Download eBook for Free

FormatFile SizeNotes
PDF file 0.8 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

This report describes the results of a simulation analysis of a payment model for specialty oncology services that is being developed for possible testing by the Center for Medicare and Medicaid Innovation at the Centers for Medicare & Medicaid Services (CMS). CMS asked MITRE and RAND to conduct simulation analyses to preview some of the possible impacts of the payment model and to inform design decisions related to the model. The simulation analysis used an episode-level dataset based on Medicare fee-for-service (FFS) claims for historical oncology episodes provided to Medicare FFS beneficiaries in 2010. Under the proposed model, participating practices would continue to receive FFS payments, would also receive per-beneficiary per-month care management payments for episodes lasting up to six months, and would be eligible for performance-based payments based on per-episode spending for attributed episodes relative to a per-episode spending target.

The simulation offers several insights into the proposed payment model for oncology: (1) The care management payments used in the simulation analysis — $960 total per six-month episode — represent only 4 percent of projected average total spending per episode (around $27,000 in 2016), but they are large relative to the FFS revenues of participating oncology practices, which are projected to be around $2,000 per oncology episode. By themselves, the care management payments would increase physician practices' Medicare revenues by roughly 50 percent on average. This represents a substantial new outlay for the Medicare program and a substantial new source of revenues for oncology practices. (2) For the Medicare program to break even, participating oncology practices would have to reduce utilization and intensity by roughly 4 percent. (3) The break-even point can be reduced if the care management payments are reduced or if the performance-based payments are reduced.

The research addressed in this report was conducted in RAND Health, a division of the RAND Corporation, under a subcontract to MITRE.

This report is part of the RAND research report series. RAND reports present research findings and objective analysis that address the challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards for research quality and objectivity.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.