Paying for cancer care: a primer on the Oncology Care Model

Reading time: 4 minutes

Swetha Srinivasan

If you’ve been following the Democratic primary presidential debates, then you’re likely familiar with the spirited debate around the future of the healthcare system in the US, as well as the question: “How will we pay for it?” The world of health policy research has been evaluating on-the-ground solutions to pay for healthcare in a sustainable way for a while now, and paying for cancer care has received special attention in this regard, given the prevalence of cancer in the US, the costs of developing innovative technologies, and the cost of delivering these innovations in clinical practice. 

First, how does payment for healthcare services in the US work? In the traditional fee-for-service (FFS) model, each service delivered by a healthcare provider is paid for separately. This incentivizes providers to provide more treatments as payment is dependent on the volume of services or the quantity of care. Under the Affordable Care Act, the Center for Medicare and Medicaid Services (CMS) established the CMS Innovation Center with the mission of testing various payment and delivery models for healthcare with the goal of achieving better patient outcomes and lowering spending on healthcare, resulting in broader payment reform. Such models of payment shift the focus from quantity to quality of care by linking payment to patient outcomes. 

The Oncology Care Model (OCM) is a payment and delivery model that is currently being tested by CMS and aims “to provide higher quality, more highly coordinated oncology care at the same or lower cost to Medicare.” Medicare is the largest payer for cancer in the US; however, the current list of 10 participating payers includes commercial insurers such as Aetna. The OCM was launched in 2016 and has currently been implemented by 175 oncology practices

A paper by Kline, et al. describes the design of the OCM and challenges encountered in the process of balancing cost control with quality safeguards. The OCM is designed to realign financial incentives by providing payment in two parts:

  1. First, all participating providers receive a monthly fee of $160 for every beneficiary receiving chemotherapy at the practice upto six months or the death of the patient. This payment, called the Monthly Enhanced Oncology Services (MEOS) payment, is intended to assist practices in creating internal resources for effectively meeting patient needs. Activities central to meeting these patient needs under the OCM include collecting data for continuous quality improvement, implementing certified electronic health record technology, providing patient navigation services such as facilitating financial support and linking to follow-up services, and providing 24/7 patient access to an appropriate clinician who has real-time access to the patient’s medical records.
  2. Second, as the patient continues to receive care at the facility, services continued to be reimbursed as in the traditional fee-for-service model. However, the OCM sets financial benchmarks for the episode of care (the duration of the treatment), which includes reimbursement for all the services used and all the providers (oncologists, nurses, etc.) working on the case. If practices meet both these spending targets and quality improvement targets such as all-cause hospital readmissions and patient and caregiver experience scores, they receive a performance-based payment from CMS, with a greater quality score receiving a higher payment bonus. Spending-targets are adjusted for risk so that practices that see higher-cost patients are not unduly penalized. Practices that participate in the one-sided risk model are not responsible for expenditure if they exceed these spending targets, while practices that participate in the two-sided risk model receive a greater performance-based payment, but are responsible for expenditures that exceed the target. 

So does the OCM achieve its goals? The annual evaluation reports by CMS indicate that more time is needed to tell whether the OCM achieves its stated goals of improving care for cancer patients and lowering spending. With the number of new cancer cases expected to rise to 23.6 million by 2030 and the pace of development in cancer care, national expenditures on cancer care are expected to increase. The OCM demonstration project is slated to continue until 2021, and final results from the 5-year evaluation will be critical in informing whether the OCM can be incorporated into permanent payment policy in its current form or with design improvements to achieve better outcomes for cancer patients using value-based payment models. 

Edited by Bekah Schulz

Work Discussed:

  1. Kline, R. M., Muldoon, L. D., Schumacher, H. K., Strawbridge, L. M., York, A. W., Mortimer, L. K., … Conway, P. H. (2017). Design Challenges of an Episode-Based Payment Model in Oncology: The Centers for Medicare & Medicaid Services Oncology Care Model. Journal of Oncology Practice, 13(7), e632–e645.

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