May 2019 Edition Vol.11, Issue 5

Novel Payer Models and Initiatives in Oncology Payment Reform

By Megan Garlapow, PhD

Value-based reimbursement in oncology aims to achieve the dual goals of improved outcomes and cost-effectiveness in cancer care. As these models move beyond the experimental phase and into accepted and preferred healthcare payment policies, physician payments are shifting from the “volume” of services provided to the “value” of the care healthcare professionals provide and patient outcomes.

As the volume of cases and the cost of care in oncology continue to increase, so do the challenges to payers, practices, and patients to control costs and out-of-pocket expenses. The Centers for Medicare and Medicaid Services (CMS) Innovation Center developed and implemented the experimental, five-year Oncology Care Model (OCM) to help decrease costs to Medicare and emphasizes performance and financial accountability for practices. Currently, 176 practices and 10 payers participate in the OCM, which expires in July 2021.1

Under OCM, practices have entered into payment arrangements for episodes of care surrounding chemotherapy administration to cancer patients. The practices must provide enhanced services to Medicare beneficiaries, such as care coordination and navigation, and to use national treatment guidelines for care. The OCM uses a two-part payment approach which includes a Monthly Enhanced Oncology Services Payment of $160 per-beneficiary for delivery of OCM-enhanced services, and a performance-based payment for OCM episodes.

Though CMS encourages practices to participate in two-sided risk, in oncology practices, this could amount to financial penalties if expenses are too high from, for example, treating patients with more complex healthcare needs or for using newer, more expensive drugs in treatment regimens. These concerns are particularly relevant as the cost of care in oncology continues to balloon.

Commercial payers are also experimenting with new physician payment models; however, none are standardized. Different payers offer different incentives, but they all share the same goal: to control costs, while allowing access to newer therapeutics. To provide insight into some of the variations and incentives of different payer payment models, Bo Gamble, Director of Strategic Practice Initiatives, Community Oncology Alliance discussed value-based contracting models at the 2019 Community Oncology Conference in Orlando, FL.

His presentation included 18 payment models, but we’re only highlighting a handful here to provide a brief overview of what some of the different models and initiatives are. Gamble noted limitations in how much he could explain due to the proprietary nature of payer contracts.2 Given the lack of a standardized reform model, he described this era of healthcare reform as an “experimental phase.” Among the variety of models, he thought that some will do well and others will fail, with growth likely indicative of a successful model.

Overview of Three Major National Payment Models


Aetna’s successful growth and addition of practices may be attributed to the fact it does not have a per member per month (PMPM) or downside risk, and it participates in shared savings. The payment model seems to be the most consistent with the OCM. Both have similar features, such as monthly reporting and daily inpatient reports. Other features include nurse navigation, practice-reported patient feedback, a monthly reporting package, and a monthly meeting with the office for mental health. Its measures of drug utilization, inpatient days, and ED visits are also consistent with the OCM’s.

Blue Cross/Blue Shield

Blue Cross Blue Shield (BCBS) Association has developed a clinical delivery process called Blue Distinction. These centers are healthcare facilities and providers recognized for their expertise in delivering specialty care. Blue Distinction Centers+ are recognized for their expertise and efficiency in delivering specialty care. The model features two-sided communications, collaborations, and expectations, which Gamble stated make it a great value-based program. He compared this two-way communication to the one-sided communication that plagued the OCM when it first came out.


Cigna’s initial payer program ended January 1, 2019, and Gamble commended the decision to start a new payer model guided by lessons from the first rather than merely apply “Band-Aids” to the old model. The new Cigna model includes qualifiers that must be met to participate, including 50 covered lives minimum. Cigna’s model emphasizes triage, access to care, adherence to evidence-based pathways, end-of-life care, and shared decision making in the broad care setting, which is important as not all models emphasize it in the broad care. Financially, groups must pass a quality and efficiency score, which determine savings. Like other models, this model has no downside risk.

Smaller Payment Models and Initiatives

Florida Connections

One of the seven models offered in the state of Florida is an employer-specific model, called Florida Connections. The model is a collaboration between two payers and around six employers. Gamble described it as one of two models that has removed so-called power positions. Employers prompted the removal of the requirement for prior authorization so that the rate of care could improve, illustrating how powerful employers can be when contracting payment models. In addition to standard measures, additional measures include decreased pharmacy costs, reduced duplication of diagnostic services, and improved patient satisfaction. Financially, Florida Connections identifies and uses cost-effective pathology and pharmacy services.

BCBS Michigan

BCBS Michigan covers over 90% of oncologists and features a Collaborative Quality Initiative and an enhanced use of prior authorizations. Gamble noted strong, creative leadership. Financially, the model increases the fee schedule, and no facilities want downside risk. Gamble noted that two-sided risk may be changing similarly to how measures evolved and then stabilized. He suspects more two-sided risk will emerge as groups better understand and control their own risk.

Health Springs/Wellcare

The Health Springs/Wellcare model is a capitated plan for Medicare patients in Texas. Gamble described the plan as complicated as it features several sources of data, various divisions under the risk model, and a budget assigned to each division based on the total number of lives with and without cancer. Service lines delineate the model’s budget. The model contains an actuarial assessment. Financially, monthly revenues are determined by the PMPM rate times the number of lives in each division. Patients treated for less than the monthly revenue result in a gain, and patients treated for more than the monthly revenue result in a loss. Assessment of new locations in the risk model are based on the risk of the population.

Final Thoughts

Collaboration and communication seem integral to the success of any model and Gamble used the launch of the OCM model as a key example of how complex and difficult initiating and executing new payment models can be. “Do not expect things to work out clearly,” he said, highlighting that effective communication and collaboration can at least partially attenuate some of the challenges. Additionally, reflection on what has worked well and standardization across models could ease the difficult process of payer reform.

Gamble identified only seven states lacking any initiatives for payment reform in oncology. On the other hand, Florida has seven reform models—a situation that Gamble noted is very cumbersome for healthcare providers.

Gamble concluded by describing what he would like to see for the OCM 2.0 model, including very specific value-based arrangements with drug companies and providers. However, the relationships involve negotiations. Gamble suggested as an example that a drug company may provide more incentives in exchange for data on tumor burden with treatment.


  1. US Department of Health and Human Services; Centers for Medicare and Medicaid Services. Oncology care model. Updated April 4, 2019. Accessed April 29, 2019.
  2. Gamble B. Oncology payment reform: update on novel practice and payer models. Presented at: 2019 Community Oncology Conference; April 4-5, 2019; Orlando, FL.




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