Stakeholders Pick Apart Bundled Payments for Radiation Oncology

September 19, 2019 - The American Hospital Association (AHA), Community Oncology Alliance (COA), and other key stakeholders voiced concerns about a mandatory bundled payments model for radiation oncology slated to take effect in 2020.

CMS proposed in July to implement a model that would reimburse a prospective, site-neutral payment to cover 90-day radiotherapy episodes for 17 types of cancer. The model would require physician group practices, hospital outpatient departments, and freestanding radiation therapy centers in randomly selected areas to participate and report certain quality, patient experience, and clinical data to CMS over the course of the five-year model.

The federal agency intends for the bundled payments to reduce Medicare spending on radiation oncology services by encouraging patients and providers to deliver the services in the most appropriate setting. Linking quality metrics to payments would also support care quality improvements, the agency stated in the proposed rule.

With the comment period recently closing on the proposed rule, stakeholders let CMS know how they feel about the model, and for many, the devil was in the details.

Stakeholders oppose mandatory model

The AHA and many other stakeholders questioned if the bundled payments would effectively reduce costs and improve quality while being a mandatory model.

READ MORE: Oncology Practices Oppose Mandatory Bundled Payment Model

“Our members support moving toward the provision of more accountable, streamlined care and are redesigning delivery systems to increase value and better serve patients,” AHA wrote in a comment letter. However, hospitals and health systems “should not be required to participate in such a complicated program … if they do not believe it will benefit the patients they serve. Moreover, other providers that may have the systems in place to excel under this new model could be excluded based on geographic location,” the association continued.

Compulsory participation would also be a disadvantage for some providers, COA added.

“It is important to give providers the choice to join an APM because not all providers have the infrastructure, commitment, and organizational buy-in to succeed in new payment arrangements. If required to participate, providers may not have adequate support to achieve the model’s desired goals while ensuring they continue to meet the needs of their patients,” the non-profit representing community oncology practices told CMS in formal comments on the model.

Stakeholders generally agreed that CMS should make the proposed bundled payments model for radiation oncology voluntary or at least decrease the mandatory scope of the model from 40 percent of all episodes nationwide and 17 cancer types.

Concerns about financial risk

Switching the model from mandatory to voluntary would also support providers with assuming financial risk, which would be required immediately according to the proposed rule from CMS, the American Society for Radiation Oncology (ASTRO) said in its comments.

READ MORE: Key Strategies for Succeeding with Healthcare Bundled Payments

“ASTRO urges CMS to initiate the model on a voluntary basis with little to no risk. Transition to a risk-based model with opt-in and opt-out provisions can then take place over a period of time. This approach is similar to how the Agency instituted the Comprehensive Joint Replacement model, which allowed for a one-year transition without any downside risk, as well as the Oncology Care Model that features a multi-year one-sided risk component that transitions to two-side risk either voluntarily or due to a practice’s inability to earn a performance based payment,” the organization stated.

The level of downside risk required in the first year of participation also concerned the AHA. The association said that the proposed policy “places too much risk and burden on providers with little opportunity for reward in the form of shared savings, especially in light of the significant investments required.”

To ease provider concerns, CMS should reduce the discount amount, especially for the technical component payment and incorporate a stop-loss provision that increases each year, the AHA recommended.

The association also urged CMS to make the model’s payments retrospective to allow the agency to reconcile a provider’s historical and actual case mix and avoid inappropriate level of under- or overpayments.

Payment structure flaws

Other stakeholders also found issues with the model’s proposed payment structure, including the use of hospital outpatient department (HOPD) payment rates to set the national base rate for episode payment amounts.

READ MORE: GAO: Advantages of Voluntary and Mandatory Bundled Payments

CMS proposed to use HOPD payment rates instead of rates from the Physician Fee Schedule (PFS) to determine a site-neutral base bundled payment amount for the model because HOPD rates have been more stable over time and have a “stronger empirical foundation” since the rates are determined using hospital cost report data.

However, using HOPD payment rates over PFS rate would counter CMS’ goals for the model, the Medicare Payment Advisory Commission (MedPAC) said in its comment letter. The proposed policy “would increase payments for freestanding radiation therapy centers and reduce savings for the Medicare program and beneficiaries,” the commission explained.

Using HOPD payment rates would also weaken the overall structure of the radiation oncology model, COA added. The organization advised CMS to also account for PFS episodes when calculating base rates.

“By including all episodes (i.e., HOPD and PFS episodes) in the base rate calculation, CMS will include a greater patient population which will in turn reflect more accurate payments to physicians. In addition, by revising the base rate calculation, CMS will account for different care patterns based on a greater patient mix, which will create more fair and appropriate payments to physicians,” COA explained.

CMS should also develop different payments based on a practice’s patient risk levels, COA said after expressing concerns about the model’s capitated reimbursement structure.

“[W]e believe that the capitated system creates a lack of flexibility for different practices with different patient populations. It is important for CMS to consider the stages of diseases for different cancer types when calculating payments to physicians,” the organization stated.

In light of the concerns, stakeholders urged CMS to delay implementation of the model. Specifically, the AHA called on CMS to delay implementation until a year after the agency publishes the final rule for the bundled payments model.

“Doing so would help provide participants sufficient time to operationalize the model’s parameters and be in a much better position to achieve success,” the hospital association.

Other stakeholders called on CMS to at least delay implementation of the model until summer 2020.