CMS issued the long-awaited Final Rule on an Advanced Alternative Payment Model (APM) for radiation oncology (RO Model) on Sept. 18, with a start date of Jan. 1, 2021. Physician groups had several concerns but the most urgent had been the start date, which gave practices little time to implement the changes. The good news is, CMS listened to the stakeholders and will be delaying the start date to July 1, 2021.

The RO Model will be mandatory and will test prospective site-neutral, episode-based payments to physician group practices, outpatient departments, and freestanding radiation therapy centers. It includes 90-day episodes of care in 16 types of cancer in randomly selected core-based statistical areas (CBSAs). The CBSAs selected for the RO Model contain approximately 30% of all eligible Medicare fee-for-service radiotherapy episodes.

Episode payments will be prospective — half will occur when the RO episode is initiated, the rest when it ends. Payments are split into a professional component (PC) for radiation therapy services that may only be furnished by a physician, and a technical component (TC) for related technical costs.

Participant-specific payment amounts are determined using national base rates, trend factors, and adjustments for each RO participant’s case-mix, historical experience, and geographic location. CMS further adjusts amounts by applying a discount of 3.75% for the PC and 4.75% for the TC. The amount is also adjusted for withholdings due to incorrect payments (1% for PC and TC), low quality scores (2% for PC), and low ratings around patient experience (1% for TC starting in 2023). RO participants can earn back all or some of the withholds based on their quality score and other factors. The RO Model qualifies as an APM and a Merit-based Incentive Payment System (MIPS) APM under the Quality Payment Program.

While the six-month delay is helpful, without regulatory or legislative adjustments, a mid-2021 start could actually prevent RO Model participants from qualifying for the 5% APM incentive on professional component payments. Also, there is no clarity on how practices participating in MIPS will transition to the RO Model in the middle of 2021.

The discounts of 3.75% and 4.75% on professional and technical payments, respectively, are out of step with other APMs and the Medicare Accessibility and CHIP Reauthorization Act (MACRA). The Final Rule estimates cuts of 6% on participating group practices and 4.7% on hospital outpatient departments. RO services rely heavily on the use of advanced technology and equipment that require a significant financial investment. They have higher fixed costs (that far outweigh the variable ones), compared with other specialties — with limited scope for generating savings. As a comparison, CMS also released a new mandatory payment model for kidney disease providers on Sept. 18 — and despite a far greater number of participants and kidney disease representing multiples more in Medicare spending, CMS estimates only $25 million in savings over five years there. The estimated savings on the RO Model are around $230 million for the Model period. The RO payment cut looks vastly disproportionate.

There are other unknowns at this point that could further cut payment rates. The proposed 2021 Medicare Physician Fee Schedule Conversion Factor (CF) is to be set at $32.26 — around 10% lower than the 2020 CF rate update of $36.09 — to meet the mandated budget-neutrality requirement. The RO Model payment methodology incorporates a trend factor to account for utilization and payment rates for RT services outside the model. As these could be driven down outside the model due to the reduction in the CF, we could have a negative trend factor on the PC side if the proposed CF rate holds in the Final Rule.

Radiation oncology group practices and hospital outpatient departments have been hit hard by the pandemic. Federal officials expect increases in COVID-19 cases through winter, which will continue to stress radiation oncology clinics and other health providers. In addition to the concerns listed above, the RO Model adds on new administrative burdens and costs to those practices that are required to participate in the model. They will have to accommodate unreasonable clinical data reporting requirements, including maintaining separate billing systems and collecting and reporting significant new amounts of information — much of which cannot be found in the Electronic Health Record.

Payment reform succeeds when stakeholders unite to improve clinical quality and outcomes, while containing costs. As providers, we are key participants and our concerns need to be heard. The stakes are too high: the well-being of patients and the stability of cancer care into the future.