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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.
In terms of pure comparison, upon the launch of the OCM pilot, it appeared that OCM with 1-sided risk was the best option for oncologists, followed by MIPS and then OCM with 2-sided risk. However, acknowledging an extremely high downside risk— exposing a practice to almost 20% risk, amounting to in excess of $250,000 per provider—the original 2-sided risk parameters provided a model that could cause significant financial hardship to practices that fell on the wrong side of the model. That is why none of the participating practices opted for original 2-sided risk and why they instead remained under the no-risk model. As mentioned before, the upside potential for an exceptional performer practice or provider is significantly higher. This also contributed to a business case for providers to not opt for the original 2-sided risk model. Recognizing these limitations of 2-sided risks, CMMI altered parameters to limit risk and make 2-sided risk a more attractive proposition. However, CMS subsequently modified the 2-sided risk model, and the new alternative risk model has significantly less financial risk for the practice than the previous +/–20% approach. In this modified risk model, risk is based upon expenses attributed to a provider and not the total cost of care per episode (Figure 5, Tables 1-2). 

Although the metrics for no risk still are the most favorable for most practices, if a practice fails in the performance category for 3 consecutive periods, that practice is forced to accept the alternate model. Given the more favorable parameters of the alternative risk model, it is worth considering remaining in the OCM under 2-sided risk rather than leaving the model. 

Summary of Risk OCM Models and Financial Impact 

The 1-sided risk model allows for a practice to eliminate the financial challenges associated with downside risk. These practices may not qualify for the designation of AAPM and hence will not be eligible for the 5% AAPM bonus. They will also be subject to following the QPP requirement. However, by nature of the practice transformation process, these practices are already compliant with the majority of quality reporting, as well as other QPP requirements, and they will likely earn incremental bonuses up to 9% by 2022. Thus, a practice that is very efficient, has achieved a PBP, and has fulfilled all requirements is best suited to remain in the 1-sided risk model and optimize its performance in the QPP track. For those practices and providers considering 2-sided risk, the original 2-sided model provided the highest potential revenue for a top performer. However, the difference in top gains versus no risk would be less than $100,000, versus the difference in top losses versus no risk of almost $1 million. This high-risk profile is what led to no adoption of the original 2-sided risk model. 

The practices that fail to achieve PBPs for 3 successive episodes will either need to shift to the 2-sided risk model or drop out of the OCM. In our analysis (hypothetical, based upon our own case study), the numbers show that the new 2-sided risk model has a more favorable maximum loss than the no-risk model, although gains are approximately half of what they would be under the no-risk model. As such, this new 2-sided risk model is a financially sound model for a typical physicians’ office. Although the no-risk model remains the preferred OCM reimbursement model for most practices, the new 2-sided risk model is one that may not be financially toxic like its predecessor. As such, for practices without another option, it is still a viable model under which a practice can be a participant in the OCM and experience significant financial gains through its participation. The new 2-sided risk model is significantly more favorable than the previous model. In particular, for practices that have failed the 3-performance-periods test for the no-risk model, it may make sense to remain in the OCM under the new 2-sided model. This approach makes sense, since the financial downside can be mitigated by obtaining reinsurance, the cost of which can be offset by the gain in revenue through MEOS payments (Table 3, Figure 6). 

Protecting Downside Risk With Reinsurance 

There are 2 types of reinsurance concepts that a provider needs to understand when accepting downside risk. These concepts are: (1) severity risk and (2) frequency risk. 

Severity risk is the impact of a single large claim on the risk pool. For example, Medicaid plans worry about an infant in the newborn intensive care unit or a patient with hemophilia with medical costs exceeding $1 million. 

Frequency risk is the impact of many low-level claims on your risk pool. For example, a year with widespread flu cases can cause an increase in hospitalizations and associated treatments. No one treatment is costly, but the increase in utilization can drastically affect the risk pool. 

Severity risk is mitigated by what is called specific reinsurance and frequency risk is mitigated by aggregate reinsurance. 

Conclusions 

CMMI has paved the path for the transition from volume to value in oncology. Although concerns remain to be addressed, at least one-third of OCM practices have reached some type of PBP and accessed shared savings. It is possible to improve the patient experience and reduce cost of care while adhering to guidelines based on standard-of-care treatment. Some of the areas of cost improvement include expanded access, use of biosimilars and generic drugs, and following recommendations by the national professional societies (eg, the American Society of Hematology, the American Society of Clinical Oncology). Visits to the emergency department, reduced hospitalization, use of biosimilars and generics, and expanded access are low-hanging fruit for success, all of which can help practices optimize their performance in the OCM and/or newer payment models, even if they must adopt 2-sided risk. 

We believe that realigning the workforce to provide patient-centered care will enhance the team-based approach, improve employee morale, improve the patient experience and care coordination, and ultimately lead to true value in healthcare. Human potential is frequently ignored and undervalued, but capturing it is a highly rewarding step for success in any task, no matter what challenges exist. By properly training and incentivizing the workforce around patient-centered care, practices can provide a recipe for their success in the OCM. 

From CMMI’s perspective, it may be worth considering adjustments based on regional and/or socioeconomic and demographic risk factors. Factors such as having a rural versus a suburban location or access to urgent care can affect outcomes. Such an alternative would reduce disparities in performance that are beyond an individual provider’s control. 

Based on our experience, transitioning to VBC is possible. Given the newer improved risk profile in the 2-sided risk model for the practices that must take 2-sided risk, it is worth considering by identifying the possibility of reinsurance, either by sharing part of upside potentials or sharing part of the MEOS payments. 

AUTHOR INFORMATION:

Authors Kashyap Patel, MD, ABOIM, BCMAS; Maharshi Patel, MBA; Taylor Lavender, BS, PA; Dhwani Mehta, MS RD; Asutosh Gor, MD, and Sashi Naidu, MD, are affiliated with Carolina Blood and Cancer Care Associates, based in Rock Hill, South Carolina. Chuck Newton, BS, is senior vice president of Risk Strategies Company, based in Midlothian, Virginia. 
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