The Centers for Medicare & Medicaid Services (CMS) has proposed a new Radiation Oncology (RO) innovation model (RO Model) to test whether prospective site neutral, episode-based payments for radiotherapy (RT) episodes of care would reduce Medicare expenditures while preserving or enhancing the quality of care for Medicare beneficiaries. Importantly, the RO Model would be mandatory for providers and suppliers that furnish RT services within randomly selected Core Based Statistical Areas (CBSAs), with very limited exceptions. CMS estimates that the RO Model would cover about 40% of Medicare RO episodes and reduce Medicare spending by $250 million – $260 million during the five-year program.

Key features of the proposed RO Model are summarized below. CMS will accept comments on the model until September 16, 2019.

RO Provider/Supplier Participation

Medicare-participating physician group practices (PGPs), hospital outpatient departments (HOPD), and freestanding radiation therapy centers that furnish RT services in designated CBSAs generally would be required to participate in the RO Model. CMS proposes exempting a provider or supplier that:

(1) furnishes RT services only in Maryland, Vermont, or the U.S. territories;

(2) is classified as an ambulatory surgery center (ASC), critical access hospital (CAH), or prospective payment system-exempt cancer hospital; or

(3) is eligible to participate the Pennsylvania Rural Health Model.

In a proposed rule to be published on July 18, 2019; CMS expresses its view that mandatory participation “is necessary to obtain a diverse, representative sample of RT providers and RT suppliers and to help support a statistically robust test of the prospective episode payments made under the RO Model.” CMS notes that because hospital outpatient prospective payment system (OPPS) rates are projected to increase substantially more than physician fee schedule (PFS) rates during the period of 2019 through 2023, it “would result in few to no HOPDs electing to voluntarily participate in the Model.” CMS also expects that a voluntary program would attract only those freestanding radiation therapy centers with historically lower RT costs compared to the national average.

Providers and suppliers would participate in the RO Model as either a Professional participant, Technical participant, or Dual participant.

Beneficiary Population

A Medicare fee-for-service (FFS) beneficiary would be included in the RO Model if he or she receives an included RT service from an RO Model participant in an RO Model CBSA, and has been diagnosed with one of 17 specified types of cancer (subject to certain exclusions). Beneficiaries could receive care from any RO provider or supplier of their choice, including providers or suppliers in a geographic area not included in the RO Model, but RO beneficiaries would not be permitted to “opt out” of the Model’s pricing methodology.

Beneficiaries would be responsible for the standard 20% cost-sharing. Because CMS would apply a discount to the RO Model payment amounts, CMS expects beneficiary cost-sharing under the RO Model may be reduced relative to FFS levels.

RO Model Episodes

CMS would pay RO participants a site-neutral, episode-based payment amount for all specified RT services furnished to an RO beneficiary during a 90-day episode (triggered by an initial treatment planning service).

CMS proposes to include the following RT modalities in the RO Model: 3-dimensional conformal radiotherapy (3DCRT), intensity-modulated radiotherapy (IMRT), stereotactic radiosurgery (SRS), stereotactic body radiotherapy (SBRT), proton beam therapy (PBT), intraoperative radiotherapy (IORT), image-guided radiation therapy (IGRT), and brachytherapy.

RT services included in the model would be treatment planning; technical preparation and special services; treatment delivery; and treatment management. Brachytherapy radioactive elements also would be included. Evaluation and management (E&M) services and all other RT services would be excluded from the RO Model and subject to Medicare FFS payment rules.

Pricing Methodology

RO Model participants would receive prospective, episode-based payment amounts furnished during a 90-day episode of care, rather than regular Medicare FFS payments. Episode payments would be split into a professional component (PC) payment and the technical component (TC) payment. Rather than bundling the TC and PC payment to the hospital, the model envisions ongoing separate payments for the services of the radiation oncologists. The professional component reimbursement of an episode of care would be provided through two payments covering all the radiation therapy services provided by the radiation oncologists during the episode. Payment for the PC would be made through the Medicare PFS and would paid directly to the physicians who submitted claims.

Participant-specific payment amounts would be based on national base rates, trend factors, and the participant’s historical experience, case mix history, and geographic location. As in other episodic innovation models, CMS would apply a discount factor to represent savings to the Medicare program and beneficiaries; the PC discount factor would be 4%, and the TC discount factor would be 5%. Additional payments would be withheld (varying by PC and TC), and participants could earn back a portion of the amount based on reporting and performance on quality measures, clinical data reporting, and patient experience measures.

Proposed Model Performance Period

CMS proposes to test the model for 5 performance years, from January 1, 2020 through December 31, 2024. CMS solicits comments on whether it should delay implementation to April 1, 2020 to give participants and CMS additional time to prepare; the model still would conclude on December 31, 2024.

Quality Payment Program

The Model would qualify as an Advanced Alternative Payment Model (APM) and a Merit-based Incentive Payment System (MIPS) APM under the Medicare PFS Quality Payment Program (QPP).