Innovative payment models may reduce Part B spending

Some of CMS’ payment plan proposals may have the effect of reducing Part B drug costs, even if not specifically designed to do so. Avalere Health reviewed three categories of programs and found that episode payment models (EPMs), a disease-specific model, and accountable care organizations (ACOs), incentivize providers to reduce Part B spending due to the financial responsibilities imposed. The Center for Medicare and Medicaid Innovation (CMMI) is continually developing and testing new models with the goal of offering higher quality care while minimizing costs.

EPMs

EPMs include the Bundled Payments for Care Improvement (BCPI) demonstration and the mandatory (for metropolitan area hospitals) Comprehensive Care for Joint Replacement (CJR) model. Providers are held accountable for costs incurred over a patient’s episode of care, bearing risk for Part A and B expenditures that begin with a hospital stay. A target is provided based on historical expenditures, and providers are financially responsible for excess spending. Over 1,300 providers now participate in BPCI. CJR covers the initial hospital stay and 90-days after discharge for major joint replacements in the lower extremity, including Part B spending. A proposal has been issued to include non-joint replacement hip and femur treatments.

Similarly, the Oncology Care Model (OCM) provides a fixed monthly payment to providers for management and coordination of patient care for six months while a patient is receiving chemotherapy. This model includes payments for novel oncology therapies to ensure that there is no disincentive to use expensive new treatments.

Disease-specific and ACOs

End stage renal disease (ESRD) beneficiaries are often excluded from payment model demonstrations, so CMMI created the Comprehensive ESRD Care (CEC) model to determine whether improved outcomes and savings are possible for these patients. Providers are accountable for Part A and B spending per beneficiary, per year, including dialysis treatments.

The Medicare Shared Savings Program (MSSP), Next Generation ACOs, and Pioneer ACOs all place risk on providers in various ways, allowing them to share in savings and losses. This includes responsibility Part B spending and the opportunity to receive savings based on low-cost decision-making.