Modeling Episode-Based Payments for Cancer Using Commercial Claims Data

Innovative health care reimbursement models are gaining attention as a way to move away from a payment system that rewards quantity of service over quality of care. One such alternative payment model is episode-based payment, such as the Oncology Care Model (OCM) being piloted by the Center for Medicare & Medicaid Innovation.

To adapt the OCM methodology to a commercially insured population to understand the challenges and potential implications of implementing an episode-based payment model in a commercial health plan.

Administrative claims databases from 3 regional commercial health plans were used to identify continually eligible patients (aged ≥ 18 years) with breast cancer, lung cancer, melanoma, or chronic myelogenous leukemia (CML). Episode triggers were identified using the OCM methodology. In calculating the episode-based payments, adjustments to the OCM methodology were necessary to adapt the methodology to a commercial population, since not all Medicare data elements used in the OCM algorithm are available in commercial claims data.

The adapted OCM-like model was applied to data from 39,967 patients with 1 of 4 cancer types. Approximately 13% of patients had at least 1 episode per year and the average number of episodes per patient per year for patients with at least 1 episode ranged from 1.42 for patients with melanoma to 1.94 for patients with CML. The percentage of total annual costs included in episodes was 49%, 60%, 34%, and 52% for breast cancer, lung cancer, melanoma, and CML, respectively.

As health care financing shifts to alternative payment models, insurers may look to adopt episode-based payments for oncology, similar to the OCM. This study shows that implementing an OCM-like model in a commercial health plan is feasible but will require adjustments to the OCM algorithm to make it implementable and applicable to populations beyond Medicare.

This study was conducted by Magellan Rx Management with funding contributed by Novartis. Zacker is an employee of Novartis. The other authors are employed by Magellan Rx Management and have nothing to disclose.