Where Are the Opportunities for Reducing Health Care Spending Within Alternative Payment Models?

The Oncology Care Model (OCM) is a highly controversial specialty care model developed by the Centers for Medicare & Medicaid aimed to provide higher-quality care at lower cost. Because oncologists will be increasingly held accountable for spending as well as quality within new value-based health care models like the OCM, they need to understand the drivers of total spending for their patients.

This retrospective cohort study included patients ≥ 65 years of age with primary fee-for-service Medicare insurance who received antineoplastic therapy at 12 cancer centers in the Southeast from 2012 to 2014. Medicare administrative claims data were used to identify health care spending during the prechemotherapy period (from cancer diagnosis to antineoplastic therapy initiation) and during the OCM episodes of care triggered by antineoplastic treatment. Total health care spending per episode includes all types of services received by a patient, including nononcology services. Spending was further characterized by type of service.

Average total health care spending in the three OCM episodes of care was $33,838 (n = 3,427), $23,811 (n = 1,207), and $19,241 (n = 678). Antineoplastic drugs accounted for 27%, 32%, and 36% of total health care spending in the first, second, and third episodes. Ten drugs, used by 31% of patients, contributed 61% to drug spending ($18.8 million) in the first episode. Inpatient spending also substantially contributed to total costs, representing 17% to 20% ($30.5 million) of total health care spending.

Health care spending was heavily driven by both antineoplastic drugs and hospital use. Oncologists' ability to affect these types of spending will determine their success under alternative payment models.