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Alternative payment models are the centerpiece of efforts to reduce Medicare spending and improve quality of care. A limitation of existing alternative payment models is that most are directed toward primary care clinicians, even though specialists account for 95% of Medicare spending.1 In July 2019, the Centers for Medicare & Medicaid Services (CMS) took a step toward broader inclusion of specialists in alternative payment models by proposing to test an episode-based payment model for radiation oncology.2 (CMS also proposed a new model for end-stage renal disease care.) Unlike previous, specialty-focused alternative payment models, participation in the Radiation Oncology Model is mandatory. The proposal offers a template that could serve as the basis for future efforts to revamp Medicare reimbursements for specialty care.
Under the model, radiation oncology physicians and clinics will receive a fixed payment for a 90-day episode of care. As the proposal notes, radiation oncology is well suited for episode-based payments because most courses of treatment are delivered in short, well-defined time periods. Participation in many previous alternative payment models has been voluntary and, as a result, low. For example, less than 10% of medical oncology practices participate in CMS’s Oncology Care Model.3 In addition to limiting the influence of these models, voluntary participation makes it difficult to evaluate their effectiveness because of selection effects. Expected gains (or losses) influence clinicians’ decisions to participate. In the case of the Radiation Oncology Model, participation will be assigned randomly by region and will be mandatory for radiation oncology physician groups and clinics in the selected regions. CMS estimates that to rigorously evaluate the model, it will need to select enough regions so that 40% of all episodes of radiation oncology therapy are included.2
Episode payments will be based on average Medicare reimbursements for episodes at hospital-based radiotherapy clinics in 2015 to 2017. Payments will be risk-adjusted and differ by region. The model builds in automatic discounts of 4% (for professional fees) and 5% (for technical fees). These discounts represent CMS’ share of savings under the model. Participating practices will be 100% at risk for costs. If the payment exceeds their costs, the practices keep the difference. If costs exceed the payment, participants will not receive extra reimbursements.
About one-third of radiation oncology services are provided in freestanding radiotherapy clinics, and the remainder are provided in hospital-based clinics.2 Payments under the model will be site neutral; ie, freestanding and hospital-based radiotherapy clinics will receive the same payment amounts. In other contexts, site-neutral payments favor freestanding clinics because they are paid less under the physician fee schedule than hospital outpatient departments are under the hospital outpatient prospective payment system. However, patients treated in freestanding radiotherapy clinics are more likely to receive intensity-modulated radiation therapy (IMRT) and longer courses of therapy, the costs of which offset the lower per-service reimbursement received by freestanding clinics.2,4,5 CMS estimates that Medicare payments are 11% higher for episodes delivered in freestanding clinics due to volume and treatment intensity effects.2
As in other alternative payment models, payments to participants will be partly based on patient satisfaction and quality. CMS will withhold 3% of episode payments, allowing practices to earn back some or all of the money based on their performance. CMS identified 4 quality measures: plan of care for pain, screening for depression and follow-up plan, advanced care plan, and treatment summary communication. All are measures of the process of care. CMS was unable to identify any outcome measures relevant to radiation oncology. In the proposed regulation, CMS attempted to justify these measures while acknowledging that several are not specific to radiation oncology. The lack of relevant measures highlights a broader obstacle to extending alternative payment models to specialty care, where quality and outcomes are often difficult to define and measure.
In justifying the development of the model, CMS pointed to evidence of overuse. Use of proton beam therapy and IMRT has increased in the absence of evidence that these modalities provide better outcomes compared with less costly 3-dimensional conformal radiotherapy. Many patients with breast cancer and patients with prostate cancer receive long courses of radiotherapy, even though some trials have suggested that short-course (hypofractionated) regimens are as effective.6 The episode-based payment model completely reverses the incentives for participants in the current system; participating centers and physician groups that treat patients using newer, more expensive modalities and long courses of therapy will lose money on a per-episode basis.
The Figure summarizes data from a clinic-level data file released by CMS in conjunction with the Radiation Oncology Model proposal.2 It shows how average, clinic-level Medicare technical fee revenues for treating patients with breast cancer between 2015 and 2017 varied with treatment intensity, defined as the share of patients receiving proton beam therapy, IMRT, or longer courses of 3-dimensional conformal radiotherapy. Mean Medicare revenues were $10 244 for clinics with treatment intensity above 50% vs $8795 for clinics with a treatment intensity below 50%. These data illustrate how some clinics will need to change their treatment patterns to succeed under the Radiation Oncology Model.
IMRT indicates intensity-modulated radiation therapy. Each circle represents a clinic. The horizontal line shows mean episode revenue. Long-course therapy was classified as episodes with 21 or more treatment delivery services. Data are from a radiation oncology episode file.7
Payments under the Radiation Oncology Model will be adjusted upward or downward based on a radiation oncology physician group– and clinic-specific “historical experience” factor, which is weighted by an “efficiency” factor. This indirect and overly complex adjustment will provide higher episode payments to radiation oncology physician groups and clinics that had higher average episode costs in the baseline period, 2015 to 2017. The adjustment does not change physicians’ and clinics’ incentives under the model, but it does reduce potential losses to clinics that used more expensive treatments (eg, IMRT, proton beam therapy, longer fractionation schedules) previously. Clinics with historically lower than average costs may perceive they are being treated unjustly as their payments will be adjusted downward. However, the upward adjustment for high-cost clinics will diminish over the first 3 years of the model.
As is the case with other episodic payment models, the Radiation Oncology Model is unlikely to have much effect on the decision of whether to initiate treatment. Older patients and patients with low-risk breast cancer and low-risk prostate cancer may safely forgo radiotherapy in some cases. However, by making participation mandatory and putting radiation oncology physician groups and clinics at full risk for costs, the Radiation Oncology Model could prove to be a much more powerful model for reshaping clinical practice and reducing costs than other, existing specialty-focused alternative payment models.
Corresponding Author: David H. Howard, PhD, Department of Health Policy and Management, Emory University, 1518 Clifton Rd NE, Atlanta, GA 30030 (firstname.lastname@example.org).
Published Online: October 9, 2019. doi:10.1001/jama.2019.15888
Conflict of Interest Disclosures: None reported.
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Howard DH, Torres MA. Alternative Payment for Radiation Oncology. JAMA. Published online October 09, 2019. doi:10.1001/jama.2019.15888
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