Cancer care is notoriously complex, intensive and costly. With more than 1.6 million people diagnosed with cancer each year, there is a strong impetus towards reforming service delivery. Accordingly, the U.S. Department of Health and Human Services is launching a new payment and care delivery model for Medicare beneficiaries undergoing chemotherapy treatment.[1]

Developed by the Center for Medicare and Medicaid Innovation, the Oncology Care Model (OCM) emphasizes comprehensive, coordinated and person-centered care. Participating providers—physician group practices and solo practitioners—must meet a number of requirements such as providing patients 24-hour access to a clinician who has real-time access to the practice’s medical records and utilizing data for continuous quality improvement. Many of these elements are drawn from the care coordination program launched by CMS this past year for physicians with Medicare Advantage members.

Regarding the OCM payment model, CMMI takes the middle ground, drawing from capitation-like payments and quality-based incentives. Participating practices are eligible for two forms of payment: (1) a monthly per-beneficiary-per-month payment for the duration of an episode of care, intended to pay for enhanced services related to the program requirements; and (2) a performance-based payment for episodes of care involving high-volume cancers for which reliable benchmarks can be calculated. An episode of care is defined by the program model as six months.

Benchmarking and risk-adjustment under the OCM are sources of potential controversy. During the first two years, all participants will be in a one-sided risk arrangement under which the OCM applies a 4% discount to benchmark spending so as to determine the target price for a participant’s performance period episodes. Participants are eligible to retain a portion of the difference between the target price and actual expenditures. Practices are not financially responsible for actual expenditures exceeding target spending. Beginning in the third year, participants will have the option to switch to a two-sided arrangement, under which a 2.75% discount is applied and practices are financially responsible for excess spending. In certain states, this downside risk bearing approach may require additional state insurance law compliance requirements be met, including perhaps a provider sponsored network license, a full or limited insurance license or managed care health plan license. Risk adjustment for the first year is based only on administrative claims data but the RFA includes a request for information about factors not captured therein. Ultimately, the extent to which practitioners are satisfied with the eventual methodology could prove central to the long-term prospects of the model.

Another interesting feature of the OCM is that it encourages participation by other payers, so as to create broader and stronger incentives for care transformation. Payers must align their financial incentives with the practice requirements set forth by the OCM, but are not required to use the same benchmarking, attribution or payment methodologies. This is, conceivably, a powerful union, especially as some insurers are already conducting parallel pilots. UnitedHealthcare, for example, has been experimenting with bundled payment models for cancer care over the past several years. A study of one of its programs, conducted in collaboration with five oncology groups, found a 34% reduction in the total cost of medical care for 810 cancer patients over a three-year period.[2] The exchange of such experiences between the OCM and other payers could contribute to more widespread reform on the path to better care and smarter spending.

Information on applying for participation is available here. A non-binding letter of intent is due March 19 or April 23 for payers and practitioners, respectively.


[1] Detailed information about the Oncology Care Model is available here.

[2] Newcomer, LN, et al. Changing Physician Incentives for Affordable, Quality Cancer Care: Results of an Episode Payment Model. Journal of Oncology Practice (2014).