Mandatory value-based payment models coming to some regions under CMS proposal

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Trine K. Tsouderos HRI Regulatory Center Leader, PwC US July 19, 2019

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CMS has proposed two Medicare payment models—one for radiation oncology treatment and the other for advanced kidney disease care—that would be mandatory for providers in certain randomly selected regions.

The new payment models are a continuation of the agency’s push toward using the Medicare payment system to reward providers for the quality and cost of care, as opposed to the volume of services.

The radiation oncology initiative, which would start Jan. 1, establishes a prospective bundled payment for 90-day episodes of care for several common types of cancer, including breast, colon, lung and pancreas. The project is expected to involve 40 percent of radiation oncology episodes in the chosen areas and to save $250 million to $260 million over five years, noted the American Society for Radiation Oncology in an analysis of the proposal.

HRI impact analysis

The bundled payments would be the same regardless of whether the services were provided in a hospital outpatient department or a freestanding radiation therapy center. CMS wants to end what it sees as incentives in the current reimbursement system that favor freestanding centers and volume of care over value. Medicare pays freestanding centers 11 percent more on average than hospital outpatient departments for radiation therapy per episode of care.

Providers would keep any savings if they spend less than the bundled payment amount as long as they meet quality and patient-experience measures, but would be accountable for any spending above the payment amount, according to the American Hospital Association.

The radiation oncology society generally favors the proposal but dislikes that it would be mandatory in the chosen areas, and is concerned that the project would be launched too fast and that some of the factors used to set payment “could create cash-flow challenges for practices,” it said in its analysis.

The other proposed payment model aims to increase rates of home dialysis and kidney transplants for Medicare beneficiaries with end-stage renal disease (ESRD), a condition that affects more than 726,000 Americans, according to HHS.

The vast majority of patients get dialysis at dialysis facilities even though home dialysis would be better for them and cost less, and too few patients get kidney transplants, CMS said. The government’s goal is to have 80 percent of affected beneficiaries getting dialysis at home or receiving a transplant by 2025, according to the proposal.

The model, which would begin next year and end in 2026, would give ESRD centers and physicians managing ESRD patients in the selected areas a payment increase, which would phase out over time, for supporting beneficiaries getting home dialysis. It also includes positive or negative payment adjustments based on providers’ home dialysis and transplant rates.

Both payment models were detailed in the proposed regulation, which is expected to be published soon and that will give providers 60 days to comment.

Contact us

Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Alexander Gaffney

Senior Manager, Health Research Institute, PwC US

Tel: +1 (202) 836 1604

Ingrid Stiver

Senior Manager, Health Research Institute, PwC US

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