OCM Underestimates Medicare Costs

The Oncology Care Model (OCM) was created by CMS with the goal of improving cancer treatment quality at the same or even a lower cost to Medicare than traditional models. However, new research suggests that treatment OCM treatment costs are higher than anticipated.

The study from Avalere, a strategic advisory company, found that on average, the risk-adjustment method for the OCM payment model underestimates Medicare costs for OCM episodes by 2 to 3%.

Currently, about 1 in 5 patients Medicare FFS are treated by an OCM participating practice.

The study found that overall actual costs for the first performance period were $30,500 per episode, compared to the $29,700 predicted costs-a 3% difference. The study found that the gap did improve in the second performance period, with an actual per-episode cost of $29,400 compared to the $28,900 prediction-a 2% difference.

Related article: Three Keys to Success in the Oncology Care Model

Avalere also compared OCM participants with non-participants, and found that OCM participants had a 2 to 4% higher per-episode cost than participants. The Prediction Model estimated just a 0.5 to 1% higher per-episode cost. According to Avalere, the remaining 2-3% could be explained by key risk factors missing from the Prediction Model.

“If the OCM’s Prediction Model underestimates actual costs, then success for practice participants becomes more difficult,” said Lance Grady, managing director at Avalere in a release. “We expect CMS to continue to improve the model, as it recently said it would incorporate stage-of-tumor information for breast, lung, and prostate cancers into the Prediction Model.”

Nicholas Hamm is an editor with Managed Healthcare Executive