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.This issue brief - the third in our series of "Radiation Oncology Episodes of Care"- shows that the newly proposed CMS payment model may present savings opportunities for radiation therapy providers.
CMS’ proposed mandatory payment model for radiation oncology will be based on 2015-2017 historical average spending for RT services that accounts for the service utilization and blend of modalities used to treat each cancer type during that baseline period. This blog builds on our previous analysis to show that the wide variation in spending in the technical component (i.e., services provided by hospital outpatient departments and freestanding radiation therapy centers during a radiation oncology episode) of RT episodes – as shown in Exhibit 1 – provides opportunities for substantial savings for providers in the model. It examines low cost episodes (defined as episodes in the lowest 25th percentile of spending) for prostate cancer treatment, as an example, compared to all prostate cancer episodes in order to determine where savings opportunities may exist. While our prior issue brief found that cost differences across various modalities are significant, this analysis expands upon the prior analysis to examine both the mix of modalities and number of fractions/services provided.
CMS stated in the proposed rule that “For some cancer types, stages, and characteristics, a shorter course of RT treatment with more radiation per fraction may be appropriate. For example, several randomized controlled trials have shown that shorter treatment schedules for low-risk breast cancer yield similar cancer control and cosmetic outcomes as longer treatment schedules. As another example, research has shown that radiation oncologists may split treatment for bone metastases into 5 to 10 fractions, even though research indicates that one fraction is often sufficient. In addition, recent clinical trials have demonstrated that, for some patients in clinical trials with low- and intermediate-risk prostate cancer, courses of RT lasting 4 to 6 weeks lead to similar cancer control and toxicity as longer courses of RT lasting 7 to 8 weeks. Importantly, however, the latest clinical evidence suggests that shorter courses of RT for certain types of cancer would be equally effective and could improve the patient experience, potentially reduce cost for the Medicare program, and lead to reductions in beneficiary cost-sharing.”
When comparing low-cost episodes (25% of episodes with the lowest technical component spending) to the overall average for prostate cancer episodes, we found the that average low-cost episode spending was $11,024 compared to $20,983 across all episodes, or nearly half the cost as shown in Exhibit 2. This represents an opportunity for providers to significantly reduce service utilization and spending that will allow them to benefit under the new payment model. The key differences in service use and spending for low-cost episodes are as follows:
- Low cost prostate cancer episodes utilized stereotactic radiosurgery (SRS) as the treatment delivery modality more often than the average (in 23.0% of episodes compared to 6.2% across all episodes). Although SRS is the most expensive modality per fraction (about $1,800), the small number of fractions required (4.5 and 4.6 per episode) make this modality relatively cost effective, with per episode costs for SRS services of about $8,200 on average.
- Low cost episodes utilized intensity-modulated radiotherapy (IMRT) as the treatment modality less often than the average (in 44.2% of episodes compared to 81.2% across all episodes). For episodes using IMRT, the number of fractions used per low-cost episode was 26.3 compared to 39.1 across all episodes. The smaller number of fractions used in low-cost episodes substantially reduces the episode costs for IMRT services to $10,734 compared to $16,746 across all episodes.
- Low-cost episodes utilized conventional external beam (CEB) as the treatment modality more often than the average (in 21.2% of episodes compared to 7.4% across all episodes). The number of CEB fractions used per episode and cost per fraction where similar for the low-cost episode group compared to the overall average. Since CEB is one of the lowest cost modalities, the higher use of this modality is cost effective.
- Low cost episodes utilized proton beam therapy as the treatment modality less often than the average (in 0.4% of episodes compared to 5.0% across all episodes). For episodes using proton beam therapy, the number of fractions used per low-cost episode was 12.5 compared to 37.3 across all episodes. The smaller number of fractions used in low-cost episodes substantially reduces the episode costs for proton beam therapy to $12,086 compared to $36,753 across all episodes.
- Technical preparation and special services are utilized for most all episodes. However, the number of these services provided per low-cost episode was nearly half the overall average (15.8 compared to 30.9). This results in $1,374 lower episode spending for these services in low-cost episodes compared to the overall average ($2,850 - $4,197).
For prostate cancer treatment, the potential for significant cost savings could be achieved for technical component providers by utilizing SRS or CEB treatment modalities instead of IMRT or proton therapy where appropriate, lowering the number of radiation fractions prescribed, and managing the volume of technical preparation and special services during an episode of care. Our data show that one quarter of prostate cancer episodes with the lowest cost were 48 percent lower than the overall average. Since the new RO payment model will be based on the historical utilization of services used to treat each cancer type, opportunities exist for savings by utilizing lower cost modalities as appropriate and utilizing fewer fractions/services.
Using prostate cancer as an example, CMS proposes that technical providers will be paid a rate of $18,859 ($19,852 national base rate x 5% discount in 2017 dollars before adjusting for geographic location). If providers can reduce utilization and spending to levels illustrated in this example ($11,024), then providers would be able to keep the difference of $7,835.
Finally, one of the program objectives is to fast track the use of lower cost service mix (i.e., modality and fractions) that can produce equal or better patient outcomes. This result could lead to a win-win situation for providers, Medicare and patients.