CMS’ OCM: A New Bundle of Joy…or Something Else?

The Centers for Medicare & Medicaid Services (CMS) recently announced a bundled payment initiative for oncologists: The Oncology Care Model (OCM). The goals of the OCM are to utilize appropriately aligned financial incentives to improve care coordination, appropriateness of care, and access to care for beneficiaries undergoing chemotherapy.

While CMS’ intent is “better” care through this adjustment in financial alignment, it may result in unexpected and unwanted consequences. These will vary greatly based on stakeholders and their preparation for this massive change. Of course, those at risk from this change include pharmaceutical manufacturers, especially those that are unable to articulate how their value relates to the OCM. This new payment model raises a great number of questions.

New Model or Just Payment Model Improvements?

The OCM encourages participating practices to improve care and lower costs through a model that incorporates a care coordination fee and episode-based payments. The Innovation Center expects that these improvements will result in better health outcomes, higher-quality care and lower Medicare costs. But whether this will be a bundle of joy or something else for oncologists, Medicare, cancer patients, and pharmaceutical manufacturers will depend on how each party manages the significant change.

While the initial focus of this program is Medicare fee-for-service (FFS) non-hospital-based oncology practices, it is likely to be merely the beginning of changes for all oncology practices and payers. While CMS is starting this program with community-based oncologists—perhaps as an alternative to their signing on with the local health system—it will move to those practices as well. And while CMS is proceeding with this payment system through FFS Medicare, managed care will follow suit, as is typically the case. So the OCM will affect all oncology practices even though few practices may actually sign up to participate in the first round of CMS’ formal program.

Episodes in the OCM for Medicare fee-for-service (OCM-FFS) beneficiaries will start with either an initial chemotherapy administration claim or an initial Part D chemotherapy claim for cancer, and include all Medicare Parts A and B services that the OCM-FFS beneficiary receives during a six-month episode. Certain Medicare Part D expenditures will also be included so that efficient and effective non-chemotherapies used in conjunction will benefit from this new outcomes-focused approach.

Participating practices will receive per-beneficiary-per-month (PBPM) payments for Medicare FFS beneficiaries receiving an included chemotherapy during each month of an episode, regardless of cancer type. However, participating practices will be eligible for performance-based payments only for beneficiaries with high-volume cancers for which reliable benchmarks can be calculated. The high-volume cancers, which will be included in benchmarks, cover an estimated 90% of Medicare FFS beneficiaries receiving chemotherapy but CMS’ Innovation Center has not yet released the list of such cancers.

Under the OCM, participating practices will receive Medicare FFS payments. In addition, the OCM has a two-part payment approach:

  • A PBPM payment of $160 for enhanced services required by the OCM that is paid during the chemotherapy episode.
  • Performance-based payments that provide incentives to lower the total cost of care and improve quality of care for beneficiaries over the six-month episode period. This is a retrospective payment that is based on the practice’s historical Medicare expenditures and achievement on selected quality measures.

CMS has several stated goals of the OCM program, each of which is designed to drive very specific behaviors and process-focused changes in oncology practices.

CMS has actually highlighted six practice transformations that they expect as a result of the OCM:

  • Provide patients with 24/7 access to appropriate clinicians who have real-time access to the patient’s medical records.
  • Use an EHR certified by the Office of the National Coordinator for Health Information Technology and attest to Stage 2 of meaningful use by the end of the third model-performance year.
  • Utilize data for continuous quality improvement.
  • Provide core functions of patient navigation.
  • Document a care plan for every OCM patient that contains the 13 components in the Institute of Medicine Care Management Plan.
  • Treat patients with therapies consistent with nationally recognized clinical guidelines.

While these practice transformations are expected to reduce costs and improve quality, CMS bases its payments on performance in six specific areas: (1) clinical quality of care, (2) communication and care coordination, (3) person- and caregiver-centered experience and outcomes, (4) population health, (5) efficiency and cost reduction, and (6) patient safety.

Major Oncology Care Shift—Or Failed Attempt?

The OCM is focused narrowly on community-based oncologists in FFS Medicare and, even more specifically, those practices that believe they can make changes to significantly reduce their use of overall resources for the patients they treat. However, this current attempt does not directly address all the many patients outside FFS Medicare through Commercial payers, Managed Medicare and Medicaid. In addition, oncology practices that are hospital-based or have already adjusted their practices to deliver more efficient and effective care are left out of OCM opportunities. Despite the limited scope of the OCM, many practices outside the OCM’s direct sight are making adjustments in anticipation that this will soon be law of the land—a law that will soon apply to all practices via all payers.

Is Pharma Ready For The OCM?

While the transformation for oncology practices is significant, at least CMS has provided a careful road map. However, the same cannot be said for pharmaceutical manufacturers.

For manufacturers in the oncology treatment environment, success will be based on how well they transition their focus to this new model. This provides an opportunity to engage all oncologists, especially community-based practices, around this “hot” topic by providing valuable resources to understand this change.

These resources should start with OCM 101 and quickly move to the best practices in the new process focus. But this is just the beginning. Once engaged and viewed as a valued partner through this transition, the pharmaceutical manufacturers that win will be those that are able to articulate the value of their treatment in terms of improved economics over competitors with equal or superior quality-of-life outcomes. Those pharmaceutical companies that follow this path will surely find a bundle of joy in CMS’ OCM.


  • Dr. Richard Stefanacci

    Richard G. Stefanacci, DO, MGH, MBA, AGSF, CMD is Chief Medical Officer at The Access Group. Dr. Stefanacci is a recognized thought-leader in healthcare reform. In addition, he leads the Government Policy Systems team, which ensures pharmaceutical products and diagnostic devices gain appropriate access and utilization.


You May Also Like

My Other Life with Ian M. Marks

PM360 recently spoke to Ian M. Marks, VP R&D Innovation at GSK Consumer Healthcare, ...

Building Bridges: Creating Value to Create Access

The ever-narrower limitations on field-force access to practicing physicians are well documented and well ...

Biden Takes Bold Steps to Reverse Years of Healthcare Disparities

We can’t ignore the lessons of the COVID-19 crisis: our healthcare and public health ...