Several clients and provider contacts expressed concern last week about how changing reimbursement methodologies may force IDNs and even community-based oncology medical groups to develop “population-based health” strategies for their patients. Client concerns include the risk of late-stage patients being diverted to hospice, and financial incentives to avoid prescribing branded cancer drugs. Providers we’ve spoken with represent an almost dichotomous set of opinions: “Don’t worry, be happy” (our pro bono client) versus “This is an existential threat” (head of strategic planning in an academically focused IDN).

In this unsettling time, we believe it’s helpful to review several key points around MACRA’s emergence and implications for providers and manufacturers.

  1. It’s still fee for service: financial incentives continue to reward higher patient volumes and, potentially, high volumes of service delivered to each patient. Nearly all oncologists currently reimbursed through Medicare’s Physician Fee Schedule (PFS) will move to the Merit-Based Incentive Payment System (MIPS), which modifies the PFS payments based upon a retrospective examination of total cost, meaningful use of EMR, reporting on quality measures, and engagement in processes to improve practice. The MIPS program will not include oncologists employed by IDNs and hospitals whose services are billed under the Outpatient Prospective Payment System (aka Ambulatory Payment Classifications).
  2. There’s more bonus money in process measures, including meaningful use, clinical practice improvement, and quality reporting, than in total cost measures. Providers in the MIPS program will, in 2022, face a likely maximum bonus or penalty of 9%; just 2.7% (30% of the total bonus/penalty) will be tied to cost per patient compared to a benchmark. Providers should have more to gain by focusing on areas other than cost. It’s worth noting also that bonuses are funded by penalties paid by other groups; if lower-performing (and nonreporting) groups don’t underperform sufficiently, bonuses will be reduced.
  3. The Oncology Care Model is one of the few Alternative Payment Models currently exempt from MIPS. Although the pilot still rewards growing patient volumes, it does present a potential change to “business as usual” for manufacturers, as participating providers are measured on total cost of care (including Part D catastrophic care payments) for their patients and forced to move from shared savings to up-and downside risk by the third year. A particular concern for brands with either initial or follow-on indications launching after 2016 is that the performance benchmarks will include only FDA indications, and will not fully account for innovative new therapies costing more than previously used treatments. CMS claims to adjust the trended benchmark to account for new therapies, but our analysis suggests that the performance benchmark will include no more than 80% of the difference in costs. The 3,000+ participating oncologists will thus need to find other savings just to break even as they adopt new treatments.


Commercial success for cancer providers still means increasing patient volumes. Greater cost scrutiny and initiatives that track utilization, pathway compliance, and other quality process metrics suggest that adoption of new therapies will increasingly be a decision for committees rather than independent physicians. Data informing such decisions must address topics such as expected impact on overall costs in the context of patients’ utilization of broader resources, such as ER visits and supportive care therapies. Ensuring adoption for newly-launched products may also require taking steps to mitigate CMS’ underpayment for these products.