Some oncology practices may be forced to drop out of a CMS bundled-payment program to avoid being hit with a financial loss.
The agency’s Oncology Care Model beginning in July will push practices to move from one-sided to two-sided risk where they would be responsible for paying the difference if they did not meet a target price for services. Approximately 70% of oncology practices participating in the program would owe the CMS money, according to new research released last week by Avalere Health.
Started in 2016, the Oncology Care Model is a five-year, voluntary bundled-payment model developed to give providers incentives to improve care quality and care coordination to lower costs. Oncology practices participating in the model receive a combination of both regular fee-for-service payments as well as the potential to earn more through a performance-based payment when certain quality and financial measures are met over a six-month performance period.
Currently, practices can generate revenue by providing care below the target price set by the CMS without incurring penalties if they exceed cost targets. Starting in July, practices that have yet to achieve performance-based payment could be transitioned to the two-sided risk model, putting them on the hook for financial losses if they don’t meet cost targets.
They could also pursue a proposed alternative arrangement that creates a “neutral performance zone.” Under that model, additional payments are neither earned nor owed to offer practices less downside risk.
The Avalere report found a greater share of providers would fare better under the alternative two-sided arrangement. While roughly a third of practices are projected to achieve performance-based payment, about half of practices would pay penalties under the alternative arrangement compared with 70% under the original arrangement.
Practices that have already hit their performance metrics can stay in the one-sided risk model.
While many stakeholders recognize the CMS’ bundled-payment models have promise to be effective tools for giving providers incentives to become more efficient, some contend those efforts could be hindered if providers are forced to take on downside risk too quickly. The Government Accountability Office in January found that while many hospitals enter bundled-payment models because of the potential for financial gain, a majority end up leaving once they must incur downside risk.
Dr. Melissa Dillmon, an oncologist at Harbin Clinic Cancer Center in Rome, Ga., said her practice has been able to meet the performance metrics necessary to receive a bonus and will stay in the one-sided risk model. They would have exited the program if the practice were forced to take on more risk, she said. “I think that’s true of everyone across the board,” said Dillmon, who also serves as chair-elect of the clinical practice committee for the American Society of Clinical Oncology.
Making the transition to take on downside risk is difficult since many practices spend the first year in the OCM model getting the right processes in place and learning what the CMS wants, while year two is spent collecting the necessary data, Dillmon said. For many, it means making any necessary changes to their systems cannot be done until three years into the program.
“There definitely is a policy argument for encouraging downside risk, but there’s always been a lot of questions about how fast to make that transition happen,” said Richard Kane, associate principal at Avalere and co-author of the report.
Currently there are 176 oncology practices participating in the OCM, according to the CMS.
Kane said the findings suggest the majority of providers in the model may need more time to prepare before they are ready to take downside risk. “I think it’s about being mindful about where participants are,” he said. “At the same time as participants are experimenting with a new payment model CMS is also experimenting with a new payment model, so I think that’s a reason for some patience.”
Overall, indicators seem to point to a slow move toward value-based payment models on the part of medical groups. A recent survey of physician groups conducted by the trade group AMGA found risk-based payments accounted for 28% of total revenue for medical groups in 2018, and that bundled payments specifically made up only 1% of federal or commercial revenue among multispecialty groups, integrated delivery systems and independent physician associations.
Survey respondents cited a lack of attribution methodologies to accurately measure performance as one of their biggest impediments toward moving to value.