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. Medicare would pay participating providers and suppliers a discounted, 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. Providers will be paid a single rate for each specific cancer type regardless of the treatment modality (i.e., stereotactic radiosurgery, intensity-modulated radiotherapy, conventional external beam, intraoperative radiotherapy, proton beam therapy, or brachytherapy) selected for the patient. Technical component providers that will be subjected to the RO payment model will need to determine how to achieve a 5-percent savings, which is CMS discount from average historical spending. One option will be to assess the clinical appropriateness and cost effectiveness of the treatment modality used during the episode. This blog is the second in the multi-series of blogs titled "Radiation Oncology Episodes of Care" and examines the cost differences across the various treatment modality options and their impact on episode spending.
Our analyses 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 using the RO Model Public Use Episode file provided by the Centers for Medicare and Medicaid Services (CMS) indicate that average episode spending for the technical component was $12,255 during CY 2015-2017 period. As shown in Exhibit 1, the cost differences across these various modalities are significant. Medicare spending for RO model episodes using conventional external beam therapy was $7,528 on average compared to $18,185 for episodes using intensity-modulated radiotherapy and $34,612 for episodes using proton beam therapy.
CMS stated in the proposed rule that “Because the OPPS and PFS are resource-based payment systems, higher payment rates are typically assigned to services that use more expensive equipment. Additionally, newer treatments have traditionally been assigned higher payment. Researchers have indicated that resource-based payments may encourage health care providers to purchase higher priced equipment and furnish higher-cost services, if they have a sufficient volume of patients to cover their fixed costs. Higher payment rates for services involving certain treatment modalities may encourage use of those modalities over others.”
Across all 17 cancer types, conventional external beam therapy was the most common modality used (47 percent of episodes) along with being the least expensive (Exhibit 2). However, intensity-modulated radiotherapy was used in 36.3 percent of episodes and was the second most expensive modality. Stereotactic radiosurgery was used in 11.9 percent of episodes and the other modalities (intraoperative radiotherapy, proton beam therapy, and brachytherapy) were used in less than 5 percent of episodes.
However, modality use differed substantially across the various cancer types. As shown in Exhibit 3, conventional external beam therapy was used in 86.4 percent of episodes for Bone Metastases. This was also the lowest cost cancer type to treat at $5,510, as shown in Exhibit 4. In contrast, conventional external beam therapy was used in only 8.7 percent of episodes for Prostate cancer. While intensity-modulated radiotherapy was used in 78.2 percent of episodes and proton beam therapy was used in 4.1 percent of cases. Due to this mix of modalities, Prostate cancer was the most expensive cancer type to treat at $20,525. Thus, the new payments will be based on the historical blend of modalities used to treat each cancer type along with the cost associated with each modality.
Another issue that providers will need to assess under the new payment model is the use of multiple modalities required to treat patients. As shown in Exhibit 5, the cost of an episode using two or more modalities is about 41 percent higher than the cost of using a single modality. On average, the use of multiple modalities occurred in only 6.7 percent of episodes. However, the use of multiple modalities occurred in 54.9 percent of episodes with Cervical cancer and 25.8 percent of episodes with Uterine cancer. For both cancer types, this more than doubles the cost of the episode. The use of Brachytherapy along with conventional external beam or IMRT are common for these cancer types, but providers will need to assess the cost and benefits of using both.
Under the new RO payment model, providers subjected to the model will be paid a single 90-day episodic payment rate for each specific cancer type regardless of the treatment modality selected for the patient. CMS believes that applying the same payment rate regardless of the modality would allow providers to pick the highest value modality for the new price. Under this new payment system, providers will need to assess the value of each particular modality as well as the number of fractions used in order to achieve savings under the model. Since the new payments will be based on the historical blend of modalities used to treat each cancer type, opportunities exist for savings by utilizing lower cost modalities as appropriate. However, providers will need to weigh this strategy against the significant capital investments that have been made to acquire equipment associated with the higher cost modalities.