Unbiased Analysis of Today's Healthcare Issues

Will OCM dis-incentivize innovation?

Written By: Jason Shafrin - Mar• 13•17

The answer seems to be yes according to a paper by Seiden, Neubauer and Verrilli (2017).  Although the Oncology Care Model (OCM) rewards practices both for improving quality and reducing cost, practices are not rewarded for dramatic increases in quality at marginal cost increases because financial returns are dependent on the creation of some cost savings. The following example I found illuminating.  They authors state that the Oncology Care Model:

does include quality metrics, but doesn’t include response, survival, or toxicity. The calculation of shared saving that would be delivered to the practice is equal to a quality score multiplied by cost saving score. Consider, as an example, a practice that doubled its quality score from 50 to 100 while its healthcare costs increased 10%. In this hypothetical case there was a marked improvement in quality and perhaps even survival, simultaneously with an increase in costs. While the improvement in quality would exceed the cost increase (and thus improved “value”), the cost-saving equation would yield no financial return for the practice (reward in the OCM = quality score x cost savings). In the event the practice made significant financial investment to transform clinical care through investment in information technology, staff, and processes, they could easily have overspent their monthly management fee. This highlights an important discordance with value and shared savings that dominates APMs [Alternative Payment Models].

Admittedly, balancing the desire to accelerate innovation and grant patients access to the latest medications must be balanced with limitations on society’s resources.  Balancing these two competing needs is imperative to insuring budgets are balanced and patients live long, healthy lives.

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