This post was written by Jessica Turgon, Principal, Matt Sturm, Senior Manager, and Meagan O’Neill, Senior Consultant.
Earlier this week the Centers for Medicare & Medicaid Services (CMS) announced the nearly 200 organizations that have been selected for participation in the Oncology Care Model (OCM), one of the new payment and care delivery initiatives introduced by the Center for Medicare & Medicaid Innovation (CMMI) in 2015. The 5-year pilot is slated to begin July 1, and according to CMS, the number of participants is twice the size as initially anticipated – it will include approximately 3,200 oncologists and provide coverage for 155,000 Medicare beneficiaries.CMMI expects that OCM will improve the quality and coordination of care for cancer patients while simultaneously lowering costs. Participating practices will receive a performance-based episodic payment for chemotherapy patients and in turn be responsible for tracking the patient’s total cost of care (i.e., Medicare Part A, Part B, and certain Part D services) over a 6-month episode. Participating physicians will also receive per member per month payments (called a Monthly Enhanced Oncology Services, or MEOS, payment) and are expected to use those funds in the new navigation, access, and enhanced patient service elements.
As an example, consider a physician practice with a current episode cost of $100. Based on OCM’s target of 4% in cost savings below historical benchmark performance, the practice will have a new episode cost target of $96. If the practice can successfully lower its episode cost to $90, the group will receive a portion of the $6 savings per episode, as determined by a performance factor that measures how well the group performed on OCM’s quality indicators.
What Should Hospitals Expect?
Given that OCM includes the total cost of care, hospital admissions and emergency room visits are typical targets as areas in which a practice can make a cost-savings impact. Hospitals should expect to have conversations with their physicians about keeping chemotherapy patients out of the emergency department and ensuring patients have 24/7 access to appropriate and less costly providers and settings.
What Should Physicians Expect?
Physicians and staff will need to become well versed on the requirements built into OCM. Physicians should expect to see more chemotherapy patients in ambulatory environments, and practices will need to ensure relationships are in place to provide various cancer services across the outpatient setting. Imaging, in particular, will be an area of focus, and it’s likely that many practices will evaluate opportunities for cost savings through freestanding imaging centers for lab and radiology services over traditional hospital-based imaging.
Check this space in the coming weeks for additional answers on the implications of OCM.