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New Value-Based Payment Model for Oncology Care Could Affect How Pathologists and Medical Laboratories Get Paid for Their Services

Centers for Medicare and Medicaid Innovation is considering adding clinical laboratory services to bundled payments in its proposed Oncology Care First model

Anatomic pathologists, surgical pathologists, and medical laboratories could find some of their services shifted to a bundled payment scheme as the Center for Medicare and Medicaid Innovation (CMMI) considers a new value-based alternative payment model (APM) for providers of cancer care.

CMMI, an organization within the Centers for Medicare and Medicaid Services (CMS), is charged with developing and testing new healthcare delivery and payment models as alternatives to the traditional fee-for-service (FFS) model. On November 1, 2019, CMMI released an informal Request for Information (RFI) seeking comments for the proposed Oncology Care First (OCF) model, which would be the successor to the Oncology Care Model (OCM) launched in 2016.

“The inefficiency and variation in oncology care in the United States is well documented, with avoidable hospitalizations and emergency department visits occurring frequently, high service utilization at the end of life, and use of high-cost drugs and biologicals when lower-cost, clinically equivalent options exist,” the CMMI RFI states.

With the proposed new model, “the Innovation Center aims to build on the lessons learned to date in OCM and incorporate feedback from stakeholders,” the RFI notes.

How the Oncology Care First Model Works

The OCF program, which is voluntary, will be open to physician groups and hospital outpatient departments. CMMI anticipates that testing of the model will run from January 2021 through December 2025.

It will offer two payment mechanisms for providers that choose to participate:

  • A Monthly Population Payment (MPP) would apply to a provider’s Medicare beneficiaries with “cancer or a cancer-related diagnosis,” the RFI states. It would cover Evaluation and Management (EM) services as well as drug administration services and a set of “Enhanced Services,” including 24/7 access to medical records.

Of particular interest to medical laboratories, the RFI also states that “we are considering the inclusion of additional services in the monthly population payment, such as imaging or medical laboratory services, and seek feedback on adding these or other services.”

  • In addition, providers could receive a Performance-Based Payment (PBP) if they reduce expenditures for patients receiving chemotherapy below a “target amount” determined by past Medicare payments. If providers don’t meet the threshold, they could be required to repay CMS.

CMMI initially announced the public listening session and set a Nov. 25 deadline for written feedback, then extended it to Dec. 13, 2019. The feedback period is now closed.

Practices that wish to participate in the OCF model must go through an application process. It is also open to participation by private payers. CMS reports that 175 practices and 10 payers are currently participating in the 2016 Oncology Care Model (OCM).

“We want better quality care for patients,” explained Lara Strawbridge, MPH (above), Director of the CMMI Division of Ambulatory Payment Models, during a US Department of Health and Human Services public listening session on Nov. 8. “We hope that at the same time, costs are maintained or reduced.” The new OCF payment model will feature a Monthly Population Payment mechanism that could include reimbursements for medical laboratory services, which has some medical laboratory organizations concerned. (Photo copyright: Center for Medicare and Medicaid Innovation.)

Medical Lab Leaders Concerned about the CMMI OCF Model

One group raising concerns about the inclusion of medical laboratory service reimbursements in the Monthly Population Payment scheme is the Personalized Medicine Coalition. “Laboratory services are crucial to the diagnosis and management of many cancers and are an essential component of personalized medicine,” wrote Cynthia A. Bens, the organization’s senior VP for public policy, in an open letter to CMMI Acting Director Amy Bassano. “We are concerned that adding laboratory service fees to the MPP may cause providers to view them as expenses that are part of the total cost of delivering care, rather than an integral part of the solution to attain high-value care,” Bens wrote.

She advised CMMI to “seek further input from the laboratory and provider communities on how best to contain costs within the OCF model, while ensuring the proper deployment of diagnostics and other laboratory services.”

Members of the coalition include biopharma companies, diagnostic companies, patient advocacy groups, and clinical laboratory testing services. Lab testing heavyweights Quest Diagnostics (NYSE:DGX) and Laboratory Corporation of America (NYSE:LH) are both members.

CMS ‘Doubles Down’ on OCM

The proposal received criticism from other quarters as well. “While private- and public-sector payers would be well served to adopt and support a VBP [value-based payment] program for cancer care, we need to better understand some of the shortcomings of the original OCM design and adopt lessons learned from other successful VBP models to ensure uptake by providers and ultimately better oncology care for patients,” wrote members of the Oncology Care Model Work Group in a Health Affairs blog post. They added that with the new model, “CMS seems to double down on the same design as the OCM.”

Separately, CMMI has proposed a controversial Radiation Oncology (RO) alternative payment model (APM) that would be mandatory for practices in randomly-selected metro areas. The agency estimates that it would apply to approximately 40% of the radiotherapy practices in the US.

The RO APM was originally set to take effect this year, but after pushback from industry groups, CMS delayed implementation until July 18, 2022, Healthleaders Media reported.

These recent actions should serve to remind pathologists and clinical laboratories that CMS continues to move away from fee-for-service and toward value-based care payment models, and that it is critical to plan for changing reimbursement strategies.

—Stephen Beale

Related Information:

Oncology Care First: What You Need to Know about the Proposed Oncology Care First

Redesigning Oncology Care: A Look at CMS’ Proposed Oncology First Model

CMS, CMMI Seek Feedback on Oncology Care First, Successor to OCM

We Need Better Quality Measures for Oncology Care First

What You Should Know about the Proposed Oncology Care First Model

Oncology Care First Resource Hub

ACR Expresses Concerns about Potential Oncology Care First Payment Model

Redesigning the Oncology Care Model

ACR Wants CMS Radiation Oncology Model Delayed

ASTRO Calls for Voluntary Start, Scaling Back Excessive Cuts in CMS’ Proposed Radiation Oncology Model

Mandatory CMS Radiation Oncology Model Goes on the Backburner