March 2015 Edition Vol.9, Issue 3

ASCO, Payers, and COA React to CMMI’s New Oncology Care Model

ASCO, Payers, and COA React to CMMI’s New Oncology Care Model

By Lynne Lederman, PhD


In February, the Centers for Medicare and Medicaid Services Innovation Center (CMMI) announced the rollout of its long-awaited Oncology Care Model (OCM)—a payment model that includes financial and performance accountability for episodes of care (EOC) with regards to chemotherapy administration to patients with cancer. The goals of the OCM are part of the Department of Health and Human Service’s initiative to link payments to quality care, improvement in care delivery, and sharing information more broadly to support better decision making. Financial incentives are based on a 6-month chemotherapy EOC1, and participating practices will receive monthly care management payments for each Medicare fee-for-service beneficiary during an EOC.2

This new payment model was developed by the Innovation Center as part of the Affordable Care Act and is in response to the current buy and bill model, which is considered by many to be a flawed payment model. Physician group practices and solo practitioners that provide chemotherapy to patients with cancer and are currently enrolled in Medicare are encouraged to participate in the OCM as are commercial insurers and other payers, such as Medicare Advantage Plans.2,3

Please note that the LOI deadline dates have been extended by 3 weeks for payers and 2 weeks for providers.  The dates in the table reflect that change. For more information on the Oncology Care Model, please visit:

Selection of participants is expected within 6 months, or by the end of 2015. The OCM process itself is expected to begin around spring, 2016.

Is the OCM Right for Your Practice?

Foley & Lardner LLP, Boston, Massachusetts, conducted a webinar titled, “CMMI’s New Oncology Care Model–Is it Right for Your Organization?” March 3, 2015. Michael L. Blau, JD, reviewed the OCM, which will be a 5-year EOC pilot program applicable to high volume cancers.4,5 The program is expected to cover 90% of cancer types, although which cancer types that might be excluded has not been made public. Medicare will pay $160 per beneficiary per month (PBPM) for a 6-month EOC ($960 per EOC), plus a retrospective performance-based payment. The EOC begins with initial administration of chemotherapy or hormonal treatment and a new EOC can be initiated if treatment extends beyond the initial 6 months.

Semi-annual performance-based payments are based on meeting specific quality measures, and will not occur until savings exceed PBPM payments. The benchmarks against which cost reductions achieved by practices will be measured have not yet been determined, but are expected to be geographically risk-adjusted.

Starting out, the first 4% of savings will go to the government. At the beginning of the third year, there will be an option to choose one of two tracks for the discount rate—risk or non-risk—and this can be changed every 6 months. The downside risk minimum rate is 2.75%, which is easier to achieve than the non-risk 4%. Practices that don’t meet the requirements by year 3 will be terminated from the program.

Kavita Patel, MD, Managing Director for Clinical Transformation at the Engelberg Center for Health Care Reform of the Brookings Institution, Washington, DC, outlined the program requirements, which included:

  • Patient access 24/7 to a clinician who has real-time access to the practice’s electronic medical record (EMR)
  • Attestation and use of ONC-certified EMR (stage 3 meaningful use by the end of the third year of participation)
  • Utilization of data for Continuous Quality Improvement (CQI)
  • Provide the core functions of patient navigation6
  • Document patient care plans in accordance with the 13 attributes of care established by the Institute of Medicine (IOM)7
  • Administer chemotherapy treatment consistent with nationally recognized clinical guidelines, e.g., NCCN or ASCO guidelines

All costs are considered in this model, including those related to other comorbidities. Although solo practitioners are eligible to apply, “it is hard to see how a one-person practice could do this in isolation,” said Dr. Patel. It might be onerous for even larger practices to meet all these requirements.

As discussed by Ronald Barkley, MS, JD, Cancer Center Business Development Group, Bedford, New Hampshire, OCM performance-based pay is determined by practices’ historic baseline expenditures, benchmarked per cancer type, and adjusted for regional variation. A CMS official commented that in the first year, risk-adjustment factors will include only those in Medicare administrative claims data. Examples of this include beneficiary, episode, and disease characteristics, and types of services furnished. The Innovation Center will collect additional information from practices, including cancer staging information that will be considered as risk adjustment factors in future performance years of the OCM.

Mr. Barkley presented simulations to determine what the bottom line might be for a “typical” practice. His model assumed 10 “busy” medical oncologists, each treating 180 new patients with cancer, with 36 patients each triggering a new EOC. The simulations assume half the patients are Medicare fee for service, with a 12% savings from putting into place the types of rigorous care management envisioned in OCM, such as avoidance of unnecessary hospitalization. For mid-range expenditures, such a practice could realize about $1 million in payments. Nevertheless, each practice has to conduct its own internal assessment for operational and financial feasibility.

Selection criteria for OCM include implementation and financial plans for the first 2 years, participation with other payers, and a demographically diverse patient population. Payer Letters of Support from commercial payers are required and weighted slightly more heavily than the financial plan.

Concerns of Oncologists

Commenting on the program, Blase Polite, MD, chair of the ASCO Government Relations Committee, said, “in general, CMMI should be applauded for putting out a cancer-specific payment model. I think in general a model that recognizes the uniqueness of cancer care, and that is adjusted for cancer-specific quality metrics is the right thing to do. I think that even the shared savings concept they have is very reasonable. It does move us in the right direction away from the current system that many of us think is broken.”

However, he noted that there are problems in the details.8 For instance, how is an EOC defined? The shared savings portion begins the date chemotherapy starts and ends 6 months later whether therapy is completed or not, which “is not how cancer care is practiced.” Dr. Polite would prefer to see the EOC be defined from the beginning of therapy to the end of therapy and a couple of months thereafter.

Another concern is whether the cost of drugs should be included in the shared savings. Dr. Polite said, “I think that this is one of the most dangerous elements of the CMMI model.” Expensive hospitalizations and imaging tend to occur before the start of EOC in this model so drugs will be a major component of the cost and could determine if a practice loses rather than receives shared savings. Risk adjustment may occur for stage of disease, but patients with advanced lung cancer who have different mutations require very different therapies with potentially very different costs. The model has absolutely no way of accounting for that or for the use of molecular or precision medicine to determine therapy. Dr. Polite thinks that CMMI should test other model designs as well as the current OCM, e.g., models with and without drug costs, and see if there are savings differences across each model.

Ricky Newton, Treasurer and Director of Financial Services and Operations for the Community Oncology Alliance (COA), said that the initial goals of CMMI’s model—to provide better care, smarter spending, and healthier people—is something everyone wants. The CMMI EOC model incorporates quality initiatives that many practices already have in place. Unfortunately, the practices are expected to cut existing expenses for treating these patients to derive any benefits.

Implementing practices to achieve the goals of this plan will incur additional costs to practices, yet they will be benchmarked against past performance and expected to provide the same high quality care at a lower cost. Newton said that COA, which wasn’t included in development of the model, is accomplishing similar tasks to the CMMI model in a less onerous way through the oncology medical home. “The model that needs to work is a shared savings model. We need to be looking at the overall oncology market, instead of my practice competing against itself in a gain-sharing model.” He noted that things happen to patients who are sick with cancer that incur expenses that cannot be controlled.

Newton also said COA is trying to figure out how a practice can participate in the CMMI model without putting themselves in debt because of the additional data collection and human resources that will be required to fulfill the requirements to participate. The actual cost to a practice to sustain itself in this model is not clear, but will definitely be high. Positive features of the CMMI project include the additional patient navigators, continuous documented quality improvements, round-the-clock availability of a clinician with access to a patient’s medical records 7 days a week, plus more commitment and documentation from their EMRs. What is not clear is whether the income that is going to be paid back to the practices is a fair amount that will at least cover the costs of hiring additional people and other resources to accomplish the goals of the program.

Payers Weigh In

Ira Klein, MD, MBA, National Medical Director, Clinical Thought Leadership, Aetna, said his company is planning to submit a LOI for OCM, and is planning to work with practices that want to partner with Aetna and CMS. Dr. Klein is not sure that practices will be able to generate the 4% savings by the third year.

“Providers are very interested in the best therapy for patients, whether it is or is not in their economic interest. I don’t necessarily concur with the opinion of ASCO that oncologists will restrict patients from expensive drugs. I don’t think that’s how they behave, and that is not an opinion, that is not based on my optimism of the world, that is based on looking at the data that Aetna has collected on provider behavior,” he said. Dr. Klein did acknowledge that new therapeutic agents, e.g., immune modulators, might dramatically increase the drug proportion of the total cost of care.

“We are excited because we think that no project or program we’ve crafted internally or participated in externally are out-of-the-gate perfect, but if you don’t try these things, then you never move it forward. So we have to do it and we are going to try to do it. Ultimately, we may not participate but we do have that as our intent,” he concluded.

John Fox, MD, MHA, Associate Vice President of Medical Affairs, PriorityHealth, Grand Rapids, Michigan, said his organization will also submit a LOI. Whether PriorityHealth files a formal application with Medicare will depend on how many practices are actually interested in participating with them. Strategies to find partners include approaching members of their oncology medical home initiative.

Dr. Fox observed that the biggest unknown in these EOC payments is how to handle the cost of drugs, including price increases and acquisition costs. Additionally, not every physician can purchase drugs at the same price. It is not known how CMS will determine the payment for a new agent that does not have an average sales price. “I think from the provider standpoint that there is a tremendous amount of uncertainty about how Medicare is going to handle the drug costs and new drugs in their calculation of the expected cost per episode.”

Other concerns for oncologists include how episode costs can be determined for patients with metastatic disease, where costs can be highly variable. A better way to calculate episode costs would be to do so where the costs are most predictable, namely around surgery, radiation therapy, or adjuvant therapy for patients who do not have metastatic disease. These are the three most predicable costs in cancer care, said Dr. Fox.

He concluded, “practices are in different states of readiness to participate in OCM. This could have the deleterious effect of forcing more consolidation between independent practices, community-based practices, and hospitals, which would not be desirable. Even some of the larger practices of 5, 10, 15 physician independent practices might be forced to consolidate if they were forced to participate in the model before they were ready.”

A CMS official, in response to a query about how they would get payers to participate, implied that payers might perceive the model as a way to improve care and lower costs. This official commented that the Innovation Center will calculate risk-adjusted benchmark expenditures based on historical data, trend the benchmark expenditures to the performance period, and incorporate a discount that Medicare will retain to set the target price for performance period episodes. The Innovation Center will leverage regional or national data to increase precision for target prices for practices with a low number of episodes.


  1. CMS Oncology Care Model Fact Sheet. February 12, 2015.
  2. CMS Press Release. February 12, 2015. New Affordable Care Act initiative to encourage better oncology care.
  3. CMS OCM FAQs. February 12, 2015.
  4. Kline RM, Bazell C, Smith E, et al. Centers for Medicare and Medicaid Services: using an episode-based payment model to improve oncology care. Journal of Oncology Practice. 2015.
  5. Newcomer LN, Gould B, Page RD, et al. Changing physician incentives for affordable, quality cancer care: results of an episode payment model. Journal of Oncology Practice. 2014;10:322-326.
  6. National Cancer Institute Center to Reduce Cancer Health Disparities. What are Patient Navigators?
  7. Institute of Medicine.
  8. Polite BN, Miller HD. Medicare Innovation Center Oncology Care Model: a toe in the water when a plunge is needed. Journal of Oncology Practice.


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