Scenario 1: The practice was going to invest in implementing the OCM’s six practice requirements anyway.
The providers decide to participate in the OCM so that they can bill for the per beneficiary per month (PBPM) payments and thus generate revenues to offset the costs of the practice requirements. Ideally, they are able to reduce total costs to Medicare enough to qualify for a performance-based payment, and they also sign on to similar risk-based contracts with their commercial payers.
- The practice will spend more than the PBPM revenues to achieve the practice requirements.
- The practice’s care transformation efforts will reduce some avoidable health care utilization, and so reduce their revenues, but not enough to qualify for a performance bonus. They will be forced to drop out of the OCM after the third year.
- The practice qualifies for a performance bonus, but the bonus isn’t large enough to offset the lost revenues. (Under the one-sided risk model, practices must reduce the total cost to Medicare by more than 8% in order to earn more revenues under the OCM than it would have under traditional fee for service.)
Scenario 2: The practice has already signed on to risk-based contracts with other payers that reward providers for reducing the total costs of care for cancer patients.
The practice has already made most of the investments required to achieve the OCM’s six practice requirements and thus participation in the OCM improves alignment between their clinical practice and financial incentives.
The risk: Because the practice started its care transformation efforts earlier, their total costs to Medicare may have been lower during the historic performance period. (Remember the OCM calculates the target cost to Medicare for individual practices based on the practice’s past performance.) Consequently they’ve already cut most of the waste out of their care delivery model and must work harder to find additional improvement opportunities.
Scenario 3: The practice has not focused on care transformation to date but believes that payers in their market are on the cusp of transitioning to risk.
The providers need to align around a common set of principles for care transformation, and they decide to participate in the OCM because the six practice requirements provide a useful framework for unifying the efforts of physicians and staff. At the same time, they commit to aggressively pursuing risk-based oncology contracts with private payers.
The risk: The OCM practice requirements leave room for interpretation, and in most cases, there isn’t a well-established best practice for achieving the requirement. Consequently it’s relatively easy to spend a lot of time and money trying to “check the box,” but not necessarily increase the value of cancer services for patients.
The bottom line
Given that so many of the specifics of the OCM remain up in the air, it’s impossible to predict whether any given practice will benefit financially from participation. In all likelihood, it will be very difficult for most practices to increase their revenues under the OCM above what they would have earned under fee for service.
That said, there are potential strategic benefits to participation. Practices gain access to cost and quality performance data, which can enable them to benchmark against other practices and pinpoint improvement opportunities. In addition, they gain experience managing under risk, and they have greater opportunity to influence the future of Medicare’s oncology payment policies.
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