By Liz Christianson, Lead Clinical Research Analyst

On July 1, 2016, Medicare began enrolling select oncology patients under their newest payment plan, the “Oncology Care Model” (OCM). The Center for Medicare and Medicaid (CMS) Innovation Center developed the OCM to address rising cancer care costs and increasing variation in treatment expenditures that were not sustainable for the US economy. Many aspects of this new payment model have not yet been established and will be done based on public and provider commentary, as well as preliminary data collected during the first months of its application. While policy specifics are still under debate, many anticipate positive outcomes for both providers and patients.

One caveat to this payment policy is that it requires providers to strictly differentiate between therapies that are investigational and those that are consistent with nationally recognized clinical guidelines. Drugs or services deemed investigational may not be reimbursed under this payment policy. As such, providers that regularly incorporate research treatments into their practice must provide an explanation and justification for billing in these circumstances as documentation of compliance. Medicare recognizes that implementing this new process may require additional efforts in revenue cycle management, coverage analysis and patient management, and plans to reimburse these expenditures in one of the plan’s three payment types.

The previous Medicare reimbursement policy only used the Fee for Service (FFS) payment system which reimbursed for each drug, test and service charged. This plan failed to recognize when higher priced drugs are used unnecessarily and when repeat tests and hospital visits occur due to uncoordinated care efforts. These oversights have become great financial burdens and have hindered patient experiences.

The new OCM can be broken down into three payment types:

1.) Standard Fee for Service (FFS) payments for drugs, tests, and other care services.

2.) $160 Per Beneficiary Per Month (PBPM) payment for enhanced care coordination. This fee will be paid for each patient for each month during a six-month-care “episode.” An “episode” is initiated on the date of the first outpatient chemotherapy administration OR on the date of the initial Part D claim submission for patients receiving oral chemotherapy drugs. This amount is meant to cover the cost of transforming practices and may be applied to implementing new EHR systems, hiring patient navigators, and outsourcing coverage analysis services or any other activities that improve cost and care efficiency.

3.) Performance-based payment (portion of Medicare savings and achievement of quality measures). Medicare will estimate the total cost of caring for a patient in this six-month episode. This benchmark price will be calculated separately for each participating practice, taking into account historic Medicare claims from that practice, cancer type, geographic location and other factors. The difference between this benchmark price and the total FFS cost during the episode will be the maximum amount that a practice can pocket as performance based payment. This maximum difference will then be multiplied by a ratio determined by care quality and patient outcome metrics equaling the provider’s actual performance based payment. In effect, the final payment to the practice is influenced by both quality of care and their ability to practice in a cost effective manner.

This initiative is aimed at health care providers looking to improve quality practices and organizational efficiency. By participating in this OCM trial, providers have an opportunity to strengthen their administrative systems using Medicare dollars and prepare themselves for impending policy changes. Above all, those who implement the new OCM guidelines could see both short and long term benefits from participating.



Cox, Katie, Laura Mortimer, Heidi Schumacher, Andrew York, and Dan Muldoon. “Oncology Care Model Frequently Asked Questions and Application Overview Webinar.” Centers For Medicare & Medicaid Services Center for Medicare & Medicaid Innovation (2015): n. pag. Centers For Medicare & Medicaid Services. Centers For Medicare & Medicaid Services, 22 Apr. 2015. Web. 27 June 2016.

Trebes, Natalie. “The New CMMI Oncology Care Model: Key Takeaways and Questions.” Advisory Board. Advisory Board, 29 Aug. 2014. Web. 27 June 2016.