On May 21, 2019, Avalere Health released a report analyzing the viability of a compulsory two-sided risk arrangement within the Oncology Care Model (OCM), a Medicare payment model commenced in July 2016.¹  Significantly, the analysis found that should practices be forced to switch to a two-sided risk arrangement, more than half of them would be forced to pay recoupments back to the Centers for Medicare and Medicaid Services (CMS), meaning that participation in the OCM would no longer be justifiable for these practices.²

The OCM was established by the Center for Medicare and Medicaid Innovation (CMMI), a division of CMS. The 5-year (10-performance period), voluntary model runs through June 30, 2021, and includes almost 200 participants, comprised of 176 practices and 11 payors (including CMS).³ The goal of the bundled payment program is “to examine the impact of the OCM on primary outcomes such as reduction in total cost of care as well as improvements in key utilization quality metrics (risk-adjusted hospital admissions, risk-adjusted emergency department visits and hospice visits) and achievement of performance-based payments.”⁴ The OCM is a fairly unique CMS payment model, as it includes not just Medicare fee-for-service (FFS), but also commercial payors.⁵

As part of their participation requirements, practices enrolled in the OCM must furnish a number of “enhanced services,” including:

1. “The core functions of patient navigation;
2. A care plan that contains the 13 components in the Institute of Medicine Care Management Plan outlined in the Institute of Medicine report, “Delivering High-Quality Cancer Care: Charting a New Course for a System in Crisis”;
3. Patient access 24 hours a day, 7 days a week to an appropriate clinician who has real-time access to practice’s medical records; and
4. Treatment with therapies consistent with nationally recognized clinical guidelines.”⁶

The participants are reimbursed via regular payments throughout the six-month episode, which commences with chemotherapy. There are two forms of payment involved, including:

1. A Monthly Enhanced Oncology Services (MEOS) payment of $160 per beneficiary per month (for a total of $960 for the entire episode) for the delivery of the aforementioned “enhanced services”; and,
2. The potential for a performance-based payment (PBP) for each episode, which is meant to “incentivize[] practices to lower the total cost of care and improve care for beneficiaries during treatment episodes.”⁷

In order to obtain a PBP, a participant must meet the following requirements:

1. The OCM practice must expend less than their target amount;
2. The OCM practice must achieve an Aggregate Quality Score (AQS) of at least 30%;
3. The OCM practice must report all of the required quality data to the OCM Data Registry; and,
4. The OCM practice must implement all “Practice Redesign Activities,” which activities include the “enhanced services.”⁸

OCM currently offers three risk arrangement options for participating practices:

1. A one-sided risk arrangement with a 4% discount;
2. A two-sided risk arrangement with a 2.75% discount (termed “original two-sided risk”); and,
3. A two-sided risk arrangement with a 2.5% discount (termed “alternative two-sided risk”).⁹

Only those practices participating in the two-sided risk arrangements are eligible for the PBP.¹⁰

For the first performance period of the model, all practices participated in one-sided risk only.¹¹ Then, beginning in Performance Period 2 (i.e., January 12, 2017), practices could participate in either one-sided risk or original two-sided risk.¹² Starting in Performance Period 7 (i.e., July 2, 2019), practices may participate in one-sided risk, original two-sided risk, or alternative two-sided risk.¹³ Of note, all OCM practices are currently participating in the one-sided risk arrangement.¹⁴ However, effective January 1, 2020, CMS will require those practices that did not achieve a PBP in any of the first four performance periods to switch to a two-sided risk arrangement (either the original or the alterative), or leave the payment program altogether.¹⁵

As noted above, Avalere’s report found that should OCM practices be forced to switch to a two-sided risk arrangement, most of them would owe money, through repayments, back to the government.¹⁶ Specifically, Avalere’s analysis of “Medicare Part A/B FFS claims and Part D prescription drug event data” found that, under the original two-sided risk arrangement, 70% of those practices would owe recoupments (i.e., payments) to CMS, and under the alternative two-sided risk arrangement, approximately 50% would owe recoupments.¹⁷

For either of the two-sided risk arrangements, Avalere found that more participants would likely earn PBPs than they currently are in the one-sided risk arrangement (because they would have smaller discounts for their spending targets).¹⁸  Additionally, because the OCM is an alternative payment model (APM), as established by the Medicare and CHIP Reauthorization Act (MACRA), those practices would potentially obtain the 5% bonus payment due to their participation in an APM.¹⁹ However, it is unclear whether these positive payment adjustments would be enough to convince current OCM practices to remain in the voluntary program.²⁰ 

These issues with the OCM are similar to those with the Medicare Shared Savings Program (MSSP), wherein CMS is similarly forcing accountable care organizations (ACOs) to transition to two-sided risk models, effective July 1, 2019.²¹ A subsequent survey conducted by the National Association of ACOs (NAACOS) found that 71% of those survey respondents are likely to leave the MSSP (a voluntary program) as a result of being forced to assume two-sided risk.²² This may indicate that either CMS is forcing participants into two-sided risk arrangements too quickly, or that participants do not wish to voluntarily participate in a program wherein the rules are changed mid-program. However, this latter issue may become a moot point, as HHS Secretary Alex Azar has previously stated that CMS would be launching a mandatory payment model for Medicare cancer patients.²³

Despite these program drawbacks, private payors are modeling value-based payment programs after CMS, indicating that CMS may be on the right path to value-based reimbursement, despite their programs’ various issues. For example, in January 2019, Humana launched a new payment model for both Medicare Advantage and commercial beneficiaries undergoing cancer treatment.²⁴ The similarly-named Oncology Model of Care will seek to coordinate cancer care by offering “additional payment to [the 16] participating cancer practices for improved performance on certain metrics over a one-year period.”²⁵ Unlike the OCM, this payment model is not episode based, but quality based.²⁶  Humana pays each practice a care coordination fee, which is used to help participating practices “implement the reporting requirements and infrastructure for the model;” those practices that improve performance from one year to the next will see that fee increased.²⁷ Such payment plans seek to control the costs of one of the most expensive service lines in healthcare (due in part to the cost of chemotherapy drugs),²⁸ and it appears that more tweaks will need to be made in order to determine a payment plan that is mutually beneficial for providers, payors, and patients, and then scale it to the rest of the oncology providers in the U.S. healthcare system.