Regulatory changes for community oncology: What health execs should know

April 14, 2017

One thing that is unlikely to change under the new Administration is the goal of reducing the cost of healthcare through various alternative payment initiatives. Here’s how that will affect oncology.

To quote Jacob Bronowski, author of The Ascent of Man: the search for knowledge through science “is an unending adventure at the edge of uncertainty.”

That uncertainty may seem somewhat vaster today with so many regulatory changes in the air for community oncology.

Among other things, there is a new administration in Washington with a new healthcare agenda, the contours of which are just beginning to come into view, but which is expected to increase the free care and bad debt burden on oncology providers.

Other regulatory changes include:

  • The beginning of MACRA, with hard choices for oncologists between participating in the Merit-Based Incentive Payment System (MIPS) or the Advanced Alternative Payment Model (APM) pathway, and figuring out how to succeed on either of those tracks;

  • The start of the Medicare Oncology Care Model (OCM), testing episode of care payments for chemotherapy services; and

  • The recent Bipartisan Budget Act and 21st Century Cures Act, leveling Medicare payments between hospitals and physicians for most off-campus cancer facilities, funding the Biden Cancer Moonshot with $1.3 billion, and reforming the drug and medical device approval process to help speed new discoveries to market.

The Oncology Care Model

BlauOne thing that is unlikely to change under the Trump Administration is the goal of reducing the cost of healthcare through various alternative payment initiatives. For example, the OCM, launched on July 1, 2016, is likely to be preserved. It is a significant experiment in transitioning to value-based oncology care, with 196 oncology providers and 17 health plans participating over the next five years.

OCM-participating oncology practices can qualify to be paid a Monthly Enhanced Oncology Service (MEOS) payment of $160 for each six-month episode of chemotherapy care for their cancer patents, in addition to their usual Medicare fee schedule payments.

OCM-participating practices also have the opportunity to earn a performance bonus based on meeting quality standards and achieving cost savings in relation to the practice’s target price for each chemotherapy episode.

The MEOS payment is intended to help participants effectively manage and coordinate care for oncology patients during episodes of care, while the performance-based payment is intended to incentivize practices to lower the total cost of care and improve care quality.

OCM-participating practices can choose either a one-sided or two-sided risk track. The one-sided track involves a target price with a 4% discount to historic costs before the practice shares in cost savings. The practice can only remain on the one-sided track if it earns an OCM performance bonus by mid-2019 by meeting the applicable quality standards and reducing costs by more than 4%.

Next: The two-sided track

 

In contrast, the two-sided track involves only a 2.75% discount to historic costs before the practice shares in cost savings, but exposes the practice to having to repay CMS for any Medicare expenditures that exceed the practice’s target prices.

The OCM two-sided track is the only APM currently available to oncologists who desire to elect that option for MACRA purposes. Starting in 2019, physicians who participate in an APM can qualify to receive a 5% add-on to their Medicare fee schedule payment. But, electing the APM option will expose the oncologist to the down-side risk of the APM (e.g., repayment of all Medicare expenditures that exceed applicable OCM price targets).

Initially, there was no opportunity for any oncologist to receive the 5% MACRA add-on payment in 2019 since the OCM two-sided track originally was not scheduled to begin until 2018-a year after the 2017 data collection year on which 2019 payments will be based.

However, CMS accelerated the start of the OCM two-sided track from January 1, 2018 to January 1, 2017, to coordinate with the first performance data collection year under MACRA.

While this APM opportunity is now available, at press time, no oncology practice has elected the OCM two-sided track for 2017.

Most OCM practices are not yet ready to shoulder this magnitude of financial risk. They have neither the data reporting nor data analytics capability to assume such risk. Thus, at least for 2017, eligible oncologists will likely only be participating in the MIPS pathway.

MACRA/MIPS

Oncology practices that qualify to participate in MIPS, beginning in 2019, will receive a Medicare positive or negative payment adjustment of 4%. The adjustment will be based on a composite performance score across the following four performance categories:

  • Quality

  • Resource use (cost)

  • Clinical practice improvement activities

  • Advancing care information (i.e., meaningful use of certified electronic health record technology)

The overall performance of eligible oncologists will be assessed by CMS in relation to all other participating physicians (not just oncologists). And, there will be winners and losers. The initial payment adjustment of 4% in 2019 increases in increments to a negative or positive 9% adjustment by 2022-so the stakes get higher over time.

To succeed under MIPS, eligible physicians will need to be able to track and report in real-time (or near real-time) on the four performance categories noted above, and adjust their practices to perform better than most of their peers on the relevant scoring criteria.

These regulatory reforms will change the way that oncology providers need to conduct their businesses. Oncology providers will need to acquire new equipment, software, and information technologies; forge new business relationships; engage in new data analytics; as well as change work flow and staffing arrangements.

As such, the business and economic models for the cancer center of the future are evolving and may look quite different from the care delivery models of today. Oncology stakeholders should think seriously about their “unending adventure on the edge of uncertainty,” and how best to meet these new regulatory challenges and position for future success.