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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

Humana’s New Oncology Value-based Care Program Includes Quality and Cost Measurements of Provider Performance, Clinical Laboratories, and Pathology Groups

“Pathologists and medical laboratories may have to demonstrate efficiency and effectiveness to stay in the insurer’s networks and get paid for their services

In recent years, Medicare officials have regularly introduced new care models that include quality metrics for providers involved in a patient’s treatment. Now comes news that a national health insurer is launching an innovative cancer-care model that includes quality metrics for medical laboratories and anatomic pathology groups that deliver diagnostic services to patients covered by this program.

Anatomic pathologists and clinical laboratories know that cancer patients engage with many aspects of healthcare. And that, once diagnoses are made, the continuum of cancer care for these patients can be lengthy, uncomfortable, and quite costly. Thus, it will be no surprise that health insurers are looking for ways to lower their costs while also improving the experience and outcomes of care for their customers.

To help coordinate care for cancer patients while simultaneously addressing costs, Humana, Inc., (NYSE:HUM) has started a national Oncology Model-of-Care (OMOC) program for its Medicare Advantage and commercial members who are being treated for cancer, Humana announced in a press release.

What’s important for anatomic pathologists and clinical laboratories to know is that the program involves collecting performance metrics from providers and ancillary services, such as clinical laboratory, pathology, and radiology. These metrics will determine not only if doctors and ancillary service providers can participate in Humana’s networks, but also if and how much they get paid.

Anatomic pathologists and medical laboratory leaders will want to study Humana’s OMOC program carefully. It furthers Humana’s adoption of value-based care over a fee-for-service payment system.

How Humana’s OMOC Program Works

According to Modern Healthcare, “Humana will be looking at several measures to determine quality of cancer care at the practices including inpatient admissions, emergency room visits, medications ordered, and education provided to patients on their illness and treatment.”

As Humana initiates the program with the first batch of oncologists and medical practices across the US, it also will test performance criteria that anatomic pathologist groups will need to meet to participate in the insurer’s network and be paid for services.

The insurer’s metrics address access to care, clinical status assessments, and patient education. Physicians can earn rewards for enhancing their patients’ navigation through healthcare, while addressing quality and cost of care, reported Health Payer Intelligence.

“The experience for cancer care is fragmented,” Bryan Loy, MD (above), Corporate Medical Director of Humana’s Oncology, Laboratory, and Personalized Medicine Strategies Group, told Modern Healthcare. Loy is board-certified in anatomic and clinical pathology, as well as hematology. “Humana wants to improve the patient experience and health outcomes for members. We are looking to make sure the care is coordinated.” (Photo copyright: National Lung Cancer Roundtable/American Cancer Society.)

Humana claims its OMOC quality and cost measurements are effective in the areas of:

  • inpatient admissions,
  • emergency room visits,
  • medical and pharmacy drugs,
  • laboratory and pathology services, and
  • radiology.

To help cover reporting and other costs associated with participation in the OMOC program, Humana is offering physician practices analytics data and care coordinating payments, notes Modern Healthcare.

“The practices that improve their own performance over a one-year period will see the care coordination fee from Humana increase,” Julie Royalty, Humana’s Director of Oncology and Laboratory Strategies, told Modern Healthcare.

Value-Based Care Programs are Expensive

Due to the cost of collecting data and increasing staff capabilities to meet program parameters, participating in value-based care models can be costly for medical practices, according to Scottsdale, Ariz.-based Darwin Research Group (DRG), which studies emerging payer models.

Some of the inaugural medical practices in the Humana OMOC include:

  • Southern Cancer Center, Alabama;
  • US Oncology Network, Arizona;
  • Cancer Specialists of North Florida;
  • Michigan Healthcare Professionals;
  • University of Cincinnati Physicians Company; and
  • Center for Cancer and Blood Disorders, Texas.

Other Payers’ Value-Based Cancer Care Programs

“Depending upon which part of the country you’re in, alternative payment models in oncology are becoming the norm not the exception,” noted the DRG study. “Humana is a little late to the party.”

Darwin Research added that Humana may realize benefits from having observed other insurance company programs, such as:

Humana is not the only payer offering value-based cancer care programs. The Centers for Medicare and Medicaid Services (CMS) Oncology Care Model is a five-year model (2016 through 2021) involving approximately 175 practices and 10 payers throughout America (see above). The healthcare networks and insurers have made payment arrangements with their patients for chemotherapy episode-of-care services, noted a CMS fact sheet. (Graphic copyright: Centers for Medicare and Medicaid Services.)

Humana’s Other Special Pay Programs

Humana has developed other value-based bundled payment programs as well. It has episode-based models that feature open participation for doctors serving Humana Medicare Advantage members needing:

  • total hip or knee joint replacement (available nationwide since 2018); and
  • spinal fusion surgery (launched in 2019).

Humana also started a maternity episode-of-care bundled payment program last year for its commercial plan members.

In fact, more than 1,000 providers and Humana value-based relationships are in effect. They involve more than two-million Medicare Advantage members and 115,000 commercial members.

Clearly, Humana has embraced value-based care. And, to participate, anatomic pathology groups and medical laboratories will need to be efficient and effective in meeting the payer’s performance requirements, while serving their patients and referring doctors with quality diagnostic services.

—Donna Marie Pocius

Related Information:

Humana Launches Oncology Model of Care Program to Improve the Patient Experience and Health Outcomes in Cancer Care

Humana Launches Oncology Payment Model

Humana Launches Value-based Care Oncology Program for MA Members

Humana Launches New Oncology Payment Model

CMS Fact Sheet: Oncology Care Model

Humana Launches Value-based Model for Cancer Patients