The Centers for Medicare and Medicaid Services (CMS) first introduced the Radiation Oncology (RO) model as part of a proposed rule in July 2019,¹ which slated the model to begin in calendar year (CY) 2020. The model was designed to test whether bundled, prospective, site-neutral, episode-based payments for radiation oncology services could lower Medicare expenditures while improving the quality of care.

Since the model was first proposed, the implementation has been delayed repeatedly, most recently as part of the 2021 Consolidated Appropriations Act (December 21, 2020), which distributed coronavirus relief funds and delayed the implementation of the RO model to January 1, 2022. CMS has since proposed a number of updates to the original model design² as part of the CY2022 Hospital Outpatient Prospective Payment System (OPPS) Final Rule³ to accommodate the change in model timing as well as to make modifications. This brief introduces the model and considers potential implications for providers that will be a part of the program.

Model overview

CMS has identified radiation therapy (RT) services as a potential area of improvement given the current lack of site neutrality, incentives that reward volume rather than quality of service, and complexity in coding and payment.⁴ To address these shortcomings, CMS has developed the RO model, which will be mandated for providers in randomly selected core-based statistical areas (CBSAs). The program will run for five "performance years" (PYs), with the first performance year spanning from January 1, 2022, through December 31, 2022.

Participants in the program will receive prospective episode-based payments for certain radiation therapy services furnished during 90-day episodes of care for 15 cancer types commonly treated with RT (listed below).

• Anal cancer
• Bladder cancer
• Bone metastases
• Brain metastases
• Breast cancer
• Cervical cancer
• Central nervous system (CNS) tumors
• Colorectal cancer
• Head and neck cancer
• Lung cancer
• Lymphoma
• Pancreatic cancer
• Prostate cancer
• Upper gastrointestinal (GI) cancer
• Uterine cancer

Payments will be determined using national base rates trended and adjusted for each provider, including adjustments based on quality of care. Note that these payments will replace the Medicare fee-for-service (FFS) payments that were historically provided for select radiation therapy services⁵ provided during the 90-day episodes of care described above.

Program participation

Program participation will be mandated for providers of RT care (i.e., physician group practice, freestanding RT center, or hospital outpatient department) in the selected CBSAs and the linked 5-digit ZIP Codes.⁶

Participants in the program will be considered either professional participants, technical participants, or dual participants. Professional participants are Medicare-enrolled physician-group practices that deliver only the professional component (PC) of RT services. These participants will be identified by their Taxpayer Identification Number (TIN). Technical participants are hospital outpatient departments (HOPDs) or freestanding RT centers identified by their CMS Certification Number (CCN) or TIN and deliver only the technical component (TC) of RT services. Dual participants deliver both professional and technical components of RT care. Though enrollment in the program is mandatory, providers with a low volume of RT services (fewer than 20 episodes in one or more of the CBSAs selected for participation during the most recently available CY of claims data) can decide to opt out.

Providers participating in the model will be considered Qualifying Alternative Payment Model Participants (QPs) in PY1 (CY2022), which means that they will be eligible for a 5% bonus on Part B payments and will be excluded from Merit-based Incentive Payment System (MIPS) reporting requirements.

Payment methodology

Although the total payment amount is prospectively determined, half of the amount will be paid at the initiation of the episode and the other half will be paid at the conclusion. The rates are developed through the following high-level process:

1. Develop national base rates

1. National base rates are developed for both the professional and technical components of each cancer type based on the historical average cost for an episode of care.

2. Apply trend to PY

1. CMS will develop a trend to be applied to the national base rates by calculating the ratio of:
1. The Medicare FFS rate schedules—OPPS, Physician Fee Schedule (PFS)—in the performance year applied to the volume of services for that cancer type and component (PC, TC) in the CY three years prior to the PY.
2. The Medicare FFS rate schedules (OPPS, PFS) in the most recent baseline year (2019) applied to the distribution of services provided for that cancer type and component (PC, TC) in the CY three years prior to the PY.
3. For example, the trend factor for PY 2022 would be calculated as: (2019 distribution of services provided * 2022 FFS rates under OPPS or PFS) / (2019 distribution of services provided * 2019 FFS rates under OPPS or PFS).

3. Apply case mix, historical experience, and geographic adjustments

1. The case mix adjustment is developed by comparing the occurrence of the case mix variables (cancer type, age, sex, presence of a major procedure, death during each 30-day period within the episode, and presence of chemotherapy) among the RO participants’ historical populations compared to the prevalence of these variables in the national population. The adjustment is developed separately for TC and PC and is not varied by cancer type.
2. The historical experience adjustment compares the difference in the RO participant’s historical payments versus what the predicted payments would have been using the case mix regression. This adjustment is developed separately for TC and PC and does not vary by cancer type.
3. RO payments will be geographically adjusted using a factor that will be developed by leveraging the wage index adjustment currently used in the OPPS schedule and RO model-specific relative value unit (RVU) splits for the PFS schedule.

4. Apply discount factor

1. A universal discount factor will act to reserve savings for Medicare and reduce beneficiary cost sharing. The discount factors will be 3.5% for PC and 4.5% for TC.

5. Apply withholdings

1. CMS will withhold 1% for incorrect payments (TC and PC), 2% for quality (PC only), and 1% for patient experience (TC starting in PY3 [2024]). Participants can earn back quality and patient experience withholds based on performance. The incorrect payment withhold will be reconciled at yearend.

6. Adjust to apply stop-loss as well as remove member coinsurance and sequestration

1. The RO model will reduce the final payment (after applying all other adjustments listed in steps 1-5 above) by 20% to account for beneficiary coinsurance and by the application of sequestration based on applicable law at the time. In addition, if an RO participant with fewer than 60 episodes during the baseline period receives payments that equate to greater than a 20% loss versus FFS payments, then CMS will reimburse all losses up to the 20% threshold.

Implications

For providers that are required to participate in this model beginning in 2022 (based on their locality), this payment structure may have a significant impact on their Medicare payments. Fortunately, providers can analyze their historical (and current) claims patterns to understand how their payments could be impacted under the RO model and whether there are ways they can mitigate these changes while still providing evidence-based care to patients.

Providers can take the following steps to understand the impact of the RO model on their payments, and identify whether there might be relevant opportunities to shift their patterns of care:

• Mimic CMS’s RO episode creation methodology on historical data in concert with the RO model’s reimbursement structure to understand how RO payments may be impacted in future years
• Compare historical radiation therapy utilization and costs versus national and regional benchmarks to understand whether there are areas of deviation from broader patterns in care.
• Analyze utilization and cost of radiation therapy episodes under various cancer types in comparison to RO reimbursement to better understand a participant’s strengths and weaknesses under the RO model.

Conclusion

The Radiation Oncology model has been in the works for several years and is set for implementation in CY2022. The site-neutral payment structure represents a significant change in how radiation oncology is paid for in the Medicare FFS program and is indicative of a larger shift within CMS toward risk and episode-based payments. It is essential that organizations providing radiation oncology services within the selected areas understand how this change could directly impact their Medicare payments.

¹ The full text of the proposed rule is available at https://www.federalregister.gov/documents/2019/07/18/2019-14902/medicare-program-specialty-care-models-to-improve-quality-of-care-and-reduce-expenditures.

² The full text of the rule as of September 29, 2020, is available at https://www.federalregister.gov/documents/2020/09/29/2020-20907/medicare-program-specialty-care-models-to-improve-quality-of-care-and-reduce-expenditures.

³ The full text of the final rule is available at https://www.federalregister.gov/public-inspection/2021-24011/medicare-program-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center-payment.

⁴ U.S. Department of Health and Human Services (November 2017). Episodic Alternative Payment Model for Radiation Therapy Services. Report to Congress. Retrieved November 26, 2021, from https://innovation.cms.gov/files/reports/radiationtherapy-apm-rtc.pdf.

⁵ CMS. Included RT Services HCPCS Codes. Retrieved November 26, 2021, from https://innovation.cms.gov/media/document/ro-model-rt-hcps-codes-aug-2021 (Excel download).

⁶ CMS. Participating ZIP Code. Retrieved November 26, 2021, from https://innovation.cms.gov/media/document/ro-model-participant-zip-code-list-july-2021 (Excel download).