CMS Developing Episode-Based Payment Model for the OCM

The Centers for Medicare and Medicaid Services (CMS) is working toward addressing challenges associated with an episode-based payment model as part of the Oncology Care Model (OCM), according to a study published in the Journal of Oncology Practice (published online May 23, 2017; doi:10.1200/JOP.2016.015834).


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CMS initially developed the OCM as an episode-based payment model to promote providing high-quality, better coordinated care at a lower cost to the fee-for-service Medicare beneficiaries with cancer who receive chemotherapy. However, episode payment models can be complex and difficult to implement, as they combine all payments for services during an episode of illness—regardless of time, provider, or location—into a single price.

Not only is defining the episode of illness a challenge, authors of the study wrote, but other policy and technical decisions include identifying beneficiaries involved in the model and delegating beneficiary attribution to practitioners with overall responsibility for managing care.

Additionally, calculating benchmark episode prices, while adjusting for risk, for the entirety of services must take into account geographic cost variations and diverse patient populations such as disease subtypes, medical comorbidities, changes in standards of care over time,
adoption of expensive new drugs, and diverse practice patterns. CMS must also factor in efforts to implement quality measurement and improvement in the episode-based payment method.

CMS has considered and attempted to address these numerous challenges in designing the OCM and will determine whether an episode-based payment model for oncology episodes of care can deliver better patient care and delegate health care funds more efficiently. CMS is utilizing information from the 190 practices and 16 commercial payers who are currently participating in the OCM.

“The model is an exciting step forward for oncology care in the United States,” authors wrote.

Furthermore, CMS believes that by sharing its approach to addressing the decisions and challenges associated with an episode-based payment model, it may provide insight to other practices and commercial payers considering the development of similar payment models.—Zachary Bessette