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Radiation Oncology Model Episodes of Care: Analyzing Medicare Spending

Radiation Oncology Model Episodes of Care: Analyzing Medicare Spending

Monday, September 30, 2019 | by Randy Haught

Tags: CMS Mandatory Payment Model, Radiation Oncology

On July 18, 2019, the Centers for Medicare and Medicaid Services (CMS) proposed a payment model that would make prospective episode payments to hospital outpatient departments (HOPD) and freestanding radiation therapy centers for radiation therapy (RT) episodes of care. The model will be mandatory for a sample of RT providers and suppliers and is specific to core-based statistical area (CBSAs), which have not yet been determined. Medicare would pay participating providers and suppliers a site-neutral, episode-based payment for a list of specified professional and technical RT services furnished during a 90-day episode to Medicare fee-for-service (FFS) beneficiaries diagnosed with one of 17 cancer types. This blog is the first in the multi-series of blogs titled "Radiation Oncology Episodes of Care" and takes a look at the historical Medicare payments for radiation therapy.

Under CMS' 2019 proposed mandatory payment model for radiation therapy, the agency will create a set of national base rates for the professional component (PC) and technical component (TC) for each of 17 included cancer types, yielding 34 different national base rates. Each of the national base rates is meant to represent the historical average cost for an episode of care for each of the included cancer types, based on Medicare FFS claims paid during the CYs 2015–2017. RT providers will be paid the national base rate, adjusted for patient case mix, historical experience, and geographic location, with a 4-percent discount for the PC component and a 5-percent discount for the TC component. RT providers that will be subjected to the Radiation Oncology (RO) payment model will need to determine where and how these savings will be achieved. In this blog post, we begin to dissect historical Medicare payments for radiation therapy episodes of care for the professional and technical components for each cancer type. As CMS specified in the NPRM, “radiation therapy services furnished within an episode of care usually follow a standard, clearly defined process of care and generally include treatment consultation, treatment planning, technical preparation and special services (simulation), treatment delivery, and treatment management, which are also categorical terms used to generally describe RT services”.

Our analysis of professional component services (i.e., services provided by physicians during a RO episode) and Medicare payments for those services indicate that average episode spending was $2,479 during CY 2015-2017 period. About 52 percent of episode spending is for technical preparation and special services and 35 percent is for treatment management (Exhibit 1). The remaining 13 percent of spending is for treatment planning and treatment delivery.

    

Professional providers that will be subjected to the RO payment model will need to determine where and how a 4-percent savings will be achieved. As these data indicate, physicians should first examine their utilization for special services (e.g., medical radiation physics, dosimetry, treatment devices and special services) as this is the largest spending category. Secondly, physicians should examine medical management service utilization as this category represents 35 percent of episode spending. However, these proportions differ by cancer type as shown in Exhibit 2. Across cancer types the portion of episode spending for technical preparation and special services ranges from 44 percent for Uterine cancer to 56% for Bladder cancer. Episode spending for treatment management services ranges from 23 percent for Cervical cancer to 40 percent for Breast cancer. Therefore, different decisions may need to be made for specific cancer types.     

Our analysis of technical component services (i.e., services provided by hospital outpatient departments and freestanding radiation therapy centers during a RO episode) and Medicare payments for those services indicate that average episode spending was $11,931 during CY 2015-2017 period. About 72 percent of episode spending is for treatment delivery services and 27 percent for technical preparation and special services (Exhibit 3). The remaining 1 percent of spending is for treatment management.     

Technical providers that will be subjected to the RO payment model will need to determine where and how a 5-percent savings will be achieved. As these data indicate, providers should first examine their utilization for treatment delivery services as this is the largest spending category. The clinical appropriateness and cost effectiveness of the treatment modality used during the episode (i.e., stereotactic radiosurgery, intensity-modulated radiotherapy, conventional external beam, intraoperative radiotherapy, proton beam therapy, or brachytherapy) will need to be assessed as the cost differences across these modalities are significant and we will address these differences in a later blog post.   

Secondly, providers should examine technical preparation and special services utilization as this category represents 27 percent of episode spending. However, these proportions differ by cancer type as shown in Exhibit 4. Across cancer types the portion of episode spending for treatment delivery ranges from 56 percent for Bone Metastases to 83 percent for Liver cancer. Episode spending for technical preparation and special services ranges from 16 percent for Liver cancer to 42 percent for Bone Metastases. Therefore, different decisions may need to be made for specific cancer types.     

 

 

 

 

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