Oncology Care Model Led to $315 Million Net Loss to Medicare

Roxanne Nelson, RN, BSN

November 24, 2021

The Oncology Care Model (OCM) led to modest savings per episode of care but, when factoring in monthly and performance-based payments, resulted in an overall loss of more than $315 million to Medicare, according to one of the most thorough studies of the program.

The analysis, published on November 9 in JAMA, found that per episode savings of $297 during the first 3 years of the model's implementation were offset by $704 in payments for enhanced services to 201 participating practices. When considering the $160 monthly and performance-based payments, the authors estimated a net loss of $315.6 million between 2016 and 2019. In addition, the researchers found no significant differences in the use of most services, quality, or patient experience.

"[The OCM] hasn't reached the hoped-for results ― savings with stable or improved quality ― that would allow CMS [Centers for Medicare & Medicaid Services] to expand it nationally," Nancy Keating, MD, MPH, professor of health care policy and medicine in the Department of Health Care Policy at Harvard Medical School, Boston, and lead author of the recent JAMA study, told Medscape Medical News. "That means CMS needs to take what they learned from OCM and develop and test new models."

The OCM represents the largest alternative payment model, rolled out by CMS in 2016 to address value-based payment for cancer care. More than 3200 oncologists and 201 physician practices voluntarily entered the program, which includes financial and performance accountability for 6-month episodes of care for beneficiaries with cancer undergoing chemotherapy.

Since its implementation, studies assessing the success of the program have yielded mixed results.

A 2018 analysis, for instance, found that one large community practice saved Medicare $3 million over a year after adopting the OCM.

But a study published earlier this year found that while community practices experienced lower drug costs in lung and prostate cancer and lower office-based costs after implementing the program, the difference was not statistically significant when accounting for all costs.

Another recent study found cost reductions for all cancers, but again those savings were offset by administrative expenses. In this study, the OCM led to a $155 million net loss to Medicare over 4 years.

Inside the New Analysis

In the latest study, Keating and colleagues evaluated the association of the OCM with changes in Medicare spending, utilization, quality, and patient experience during the first 3 years after implementation.

Using claims for Medicare Parts A, B, and D, the researchers looked at utilization and payments for hospitalizations, emergency and office visits, chemotherapy, supportive care, and imaging as well as quality measures — such as chemotherapy-associated hospitalizations, emergency visits, end-of-life care, and survival — and patient experience. The study included 987,332 episodes among the 201 OCM practices and 1,122,597 episodes from 534 practices not participating in the program.

During the study period, total episode payments increased from $28,681 for OCM episodes and $28,421 for comparison episodes to $33,211 for OCM episodes and $33,249 for comparison episodes. The relative decreases in total episode payments were primarily for Part B nonchemotherapy drug payments, particularly supportive care medications ($150 per episode), as well as small savings on imaging ($18 per episode).

Overall, the OCM was associated with a significant relative reduction of 1.3% in total episode payments among higher-risk episodes (-$503) and a significant relative increase of 2.1% in total episode payments among lower-risk episodes ($151).

Keating and colleagues found that practices that adopted the OCM demonstrated no reductions in the use of novel therapies or immunotherapies or improvements in most measures of quality, including timeliness of chemotherapy, survival, or chemotherapy-associated hospitalizations. The OCM was also not significantly associated with differences in hospitalizations, emergency department visits, or survival. The authors did find that the OCM was associated with small decreases in chemotherapy-associated emergency department visits and hospitalizations at the end of life, but overall, the model had no impact on patient experiences.

In a tweet, Keating noted that the good news is the OCM achieved "modest savings and no evidence for skimping or harm," but the disappointing news is the program required "huge investments in care," which "did not lead to notable improvements in quality, patient experiences, or outcomes."

What's Next?

The OCM is slated to end in 2022 and will be replaced by a new alternative payment program: the Oncology Care First (OCF) model.

But the jury is still out on whether the OCF will be an improvement.

The OCF model differs from the OCM in several ways. First, the OCF will not include low-risk cancer episodes, such as adjuvant hormonal therapy for breast or prostate cancer, for which cancer care is generally not the main driver of total cost of care. In addition, the fee-for-service backbone of the OCM and the $160 additional monthly payments will be replaced by a single prospective capitated payment for each 6-month period.

This change mirrors a feature of the Radiation Oncology Model, proposed in 2019, which would cut payments for some high-value radiation treatments by 22% in order save an estimated $160 million. The proposal was met with strong pushback from the radiation oncology community, who felt the cuts were excessive and would jeopardize access to radiation therapy services for Medicare beneficiaries.

Oncologists have not yet sounded the alarm on the OCF model. In fact, the OCF seems to have garnered little attention.

Keating emphasized that it is difficult to address the OCF's potential impact on cancer care and costs because the program's rollout has been delayed and thus no comparisons can be made to the OCM.

"I don't believe a start date has been set," said Keating. "In fact, just this week, the Community Oncology Alliance has asked CMMI [Center for Medicare and Medicaid Innovation] to extend [the] OCM through 2022 so as not to create a gap between the two models."

Ensuring a seamless transition between the models is important because many practices have come to rely on the Monthly Enhanced Oncology Service Payments to hire staff to support care improvement activities required by OCM. These practices "fear that they will not be able to maintain these activities without a model that provides such payments," Keating said.

Deborah Schrag, MD, MPH, from Memorial Sloan Kettering Cancer Center, New York City, believes that even though the OCM wasn't a home run, it was still a worthwhile endeavor and should not curtail future alternative payment efforts.

"Overall, the OCM was incredibly important as a large experiment with an alternative payment model," Schrag told Medscape Medical News. "The success was that it got done and did not undermine care in any way."

That said, she noted that in some sense it was doomed because oncology drug pricing is such a dominant component of care and is so high. "But the fact that OCM wasn't a success does not mean that we should not continue experimentation with payment reform," Schrag said. "Such experimentation has the potential to improve the value of cancer care and is critically important."

The authors are members of an evaluation team contracted by CMS to evaluate the Oncology Care Model. Keating has disclosed no relevant financial relationships. Schrag reported being principal investigator of a research protocol funded by Grail and receiving personal fees from Pfizer and grants to her institution from the American Association for Cancer Research.

JAMA. Published online November 9, 2021. Abstract

For more from Medscape Oncology, join us on Twitter and Facebook.


Comments on Medscape are moderated and should be professional in tone and on topic. You must declare any conflicts of interest related to your comments and responses. Please see our Commenting Guide for further information. We reserve the right to remove posts at our sole discretion.