Administrators Say OCM Monthly Payments Won't Cover Costs of Improved Care

Meir Rinde
Published: Tuesday, Jun 27, 2017
Alti Rahman

Alti Rahman, MHA, MBA, CSSBB

Practices in CMS’ Oncology Care Model (OCM) are individually receiving hundreds of thousands of dollars in new annual revenue, but physicians and administrators are not exactly celebrating the influx of cash. The OCM requires substantial, ongoing spending on additional staff, software upgrades, and other infrastructure that has left some practices financially underwater on the model despite the new payments. Even those that are doing better must contend with the fact that the new funding counts toward their patients’ total cost of care. That total cost must be reduced if providers want to avoid being expelled from the program or possibly hit with financial penalties.


Table: How CMS Will Calculate Bonus Payment in the Oncology Care Model

Table: How CMS Will Calculate Bonus Payment in the Oncology Care Model

The new disbursement, called the Monthly Enhanced Oncology Services payment (MEOS), provides practices with $160 per patient per month during 6-month treatment episodes. It is meant to help them develop systems to educate patients, collect extensive data, and prevent expensive emergency department (ED) visits and hospitalizations. After automatic federal spending cuts, a 6-month episode brings a practice $940.80, and payments may continue into multiple episodes. A hypothetical practice that continuously has 500 patients covered by the OCM would receive $940,800 a year. Individual practices may have very different totals.

At the same time, CMS’ Center for Medicare & Medicaid Innovation (CMMI) requires participating practices to allow patients to call in at any hour, which means hiring nurses to staff a phone triage system and giving them real-time access to patient records. Office hours are typically extended to evenings and weekends. Staffers must spend considerable time compiling 13-point care plans for each patient listing treatment goals, estimated out-of-pocket costs, care team members, and other elements. Many practices hire patient navigators and contract with data analysts who can go through masses of patient and claims data to find ways to improve the quality of care.

Oncology Consultants in Houston spent $300,000 ramping up for the model, with roughly two-thirds of those dollars going toward added personnel and one-third to technology, administrator Alti Rahman said. The practice has 15 physicians and 4 midlevel providers working from 9 medical oncology locations and 2 radiation centers. It had previously added some weekend hours and longer weekday hours, and for the OCM it assigned nurses to phone triage and purchased oncology-specific triage software.

Rahman said his practice had 322 patients in the OCM as of mid-May and is receiving more in MEOS payments than it is spending on new infrastructure. He said the practice is in that positive financial situation because it extended its hours and staffed up several years earlier, reducing the need for hiring when the OCM launched. Rahman said it’s also important to remember that any net gains are not pure profit; in a sense, the payments count against you when CMMI calculates whether you are meeting cost-reduction targets.

“Yes, it’s called the Monthly Enhanced Oncology Services payment, and you’re getting revenues from it, but your mindset really needs to be away from, ‘Well, this is additional revenues for me.’ You need to treat it as a loan that, at some point, will need to be repaid,” Rahman said. “If you look at it that way, then you focus your efforts on trying to see how you’re going to get the extra dollars of shared savings.”

MEOS payments count as part of the cost of care, along with all Medicare Part A and Part B expenses and some Part D costs. The model takes the total cost figure and adjusts it for disease type, patient comorbidities, geographic variation, and other factors, then reduces it by 4%—reflecting the goal of lower spending—and uses the result to calculate a target price. Practices that beat their target will receive performance-based payments next year, up to the amount of savings they achieved below the target. Those that do not could be expelled from the program (Figure, cover).

Eventually practices are expected to move into the 2-sided risk version of the OCM, although none have opted to do so yet. Under 2-sided risk, the target is eased somewhat and potential rewards are higher. Practices that fall short would be assessed large financial penalties that could force them to close their doors, making the cost calculation particularly important.

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