Oncology Care Model (OCM) Bundle: 8 Summary Thoughts

Written By: Leavitt Partners

Recently I had the opportunity to research CMS’ Oncology Care Model (OCM) bundle and to interview a number of c-suite individuals across oncology hospitals and clinics. Below please find eight summary thoughts.

  1. Difficulty of bundling oncology. Joint replacements (the focus of CMS’ new mandatory bundled payment program) have a clear beginning and end for the episode of care and therefore lend themselves well to a bundled payment method. In contrast, cancer has an unknown treatment duration and presents differently in each person depending on our individual biology and the cancer’s pathology, thus cancer treatment is hard to pay for in a bundled way.
  2. CMS seems to address this difficulty with a longer bundle episode duration. Most bundles are 90-days, whereas OCM is six months and more importantly can be extended another six months if chemotherapy treatments continue. While the bundle start point is firm (when chemotherapy treatment begins), the soft end point lends more adaptability to the patient’s need. The very approach of triggering the bundle through chemotherapy payments, should create incentives for increased care coordination.
  1. Care Coordination is a Main Focus. OCM’s $160 per beneficiary per month (PBPM) payment is attractive for a practice. While this rich benefit factors into the bundle owner’s target calculation, it should provide the capital and incentive to encourage strong care coordination programs for chemotherapy patients. (The aim with proactive chemotherapy care coordination is to decrease ER visits and hospital admissions secondary to patient toxicity or exacerbation.)
  1. Costs are a driver of cancer bundles. It’s not surprising that CMS is making an effort at bundled payments, as total chemotherapy costs in the US were $124.6b in 2010 and are projected to rise to $207 billion in 2020. Commercial cancer bundles have shown promising evidence to reduce costs, e.g. United experienced a 34% cost savings in a 12-bundle study in 2009. Typically any savings > 4% are seen as statistically significant and considered by CMS as successful.
  1. Cancer incidence rates in Medicare are high. Of the 1.6 million people diagnosed with cancer each year in the U.S., the majority of people are older than 65. Current projections expect a 30% increase in cancer incidence by 2030.
  1. Oncology practices are testing the bundled payment waters. OCM has a relatively small rollout compared to other CMS bundles: only 100 awardees will be selected nationwide. Applicants I interviewed stated interest in applying to gain experience with bundles, seeing them as a probable payment direction CMS and commercial payers will pursue.  There’s a relatively small risk for providers to apply, with no downside risk for two years and a small +/-4% by year three (compare that small OCM +/-4% by 2019 to MACRA’s +/- 9% by 2023, or CJR’s +/- 20% by 2020).  These facts suggest a “get the feet wet” approach for OCM for both providers and CMS. OCM might even be characterized as a “bundle light.”
  1. Effects on Practices. Small and large oncology practices expressed respective advantages for managing the OCM bundle, summarized below:

Oncology

  1. Chemotherapy Bundle History & Adoption.   United, Aetna, Cigna, and Anthem have been experimenting for years in oncologic clinical pathways, oncology medical homes, and episode payments to eliminate unnecessary variation in chemotherapy. It will be interesting to see if commercial payers adopt CMS’ OCM model, American Society of Clinical Oncology’s (ASCO) models, or a blend. From a provider perspective, it will be easier to work with oncology bundles that are more standardized in quality measures and designs.
  1. Going forward. This is a very exciting time in cancer therapy. Moonshot 2020 provides $1b in funding for emerging cancer therapies such as immunotherapy, cellular therapy, and tailored therapy (genomics). This is also a challenging time, as changing payment methods require new provider capabilities.  Oncology practices should feel a sense of relief that CMS’ bundle provides care coordination fees ($160 pbpm), has a small rollout (100 awardees), and has a small +/- risk {4%}, i.e. this is a small titration bundle compared to the gravity of CJR or MACRA.