Developing Alternative Payment Models That Providers and Commercial Payers Support

David C. Fryefield, MD
Published: Monday, Dec 24, 2018
David C. Fryefield, MD

David C. Fryefield, MD

Patients with cancer in the United States have significantly benefited from steady improvement in treatment outcomes over the past few decades. Data from the National Cancer Institute show a large decline in the cancer death rate, down by 25% since 1990.1 Although some of the improvement is a result of prevention and screening, advances in technology and in chemotherapy and immunotherapy pharmaceuticals have been major driving forces. These advances have come at a significant cost, however. A 2011 study projected that the cost of all cancer care in the United States would rise to $157.7 billion by 2020, up from $124.5 billion in 2010.2

In an attempt to control the cost of care, many commercial payers have implemented prior authorization (PA) requirements. For oncologists, the result has been a huge administrative burden, with increasing denial rates and a drop in overall payment for services.3 A survey of American Society of Clinical Oncology stateaffiliate organizations found that the PA process increased demands on staff time, delayed patient care, decreased patient satisfaction, and complicated medical decision making.4 In addition, the actual cost-reduction benefit of applying strict PA requirements to the fee-for-service system has been questioned.5

Robert Mechanic, MBA, and Robert Galvin, MD, wrote in the New England Journal of Medicine that “we cannot solve this spending crisis without substantial changes in the way care is delivered. But widespread delivery-system restructuring will not occur as long as fee-for-service is the dominant method of healthcare payment.” They also noted that adoption of alternative payment models (APMs) by commercial health plans has been slow.6 My organization, The US Oncology Network (The Network), has embraced the concept of APMs for oncology services, and we have participated in many discussions with commercial payers. Despite our efforts, we’ve experienced slow adoption of APMs by commercial payers, similar to the experience described by Mechanic and Galvin.

Enter the Oncology Care Model and APMs for Covering Radiation Therapy

Medicare has been actively transitioning provider payments into APMs since 2010.7 In 2016, the Center for Medicare and Medicaid Innovation launched the Oncology Care Model (OCM), a 5-year model to test innovative payment strategies that promote both high-quality and high-value cancer care. Fifteen practices within The Network are participating in the OCM.

Based on the OCM experience, The Network has also been eager to develop new value-based payment models for commercial payers that more accurately align incentives with the care provided. Because the OCM does not directly address radiation oncology services, The Network created its own radiation oncology APM models that address commercial payment.

The Network’s radiation APM offerings fall into 2 categories: Episode of Care bundled payments and Capitation Payment. The Network developed different APM options because, based on our experience, various payers may prefer one model over another. However, each of the models is driven by the desire to move away from traditional payment to more predictable episode-based bundles.

The Episode of Care model was designed to be flexible, as either a disease site/stage–based model or a modality-based platform. The framework provides prepayment for a defined single episode of care based on the disease site or stage. The modality-based model provides prospective payment for an episode of care using case rates based on various radiation technologies, including 3D conformal therapy, intensity-modulated radiation therapy, stereotactic radiosurgery/stereotactic body radiotherapy, and highdose- rate/low-dose-rate brachytherapy.

In the Capitation Payment model, providers take on more cost risk for patient care and are paid on a per-member, per-month basis for all services rendered to patients within a health plan. Currently, the Capitation Payment model is less common than the Episode of Care case rate model among the number of practices in The Network that are already using radiation APMs.

Both models support quality care with improved outcomes and patient experience at a sustainable cost. They allow the physician to practice medicine while encouraging treatment optimization by adhering to preauthorized treatment guidelines and algorithms.


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