The size of the challenges that practices will face under the new model likely depends on several key characteristics, according to industry advisors.

July 8—Medicare newest pay model garnered much larger practice participation than anticipated, which observers say was spurred by the looming start of a Medicare physician pay overhaul.

This month, the Centers for Medicare & Medicaid Services (CMS) launched its newest payment model, the Oncology Care Model (OCM), and garnered nearly 200 physician group practice participants—or about twice as many as expected. The practices and 17 payers will participate in the five-year, multi-payer pilot, which provides financial incentives to physician practices to improve care coordination and reduce the total cost of chemotherapy treatment episodes.

The surge in interest was likely driven by physicians aiming to qualify for the bonus-heavy payment track of Medicare’s new physician payment system, which was created by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and starts next year, noted Kelly Price, vice president and chief of healthcare data analytics at DataGen, a subsidiary of the Healthcare Association of New York State.

Under the new law, physicians who are part of advanced alternative payment models, which include one of the two OCM tracks, will qualify for 5 percent annual bonus payments starting in 2019 instead of facing possible cuts under MACRA’s other track, which uses a complex quality measurement system.

But acceptance into the OCM does not mean physicians will qualify for the MACRA bonus payments because those are limited to practices that successfully participate in the oncology model’s two-sided risk track, which doesn’t start until the third year.

Practices will need to use the two years of upside-only payment to get up to speed on the requirements for successful participation, Price said in an interview.

She hoped that CMS also would consider extending the upside-only period if practices need more preparation time.

“CMS is certainly heavily invested in making sure that healthcare providers can figure out how to exist in the world that’s coming,” Price said.

However, practices entering OCM should not focus exclusively on whether they financially benefit from their participation.

“This program has a lot of benefits beyond whether there is a financial gain,” Price said. “The world is moving in this direction in terms of payment and requirements for quality reporting, so physician practices are going to have to move in this direction anyway.”

Winners and Losers

A preliminary study of six-month cancer episodes by DataGen, which was used to simulate an analysis of practice data under the OCM, led Price to conclude that smaller practices are more likely to struggle under the model.

“The hospital-based practices might benefit from the fact that there’s going to be a lot more resource support for them—for example, for the quality reporting and tracking the financials,” Price said.

The practices that are likely to do the best under the model, according to Dan Mendelson, CEO of Avalere, are those that have comparatively healthier patient populations, that are exposed to fewer risks, and that already are achieving the quality metrics outlined by CMS.

Meanwhile, practices with a “relatively pharmaceutically intensive style of practice” could face the biggest financial risk under the five-year pilot, Mendelson said in an interview.

“Before jumping into this, a practice has to assess whether they are likely to do well, and it’s very important to do that analytically and to think it through carefully so that they do not end up upside down,” Mendelson said.

Challenges Vary

One of the biggest challenges for practices in the OCM, Price said, will be the need to learn how to coordinate with other providers that care for their patients—while being financially responsible for that care.

Understanding how the other providers—such as skilled nursing facilities (SNFs)—are paid and how that impacts their performance under a program such as the OCM requires more expertise than most physician practices have, Price said. For instance physicians may not know that SNFs are paid a daily rate ranging from $400 to $500, while inpatient rehabilitation facilities are paid per discharge within a range of $3,000 to $7,000.

“Those interplays are going to be brand new to physician practices,” Price said.

The sufficiency of the pilot’s per-member, per-month payment to cover the additional costs a practice incurs from participating in the program also has raised concerns.

Additionally, Mendelson said it is not clear whether the pilot’s risk adjustment mechanisms are adequate to compensate for the varying patient populations of participating practices.

Steps to Avoid

The difficulty of performing risk stratification to determine a practice’s target price will be significant, so  Price urged practices to focus efforts elsewhere.

Such an effort will distract from the more important components, which are the care coordination and making sure their patients are going through the system in a logical way,” Price said. 

Additionally, practices should avoid designating a single point person to coordinate their participation in the OCM. Instead, involving “as many people from as many different areas of the practice as possible” will help, Price said. Hospitals and practices involved in bundled payment programs have reported experiencing problems when they simply designate finance or contracting department personnel to coordinate their participation.

“There needs to be an understanding and continuous engagement from all parts of the organization because this is complicated—there are financial pieces, clinical pieces, record-keeping pieces, quality-reporting pieces,” Price said. “And if everybody isn’t having those conversations together, fairly regularly, then this isn’t going to work.”

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C. office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Friday, July 08, 2016