The Oncology Care Model, to be launched in 2016, incentivizes cancer doctors to reduce hospital and pharmacy costs, in part through better care coordination.
A radical cancer payment model introduced by Medicare officials Thursday will pay qualifying oncologists $160 per month for six months for each beneficiary receiving chemotherapy.
In exchange, qualifying providers must run round-the-clock outpatient clinics to manage common drug therapy complications that might otherwise send their patients to the hospital.
"With this after-hours care, there's a way to treat [symptoms such as] nausea or vomiting… or dehydration without the patient going to the ED and being hospitalized," Patrick Conway, MD, CMS Chief Medical Officer said in an interview Friday. "That's where the largest savings from this program will come from."
The Oncology Care Model, or OCM, will launch in the spring of 2016, and could result in substantial savings in avoided hospital and pharmacy costs for many of the 1.6 million U.S. patients diagnosed with cancer each year, the agency said.
The model also incentivizes surgeons, radiologists, and medical oncologist treating the same patient to communicate with each other and with the patient's primary care providers, further reducing costs as a result of better care coordination.
Conway says he knows personally how uncoordinated cancer care is because his father passed away from the disease. "I, like many family members, spent a lot of time on the phone and on e-mail trying to coordinate my father's care, and I think we want a model that gives better care for patients," he says.
Oncologists will be able to share with Medicare any savings realized during each six-month episode of a chemotherapy recipient's care. Doctors will have a choice of two tracks similar to those offered by Medicare's ACOs. One track offers lower shared savings with no loss risk, while the other offers higher shared savings, but the potential for loss if the episode period doesn't save money.
Either track should prompt oncology practices to design ways to be more efficient and cost-effective, Conway says.
To qualify, OCM's participants must use certified electronic health records, provide patient navigation, and analyze data for quality improvement. Participants will be scored on 32 quality measures, such as lower risk-adjusted mortality rates, appropriate timing of chemotherapy administration, and fewer hospital and ICU admissions.
Efficiency and cost reduction quality measures will be based on prescription drug usage under Medicare Part B and Part D, radiation use and imaging utilization, and outpatient therapy services.
The OCM episode of care is part of CMS' drive to tie 30% of traditional, or fee-for-service, Medicare payments to value and quality payment models, such as bundles or ACOs by 2016 and 50% by the end of 2018.
Although the OCM does not tell doctors what drugs to use, it may prompt some doctors to recommend cheaper chemotherapy agents for their patients as long as they're just as effective, Conway acknowledges.
"The model encourages the use of pharmaceuticals that are evidence-based and most appropriate for the patient," he says, "but the model is a total cost of care model… that is, the goal is to improve quality and spend dollars more wisely. And the cost of Part B drugs [those administered in an office setting] are within the total cost of care."
Patricia Ganz, MD, a UCLA Medical Center oncologist, says the model is likely to result in more judicious use of imaging such as CTs and MRIs in cancer care, which she says are greatly overused in cancer patients.
And it is certain, Ganz says, to provide better outpatient care for complications that send patients back to the hospital. "Today, patients often don't know how to get ahold of their doctor if they're having massive diarrhea," she says. "That's when they end up back in the ER."
Ganz was chair of the committee that produced the 2013 Institute of Medicine report on cancer care, "Charting A New Course for a System in Crisis."
Mark McClellan, MD, former CMS administrator and director of the Health Care Innovation and Value Initiative at the Brookings Institution, which helped develop the model for CMS, said in a phone interview Friday that "There will be kinks that need to be worked out."
But in a few more years, "this kind of payment model could be a better future for most oncologists. It could have the capacity of being a medical home or a place where patients can count on 24/7 access and more coordinated management."
McClellan believes the OCM will, in time, reduce the growth in cancer costs by 2% or 3% per year. He also thinks it will lead to the use of equal, but less expensive chemotherapy prescribing.
"In many cases there are drugs that have similar benefits, but differ significantly in price, and right now there's no incentive for using the less expensive ones," McClellan says. "The way oncologists are paid now, they get paid more when they use more costly chemotherapy agents, not necessarily when they provide the best treatment for the patient."
That's because today, a 6% markup on the price of the drug is added to oncologist's drug administration fee to compensate the practice for storage and other costs of managing drug inventory in the oncology practice, where the drugs are usually administered.
Kavita Patel, MD, a Brookings Institute managing director, adds, "If you're going to show you're decreasing costs, one way is to use—when available—more generics or lower cost regimens when they're appropriate."
The pharmaceutical industry is not enthusiastic about the new model.
In a statement, the Pharmaceutical Research and Manufacturers of America (PhRMA) believes the OCM will have "the unintended effect of creating patient access barriers to beneficial tests and treatment options, including cancer medicines covered under the successful Medicare Part D drug benefit."
The American Society of Clinical Oncology has also expressed disappointment, specifically criticizing the single model's "limited scope," because it continues to rely on basic fee-for-service payments.
Richard Schilsky, MD, ASCO's chief medical officer, said in a statement that ASCO had urged the agency to move more fundamentally away from fee-for-service, and toward the "consolidated payment" model ASCO proposed last May.
Both McClellan and Conway say the current OCM design is just the first step.
Most oncologists have good ideas about things they could do to help their patients have a better experience of care, such as making sure they understand their treatment options and implications, McClellan says. "But these are things they really can't do under the current payment system." The $160 per beneficiary payments will provide additional resources to move forward.
CMS is encouraging all payers to offer similar episode models.
"I suspect after this, we will see in the near future other payers also saying, we like this demonstration, we'll do this, or we may tweak it a little bit," to encourage these outpatient 24/7-available clinics, Ganz says. "So for oncologists, it's probably better to get your house in order with all the patients you care for."