Specialty Payment Model Opportunities and Assessment: Oncology Simulation Report

Area of Science:

• Health economics
• Oncology payment reform
• Healthcare policy analysis

Background:

• The Center for Medicare and Medicaid Innovation (CMS) is exploring new payment models for specialty oncology services.
• Simulation analyses were commissioned to assess the potential impacts of a proposed oncology payment model.

Purpose of the Study:

• To simulate the financial and utilization impacts of a novel oncology payment model.
• To inform design decisions for a potential Centers for Medicare & Medicaid Services (CMS) oncology payment model.

Main Methods:

• Analysis of an episode-level dataset from Medicare fee-for-service (FFS) claims for 2010 oncology episodes.
• Modeling a payment structure including FFS, per-beneficiary per-month care management payments, and performance-based payments.

Main Results:

• Care management payments ($960/episode) represent 4% of total spending but increase practice revenue by ~50%.
• Medicare requires a ~4% reduction in utilization/intensity for the program to break even.
• Reducing care management or performance-based payments can lower the break-even threshold.

Conclusions:

• The proposed oncology payment model offers substantial revenue increases for practices.
• Achieving Medicare program break-even necessitates significant practice-level utilization and intensity reductions.
• Model parameters, specifically payment amounts, can be adjusted to influence financial sustainability.