The Oncology Care Model: Big Deal?

with 2 Comments

The Centers for Medicare & Medicaid Services (CMS) has announced a pilot program that seeks to change the way in which oncologists are paid to treat cancer. Known as the Oncology Care Model, or OCM, this program combines the elements of a Patient-centered Medical Home (PCMH) and an Accountable Care Organization (ACO) in an effort to control costs and improve quality.

How does it do this? The OCM uses a per-member-per-month payment of $160 to reimburse oncology practices for coordinating and managing a patient’s care. This represents a significant effort to bring oncology practices onto the PCMH playing field, an environment which has primarily been populated by primary care practices. The OCM also uses a performance-based payment incentive to lower the cost of cancer care. Importantly, physician payments under the OCM still rely on the fee-for-service (FFS) model. However, if the total cost of care for a patient is reduced, the practice may receive an additional performance payment. This concept directly reflects the CMS ACO model, which uses FFS payments as well as shared savings to reimburse (and incentivize) physicians.

Another critical feature of the OCM is the fact that Part D expenditures may be included in the cost savings calculations. When CMS adds up the claims for an episode of cancer care, it may pull in Part D prescription costs. This is a marked difference with the shared savings calculations under the CMS ACO model, which don’t include Part D costs in the formula.


The Oncology Care Model is an unabashed effort by CMS to move oncology reimbursement from “volume to value”.

Oncology practices still thrive under the fee-for-service model. Chemotherapy and other services are still viable parts of their businesses because they represent important components of the oncologist’s reimbursement. Conversely, the PCMH and ACO models are not necessarily attractive to an oncologist from a business perspective. Up until now, the oncologist did not receive distinct reimbursement for becoming a PCMH and therefore responsible for coordinating their patient’s care outside the office. And joining an ACO was not a sure bet to improve their income. The OCM as proposed by CMS is a way to get the oncologists to reduce expenses by coordinating care with other physicians, and also incentivize them to reduce costs.

The inclusion of Part D cost calculations is an important feature of the OCM, putting it in start contrast with the ACO model. With the growing list of oral oncology medications approved by the FDA, oncologists who choose to participate in the OCM may have pause before they write prescriptions for $1,000 pills. Therefore, from a prescription drug utilization standpoint, the OCM may eventually constrain costs more than the ACO model.

2 Responses

  1. Ann Marie Edwards
    | Reply

    It is unfortunate that there is not greater alignment in the stakeholders caring for cancer patients. One great example is commercial payers shifting oral dispensing only to specialty pharmacies and offering 90 days’ supply. How often does a patient go off therapy due to not tolerating or progression of disease?

    When the oncologist can offer dispensing of the oral chemotherapy supply needed as they monitor the patient’s care, why is it more advantageous to remove that and shift it to specialty pharmacy? We are all familiar with the volume of wasted drug that can not be used for another patient and has already been paid for by the payers. Wake up, payers and smell the coffee!! There are opportunities for savings in the current systems but it is necessary to put aside the assumption that the physicians are motivated by greed.

    • Don Benson
      | Reply

      More and more often it seems payers (both commercial and government) are forcing physicians to consider their own finances when making clinical decisions. It’s the payer’s strategy of choice to move the health care system from volume to value. The physician seemingly can’t win because they’re accused of making clinical decisions to either increase the fee-for-service claims (in the old “volume” system) or denying expensive treatments because they may lose in the shared savings (in the new “value” system). I personally believe physicians should be allowed to consider costs from their perspective. Otherwise, there may be no cost controls in our health care system. I would rather have the financial considerations in a physician’s hands than a payer’s hands!

      That being said, the infusion of financial considerations in the clinical decision making process makes understanding the business of medicine more and more important.

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