On July 10 2019, the Centers for Medicare & Medicaid Services (“CMS”) issued a Notice of Proposed Rulemaking (“NPR”) entitled, “Medicare Program; Specialty Care Models to Improve Quality of Care and Reduce Expenditures.” In the NPR, CMS proposes to implement two new mandatory specialty care payment models – one of which, the Radiation Oncology Model (“RO Model”), applies to selected radiation therapy (“RT”) services[1] as provided by physician group practices, hospital outpatient departments, and freestanding radiation therapy centers, all located within randomly selected geographic areas throughout the country.

Although the proposed RO Model is consistent with broader trends in the healthcare industry to cut healthcare costs and increase quality through the use of bundled and other alternative (i.e., not fee-for-service) payment methodologies, the RO Model has garnered its fair share of detractors within the RT community.

In this article, we will focus on the concerns of such detractors, including those voiced by proton therapy providers who consider the RO Model’s payment reductions – which apply to all RT providers regardless of the treatment modality at issue – as a CMS-intended financial hit against proton beam therapy, a form of radiation treatment that the Medicare Payment Advisory Commission (“MedPAC”), in its “June 2018 Report to the Congress: Medicare and the Health Care Delivery System,” (the “MedPac Report”) once referred to as a “potentially low value” treatment modality and an example of why CMS should consider the development and implementation of new RT payment models to create, “incentives for organizations to reduce low-value services.”

The RO Model: A Summary

As proposed, the RO Model is a prospective payment system that reimburses RT providers for RT treatment planning, technical preparation and special services, RT delivery, and RT management on a bundled basis (including both the technical and professional components of the RT services) for a 90-day episode of care. As described in the NPR, the RO Model creates a quality-based payment system that is intended to, “reduce Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) expenditures while preserving or enhancing the quality of [radiation therapy services] to the beneficiaries of such programs.” The RO Model links RT payments to quality through the assessment of RT provider-reported quality data against traditional quality metrics including patient satisfaction thresholds. Finally, RO Model payments do not differentiate between the type of RT provider, the RT modality, or the RT modality’s cost.

According to the NPR, the RO Model is currently set to take effect on January 1, 2020 and will last for five (5) years.

Background

Section 3(b) of the Patient Access and Medicare Protection Act (“PAMPA”) (P.L. 114-115) requires the Secretary of Health and Human Services to submit a report to Congress on the development of an episodic alternative payment model for the provision of radiation therapy services furnished in non-facility settings. In short, episodic alternative payment models (also called “bundled payment models”) are alternative payment methods in which the payer sets a single spending target for all applicable health care services furnished during a clinical episode of care over a specified period. The RO Model is one such alternative payment model.

On November 3, 2017, the Center for Medicare and Medicaid Innovation (“CMS Innovation Center”), a component within the Center for Medicare and Medicaid Services (“CMS”), complied with PAMPA and released Report to Congress: Episodic Alternative Payment Model for Radiation Therapy Services (the “Report”). As summarized by CMS, the Report identified three reasons why, “radiation therapy is ready for payment and service delivery reform: the lack of site neutrality for payments; incentives that encourage volume of services over the value of services; and coding and payment challenges.”

As one example of how these “three reasons” are reflected in the RO Model, the Report and in the NPR, the RO Model’s episodic payments are calculated based upon CMS-proposed national base rates, trend factors, and adjustment factors applied to each participating RT provider. Such adjustment factors include each RT provider’s case-mix, historical experience, and geographic location. As for those adjustment factors that are not included in the RO Model payment calculation, the adjustment factors do not include adjustments based upon the type of RT provider (the site-neutrality component) or the type of RT modality at issue. The absence of such adjustment factors are important in that they explain, in some part, the concerns of those in the RT provider community who take issue with the RO Model.

The RO Model: The Word from the Front

In addition, industry associations like the American Hospital Association (“AHA”) and the Community Oncology Alliance (“COA”), have been critical of various aspects of the RO Model payment methodology. As described below, some of the fears expressed by AHA, COA and their constituents relate to the payment adjustment factors that are not included in the RO Model payment calculation methodology.

For example, in its September 16, 2019 comment letter to the NPR, COA writes that although it appreciates the benefits of value-based reimbursement structures, it has significant concerns regarding some of the RO Model parameters. Specifically:

1. The COA objects to the RO Model as a mandatory demonstration project that, “fundamentally and effectively [changes] Medicare reimbursement policies” for those RT providers located in the CMS-selected geographies where the RO Model is to be tested. The COA maintains that the RO Model should be voluntary because, “not all RT providers have the infrastructure, commitment, and organizational buy-in to succeed in new payment arrangements.” Moreover, the COA notes that if RT providers are required to participate, they may not have adequate support to achieve the RO Model’s goals – the provision of high quality RT services at lower rates – while ensuring that they continue to meet the needs of their patients; and

2. Because the RO Model is designed to reimburse more expensive RT treatments at the same rate as lower cost treatments, the COA is concerned that the RO Model will have a disproportionately negative financial impact on those RT providers who treat high acuity and high cost patient populations as compared to those RT providers who treat comparatively lower acuity and lower cost patient populations. In order to accommodate the treatment of patient populations with varying acuity levels with a variety of RT modalities, the COA recommends that the national base amount calculation be adjusted to reflect the costs of treating both higher and lower acuity oncology patients with a variety of RT modalities. In doing so, the COA argues that the RO Model payments, even before the adjustment factors are applied, will be more sensitive to the diversity of RT providers and patients who are going to be impacted by the RO Model.

As noted by the AHA in its September 16, 2019 comment letter, although the AHA and its member organizations share a mutual desire with CMS to move towards a more accountable and streamlined system of care, the AHA’s RO Model concerns arise from a difference of opinion regarding how to best pursue this shared goal. The AHA believes that the RO Model as described in the NPR would place too much risk and burden on providers with little opportunity for shared savings as a reward. In order to address these concerns the AHA Letter calls for the following revisions to RO Model:

1. Make the model retrospective rather than prospective, to allow CMS to reconcile providers’ historical and actual case mix and avoid under or over payments;

2. Replace the RO Model’s historical experience and efficiency adjustments with an adjustment that blends participants’ historical performance and national and regional average performance, as has been done in other models;

3. Lower the discount amount, especially for the technical component (TC) payment, to 2.5% – 2.75%;

4. Incorporate a stop-loss provision into the RO Model:

5. Develop approaches to ensure that appropriate payments are made when providers introduce new service lines or technologies that were not included in their historical data; and

6. Ensure that appropriate payments are made for patients treated with multiple RT modalities or with multiple cancer types.

In addition to the foregoing, the AHA, like the COA, is concerned that by making the RT Model mandatory for those RT providers located in the selected geographic area creates an unfair and unnecessary burden on the providers who have no choice but to participate in the RT Model program. As noted by the AHA, “the hospitals and health systems that would be required to participate in [the RO Model] are of many different sizes and types and are at different points in the process of transitioning to value-based care. They should not be required to participate in such a complicated program, which includes 17 different types of cancer, if they do not believe it will benefit the patients they serve.” This concern about the mandatory nature of the RO Model is a common one that is shared by many providers and provider organizations.

The RO Model and its Potential Impact on Innovation and New Technology: The Case for Proton Beam Therapy

New Technology and RT Therapy. In addition to the above concerns, some stakeholders have objected to the reimbursement reductions that are part and parcel to the RO Model as creating a possible chilling effect on RT-related innovation and the development and use of new RT technology.

If the reimbursement reductions make innovation and certain types of cutting edge RT therapies economically unfeasible, RT providers who are innovating through the use of new (and often more expensive) technology to create more RT treatment alternatives that may be more specific and efficacious in the treatment of certain types of cancer and/or cancer more broadly as it may appear in rare cases may be forced to shift away from – or abandon altogether – the development and use of such new technology and new therapies. As a result, oncologists and their patients may soon find themselves with fewer (and possibly less effective) RT alternatives to choose from.

Proton Beam Therapy. A prime example of the potential negative impact that the RO Model may have on the proliferation of innovation in the RT arena can be best understood through the reaction of proton beam therapy providers and professional associations to the RO Model.

In the NPR, CMS calls out proton beam therapy as an expensive RT treatment modality that may be adversely and significantly impacted by the RO Model. For example, in the NPR, CMS notes that The Institute for Clinical and Economic Review (“ICER”), after evaluating the evidence of the overall net health benefit (which takes into account clinical effectiveness and potential harms) of proton beam therapy in comparison with other RT treatment alternatives, concluded that, “[proton beam therapy] has superior net health benefit for ocular tumors and incremental net health benefit for adult brain and spinal tumors and pediatric cancers.” In addition, CMS notes that, “ICER judged that proton beam therapy is comparable with alternative treatments for prostate, lung, and liver cancer, although the strength of evidence was low for these conditions.”

In response to the ICER conclusions, as well as the MediPac Report conclusions referenced above, CMS wrote in the NPR that, “[g]iven the continued debate around the benefits of [proton beam therapy], and understanding that [proton beam therapy] is more costly, we believe that it would be appropriate to include [proton beam therapy] in the RO Model’s test, which is designed to evaluate, in part, site neutral payments for RT services.” Notwithstanding the foregoing, CMS noted in the NPR that proton beam therapy, if provided to patient who are enrolled in a federally-funded, multi-organizational, randomized control clinical trials, may be excluded from the RO Model’s reach. Finally, the NPR includes CMS’s request for public comment regarding the inclusion of proton beam therapy in the RO Model.

On September 16, 2019, the Alliance for Proton Therapy Access (the “APTA”) submitted to CMS its comment letter to the NPR and CMS’s inclusion of proton beam therapy in the five-year RO Model implementation plan.   In its comment letter, APTA write that if the RO Model will not exclude proton beam therapy completely, CMS should minimize the negative impact that the RO Model would have on cancer patients who benefit from proton therapy. APTA suggests three changes in its comment letter that would minimize the negative impact: (i) make the RO Model voluntary; (ii) encourage more evidence-gathering on proton therapy by expanding the exclusion parameters to include proton patients enrolled in all clinical trials and data registries; and (iii) create a more appropriate base rate for reimbursement that won’t disincentivize providers for recommending proton therapy when it’s the best treatment option.

The APTA’s comment letter sums up many of the RO Model concerns that seem to be commonly accepted within the proton beam therapy provider and trade association communities. According to the APTA,

Overall, the Alliance is concerned that CMS’s large cost-saving goal and scope of this RO Model puts patients at risk. We fear this aggressive approach will be disruptive to providers who are likely to no longer offer these life-saving services because the reimbursement rates you are proposing will not come close to covering the cost of PBT, thereby preventing Medicare beneficiaries from accessing this medically proven method of treating certain types of cancer. We believe that Medicare patients should be able to receive the best treatment that is recommended by their oncologists, and this rule may prevent thousands of Medicare beneficiaries from doing so. Cancer patients deserve the right to work directly with their doctors to make the best choices about their treatment options – choices that improve their chances of survival and preserve their quality of life. In our opinion, the proposed rule will take away those choices from far too many patients, leading to potentially devastating consequences including unnecessary suffering and, in some cases, death.

The Final Rule is anticipated to be published mid to late November. The RT community will be watching and so will we.

*Dhara Waghela is a law Clerk in Sheppard Mullin’s Century City office.

[1] The selected RT services are EBRT (External Beam Radiation Therapy), IMRT (Intensity-Modulated Radiation Therapy), SRS (Stereotactic Radiosurgery), SBRT (Stereotactic Body Radiation Therapy), Proton Beam Therapy, IORT (Intraoperative Radiation Therapy), IGRT (Image-Guided Radiation Therapy), and Brachytherapy