A current move from fee-for-service to value-based care is a paradigm shift in our national health care system that is disrupting the ways that hospitals, physicians and health care groups manage risk. Oncology practices that currently participate in the Centers for Medicare & Medicaid Services’ (CMS) Oncology Care Model (OCM) will have to decide very soon whether to join in the new two-sided risk payment model or exit the Medicare reimbursement program altogether.
For oncology practices that administer chemotherapy and cancer treatments, worst-case scenarios can be an extremely risky exposure. Under the OCM program, some of that risk — along with the potential for more financial gain — will be shifted to the provider.
By December 3rd, providers must decide whether to terminate their participation in the OCM program or commit to two-sided risk going forward. As providers in OCM evaluate their options, they will need to understand which, if any, insurance products can help protect them against catastrophic downside risk.
Background on the Oncology Care Model (OCM)
OCM is a voluntary program launched by CMS in 2016 in which oncology practices provide bundled cancer treatment services, from diagnosis through chemotherapy and recovery, for a fixed fee. In this reimbursement model, providers have been allowed to participate in shared savings (upside risk), without having to take on financial exposure (downside risk), unless they chose the two-sided risk track.
Up until now, the 175 physician groups nationwide participating in the OCM program have chosen the one-sided risk option. As of January 1, 2020, any group that hasn’t achieved some level of savings by Performance Period 4 will have no choice but to accept a downside risk track, or else exit the program.
The Pros and Cons of Downside Risk
The incentives in the two-sided risk track are substantial. OCM providers can earn profits in three ways.
The disadvantages for OCM participants to take on downside risk are obvious. Primarily, practices that deliver cancer treatment and care at a price that doesn’t meet the cost threshold set by CMS will have to pay penalties to CMS. And when your job is cancer treatment, maximum losses in worst-case scenarios can be significant.
Insuring against the downside
Fortunately, there is insurance protection against this type of loss; specifically an aggregate stop-loss policy offered by a specialty underwriter that protects oncology groups financially from the worst-case scenario coverage. Knowing this protection is in place may provide the comfort needed to pursue the higher reward, two-sided risk option. This coverage, however, is only available through a qualified broker. It is not sold direct to consumer.
Stop-loss protection is nuanced. Having an insurance broker who understands the myriad complexities of the Oncology Care Model and who has access to the extremely limited marketplace for this type of coverage is critical. Providers will want a broker who can not only secure a proposal, but who can analyze it and show options for risk transfer.
Many OCM providers are approaching the move to downside risk with trepidation, and rightfully so. As the deadline for enrollment quickly approaches, they will have to weigh the pros and cons of CMS’ two-sided risk model. Understanding how to protect against downside risk needs to be part of the equation.
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