to improve care coordination by effectively managing and coordinating episodes of care for patients with cancer. The PBP is calculated retrospectively on a semiannual basis, based on the practice’s achievements in quality measures and reductions in Medicare expenditures. 

Fundamental Tenets of OCM 

OCM providers are required to: 
  • Provide patient navigation 
  • Document a 13-point care plan in accordance with recommendations from the Institute of Medicine (now the National Academy of Medicine). 
  • Provide access to a qualified clinician 24/7, with real-time access to patients’ medical records 
  • Use treatment in accordance with recognized treatment guidelines 
  • Monitor data to improve quality and gain shared savings 
  • Use electronic health records that are certified by the Office of the National Coordinator for Health Information Technology.
The multipayer OCM pilot’s early feedback has provided a blueprint for not only quality improvement and payments linked to quality, but also for the way physicians think about and deliver care. Under the OCM, patients, caregivers, and their microecosystems become the central force that directs care in accordance with patient input, preference, and choice. The OCM has the potential to reduce healthcare costs while improving patient quality of life and outcomes. 

CMMI has been reimbursing successful practices that have earned a PBP in the form of gain sharing to reward high performance and reduce the cost of care to below the target price. CMS will provide a discount of 4.0% for practices participating in the 1-sided risk model and 2.75% for practices participating in the 2-sided risk model. The savings offered will be adjusted by performance based on quality reporting. Participating practices are subject to monitoring, including on-site visits, by the CMMI team. CMMI has appropriately adjusted the risk factors to accommodate multiple comorbidities, dual-eligible status, surgical intervention, radiation therapy, and clinical trial participation. 

The OCM is the first major initiative by CMS to pilot the transition from FFS toward VBC. CMMI has been relatively flexible and accommodating of changes made to the program in response to stakeholder input. However, areas of concern remain, including the main issue of the negative penalty for exceeding the target price of care. 

Oncologists participating in the OCM are held responsible for the total cost of care, regardless of the origin of that cost. For example, if a patient under the OCM pilot is involved in a motor vehicle accident and requires hundreds of thousands of dollars’ worth of interventions, the cost of this care will be part of the bundle that the oncologist will be responsible for. However, according to the Winsorization formula—which identifies Medicare beneficiaries outside of statistical variables, which limits its practice attributes—risk exposure will be capped at 95%. 

Many lessons remain to be learned by oncologists participating in the OCM. This is compounded by the recent announcement of the MACRA final rule, where a negative risk exposure of an oncologist is limited to 3%, based on resource utilization, at the most versus the 20% risk exposure in the OCM.9  

Conversely, the upside bonus for top performers in the QPP track under the MACRA final rule could exceed 20%. This may become further complicated, given the uncertainty surrounding the 2017 change in the federal administration and its healthcare agendas. 

 
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