Unpacking the Proposed Radiation Oncology Bundled Payment Model

July 17, 2019 - On July 10, 2019, CMS proposed a mandatory radiation oncology bundled payment model that aims to improve the quality of care for cancer patients undergoing radiotherapy treatment and reduce provider burden.

Titled the Radiation Oncology (RO) Model, the bundled payment model would test whether a prospective, site-neutral payment to physician group practices (PGPs), hospital outpatient departments (HOPDs), and freestanding radiation therapy centers for 90-day radiotherapy episodes would reduce Medicare spending while maintaining or advancing care quality.

If finalized, radiotherapy providers and suppliers in certain “core-based statistical areas” would have to participate in the five-year RO Model, which would cover 17 different types of cancer.

The radiation oncology bundled payment model would significantly change how Medicare pays providers for radiotherapy, including how eligible oncology clinicians receive payment through the Quality Payment Program.

In the following article, RevCycleIntelligence.com breaks down the key components of the RO Model and explores how providers would get paid under the mandatory bundled payment model.

Mandatory versus voluntary alternative payment models

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Under the Trump Administration, CMS has seemingly opposed implementing mandatory alternative payment models. The first HHS Secretary selected by President Trump urged CMS to cease all mandatory models, arguing in 2016 that the models overstepped CMS’ authority.

Under his authority, the agency later canceled mandatory cardiac and orthopedic bundled payment models months before their launch in 2018 and decreased the mandatory scope of the existing Comprehensive Care for Joint Replacement (CJR).

Mandatory alternative payment models are not a provider favorite either. Seventy-two percent of medical group leaders in a 2018 MGMA poll said they oppose mandatory alternative payment models.

However, current HHS Secretary Alex Azar has gone on the record supporting compulsory demonstrations. “If to test a hypothesis on changing our healthcare system needs to be mandatory opposed to voluntary to get adequate data, then so be it,” he said in 2018.

Under Azar’s authority, CMS recently proposed the mandatory RO Model as well as a mandatory alternative payment model for chronic kidney disease and end-stage renal disease.

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Mandatory bundled payment models have certain advantages over their voluntary counterparts, the Government Accountability Office (GAO) reported earlier this year. Advantages include the ability to evaluate performance of participants that are more representative of different types of providers, implementation of greater financial risk and penalties, and the transition to value-based care among reluctant providers.

Why radiation therapy?

Radiation therapy is ripe for healthcare payment reform, CMS stated in the RO Model proposal.

In a 2017 report mandated by the Patient Access and Medicare Protection Act, CMS found that a lack of site-neutral payments, payments based on volume, and coding and reimbursement challenges are currently increasing Medicare spending on radiotherapy and potentially impeding quality care.

In particular, site-neutral payments are a major opportunity to lower Medicare spending on radiotherapy, CMS emphasized in the recent proposal.

Medicare currently pays radiotherapy providers based on their site of care. Freestanding radiation therapy centers are paid under the Medicare Physician Fee Schedule (PFS) at the non-facility rate, while services furnished in an HOPD are paid under the Hospital Outpatient Prospective Payment System (OPPS) and professional services are paid under the PFS.

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The payment methodology creates “site-of-service payment differentials,” which may incentivize providers and suppliers to furnish radiotherapy services in one setting over another, CMS explained.

CMS has been implementing more site-neutral payment policies to lower Medicare spending. The agency recently started paying for hospital clinic visits under a site-neutral payment policy.

The RO Model would resolve site-of-service payment differentials for radiotherapy services by reimbursing providers and technical services using historical, regional, national, and case mix-adjusted spending data. The model would also resolve paying for volume over value by including a quality component and help coding and payment challenges, such as misvalued codes and coding complexity.

How providers would get paid under the proposed RO Model

The RO Model would pay providers and suppliers in certain regions a prospective bundled payment for a 90-day episode of radiotherapy for specific cancer types if finalized.

Specifically, providers and suppliers in select core-based statistical areas, which are delineated by the Office of Management and Budget, would receive two types of payments: a professional component payment and the technical component payment.

The professional component payment represents the reimbursement for the included radiotherapy services that may only be delivered by a physician, while the technical component payment covers the included radiotherapy services that are not furnished by a physician, such as the provision of equipment, supplies, and personnel.

“This division reflects the fact that RT professional and technical services are sometimes furnished by separate providers and suppliers and paid for through different payment systems (namely, the Medicare Physician Fee Schedule and Outpatient Prospective Payment System),” the proposal stated.

CMS would also determine participant-specific payment amounts using national-based rates, trend factors, and adjustments for each participant’s case-mix, historical spending, and location, the proposal added.

Once CMS identifies the participant-specific bundled payment amount, the agency would apply a discount factor. The discount factor would be four percent for the professional component and five percent for the technical component payment.

CMS also plans to prospectively adjust the bundled payments by 2022 for withholds. The withholds would be for incomplete episodes (two percent for professional and technical component payments), quality (two percent for professional component payments), and beneficiary experience (one percent for technical component payments).

Participants would be eligible to earn back a portion of the quality and patient experience withholds based on their self-reported quality performance and their results from the beneficiary-reported Consumer Assessment of Healthcare Providers and Systems (CAHPS) Cancer Care Radiation Therapy Survey.

The RO Model would also qualify as an Advanced Alternative Payment Model (APM) and a Merit-Based Incentive Payment System (MIPS) APM under the Quality Payment Program. RO Model participants could earn the five percent bonus for Advanced APM participation.

“The Model design would encourage RO participants to furnish high quality patient-centered care. CMS would assess RO participants’ performance on measures of quality and patient experience and tie those assessments to payment. CMS would require certain RO participants to submit key clinical data that can be used for additional research, improvements to pricing, and the development of new quality measures specific to RT,” the federal agency wrote in a fact sheet.

If finalized, CMS plans to launch the RO Model in 2020.