ASCO Physician Payment Reform Educational Series Part 5: A Proposal for Patient-Centered Payment Reform

Posted January 7, 2014

This ASCO in Action series is designed to help ASCO members better understand the complex issue of physician payment reform—and why 2014 may witness dramatic changes in how Medicare reimburses oncologists for treating cancer patients. Part 1 of this series provided a broad overview of the payment reform issue; Part 2 explained the Sustainable Growth Rate formula; Part 3 reviewed the current Medicare payment system for reimbursing oncology drugs; and Part 4 outlined payment reform options being considered as alternatives to the current fee-for-service system. Part 5, the latest installation in this series, describes an innovative alternative that ASCO is proposing for consideration: a new framework for oncology reimbursement that recognizes and rewards high quality, high value care for patients with cancer. 


Amid mounting tensions over the federal deficit, healthcare spending—especially in Medicare­­—has taken center stage as a major driver in the escalating burden of our national debt. The looming specter of an aging population has increased this anxiety, leading many to believe that, unless action is taken, the cost of entitlement programs will ultimately bankrupt the country. As a result, Congress has focused a great deal of attention on Medicare, seeking ways to favorably “bend the cost curve.” Congressional committees have floated various proposals to replace the flawed Sustainable Growth Rate (SGR) formula—an effort that has gained momentum with legislation moving forward this year. (At this writing, Senate and House Committees have approved legislation to repeal and replace the SGR formula; in early 2014, Congress will work to reconcile these bills.) The ASCO has been fully engaged with both Congress and the Administration on payment reform, weighing in on proposals—and providing potential alternatives that reward and encourage high-quality patient care.

ASCO’s Clinical Practice Committee has led the Society’s efforts to address the increasingly critical need for payment reform in oncology. In July 2012, the Committee established a Payment Reform Working Group devoted exclusively to the task of identifying, researching, and analyzing alternative payment models. With representation across the spectrum of practice settings, including private practice, hospital-based, large groups, academic, and others, the group has been working across interests to collectively develop a viable proposal for reform. Their approach has been expansive, inclusive and bold. 

Setting aside preconceived notions and existing constraints, the group began with this question: “If we could build a logical Medicare model for oncology reimbursement from scratch, what would it look like?” Consensus on the main focus of such a system was quick: it would be a patient-centered system that emphasizes high-quality, high-value cancer care. Designing a payment system to achieve this vision was more difficult.

Having defined their goal, the members of the Working Group began asking the hard questions, challenging entrenched assumptions and confronting the fear of change in the cancer community as they addressed the difficult issues that lay before them. The group began to coalesce around a model that emphasized cognitive work—time spent caring for patients—rather than procedures and an administratively burdensome system of documentation.

“This payment reform proposal represents a real shift in the way oncologists would be reimbursed,” said ASCO President Clifford A. Hudis, MD, FACP. “ASCO is offering a new and different perspective on how oncologists should be compensated that recognizes their expertise as well as the care and services they are providing to patients.”

ASCO partnered with nationally recognized health economists, actuarial consultants, practice leaders and healthcare quality and payment reform experts to develop a clear picture of how new payment models would impact care delivery and practice economics.  A critical step in this process has been—and will continue to be—modeling new payment strategies in real-world practices of varying size and location. Preliminary modeling has been accomplished with the generous help of a small group of dedicated volunteers and their practice staffs, but more extensive analysis and actuarial modeling will be necessary to determine whether new approaches fairly and adequately compensate care across practice size and setting.

The proposal outlined below reflects thousands of hours of effort and represents just one potential approach to physician payment reform. It is intended to spark conversation in the oncology community and among policymakers as meaningful payment reform is pursued. ASCO recognizes that the diversity and complexity of cancer care may drive a need for multiple payment models.  As such, this is not intended to be a one-size-fits-all approach. Any proposal will need to be tested over a period of years to determine both its feasibility and its long-term ability to sustain a robust cancer care delivery system. 

"In offering this approach, we remain committed to actively engaging with others in the oncology community to develop payment strategies that optimize financial and human resources that will ensure the best care for our patients,” said ASCO Clinical Practice Committee Chair-elect Robin Zon, MD, FACP, FASCO. “The challenge before us is enormous, but not insurmountable, if we, as oncologists, work together.”

Components of a Patient-Centered Payment Model

Multiple payment strategies can be used to support and enhance patient centered care in oncology.  Some are modified fee for service arrangements that involve shared savings and other incentives to achieve efficient, high quality care.  Other models involve more structural changes to the current payment system, including episode based and bundled payments.

The ASCO proposal begins to move away from fee for service, relying instead on five key components to reform payment, maintain viability of community oncology practices, and control costs. Although the model, described below, retains some fee-for-service (FFS) features, it collapses payment for patient management into monthly payments that recognize discrete stages of patient care:

1. New Patient Payment: When a new patient is referred to an oncology practice, the practice would receive a single payment to cover all of the time involved in initial patient evaluation, treatment planning and patient education. The costs of any diagnostic testing ordered by the practice would be paid in addition to this amount (on a fee-for-service basis), but no Current Procedural Terminology (CPT)-based Evaluation and Management (E&M) payments would be made.

2. Treatment Month Payment: If the patient begins treatment with the oncology practice, the practice would receive a single payment each month in which the patient is receiving treatment (oral or parenteral) ordered by the practice. This payment would replace all current CPT-based payments for chemotherapy administration, therapeutic injections/infusions, hydration services, and established patient E&M visits. The practice could receive both a Treatment Month Payment and a New Patient Payment in the same month.

  • There would be four different levels of Treatment Month Payment to reflect the differences in time and effort involved in treating different patients; the payment level for an individual patient would be based on the patient’s diagnosis, comorbidities, risk factors, and performance status, on the number of drugs or treatments the patient is receiving, and the typical complication rate associated with the treatment regimen.

3. Non-Treatment Month Payment. If the patient is still under the care of the oncology practice but does not receive any anti-cancer treatment (oral or parenteral) during a particular month, either because of a temporary pause in treatment or because of the completion of treatment, the oncology practice would receive a Non-Treatment Month payment.

  • There would be two levels of the Non-Treatment Month Payment; a higher amount would be paid during the months immediately following the end of treatment, and a lower amount for patients for long-term monitoring.

4. Transition of Treatment Payment. When a patient begins a new line of therapy or ends treatment without an intention to continue, the practice would receive an additional payment to reflect the additional time involved in treatment planning and patient education.

  • There would be two levels of the Transition of Treatment Payment; a higher payment would be made for a patient who has been off treatment and has a recurrence.

5. Continued FFS Payment for Some CPT Codes. An oncology practice would continue to be paid for services using current CPT code-based payments, such as laboratory tests, bone marrow biopsies, and use of portable pumps.

The payment levels for each component would be standardized by Medicare to ensure that they reflect the relative amount of time and cost incurred by oncology practices during each phase of patient care described in the five components. In the initial phases of the program, practices that choose to participate would be protected from significant downside risk.

 “This episode-based approach to payment puts patient care first, while ensuring oncologists are fairly reimbursed for their time and services,” said Clinical Practice Committee Chair Anupama Kurup Acheson, MD. “The appeal of this proposed model is that by incentivizing high-quality, high-value patient care—patients win, oncologists win, and ultimately the American people will win with a stable, sensible, sustainable health care system.”

ASCO has long underscored the need for a period of transition to any new payment model in order to ensure stability, understand impact on patient care, and provide ample time for practices to adapt to the new environment.  The ASCO proposal assumes a minimum three-year transition phase, during which oncology practices can make adjustments needed to participate and thrive in the new system.   

Integration of Quality, Value and Research

The ASCO proposal also recognizes previously under- or uncompensated activities practices have long subsidized, including quality measurement, disease management, care coordination, and participation in clinical trials.

In addition to the standard payment amounts for each of the episodic components, oncology practices would receive additional compensation based on their participation in the following hallmarks of high-quality care:

  • Performance on Quality Measures: Oncology practices would be rewarded for measuring the quality of care they deliver and for achieving high levels of performance on quality measures.
  • Use of and Adherence to Pathways: Practices would receive an increase for using high-value approaches to care through the use of value-based care pathways.
  • Utilization of Other Resources: Oncology practices would be compensated for managing patient care in a way that minimizes emergency room visits and avoidable hospitalizations due to complications of treatment.
  • Participation in Clinical Trials: In order to offset the additional time and costs associated with having patients enrolled in clinical trials, oncology practices would receive higher treatment month and non-treatment month payments.

“Oncologists are already integrating many of these best practices in their day-to-day work. However, the current system does not recognize, incentivize or reimburse for these critical components to high-quality cancer care,” said ASCO Clinical Practice Committee Past-Chair Jeffery Ward, MD. “What we need to do is build incentives into the system that are properly aligned with high-quality, high-value patient care, and give the long overdue recognition and rewards to those practices that hold themselves to these high standards.”

Real World Application

Under the proposed model, payment would differ from the current model in several specific situations. For example, under the current system, if a patient sees a physician in the office or in a hospital, the practice bills an E&M CPT code for each separate visit. Under the new model, payment would be streamlined and practices would receive one payment for the care of the patient, which would include reimbursement for activities separate from the clinic encounter such as care coordination, phone or electronic communication, or related activities. The monthly payment would be calculated at a level sufficient to compensate estimated time required to manage patients in the relevant stage of their cancer care.

Coordination in the Cancer Community

In October, volunteer leaders of ASCO’s Payment Reform Work Group met with the Community Oncology Alliance (COA), US Oncology, and ION Solutions to discuss respective payment reform efforts and possible collaboration to advance these ideas. The groups agreed that two pilots—ASCO’s episode based payment model described above and COA’s proposal on patient centered medical homes in oncology—should be tested to determine feasibility and impact. The groups are working to advance both models in support of a more rational payment system in oncology.

The Community Oncology Alliance (COA) has developed a 4-phase, 5-year payment reform model for both Medicare and private insurance. The model is associated with the Oncology Medical Home developed by COA, and is based on specific measures of quality, value, and patient satisfaction. The first phase of the model pays for reporting on quality, value, and patient satisfaction measures. The second phase pays for performance against these measures as benchmarked relative to other oncology providers. The third phase incorporates shared savings for achieving specific targets on the measures and controlling costs; for example, by containing emergency room utilizing and hospital admissions. All three phases are in addition to customary evaluation and management (E&M) payments, as well as drug reimbursement (based on ASP + 6% for Medicare). The fourth phase involves a hybrid episode-of-care payment with shared savings; however, this phase would not be implemented without a demonstration project to pilot and collect data. The COA model was developed and financially tested by a team of community oncologists and practice administrators. (Click here for more information about COA’s proposal.) 


The proposed ASCO payment model introduces a global shift in thinking about physician payment reform in oncology. The shift is intentional and purposely designed to reimburse oncologists for the patient care they provide while rewarding those practices that achieve high-quality, high-value patient care and globally moving away from a fragmented, fee-for-service payment environment. 

“It’s a revolutionary concept, and one that may not be popular with everyone, but it is time to at least test it,” said Dr. Hudis. “Our oncology care system could be even more patient-centric than in the past, and a system that promotes high-quality, high-value cancer care puts our patients in the center, where they belong.”

“We are eager to hear from our members and others in the oncology community on this proposal and other promising options for oncology payment reform,” said Dr. Kurup Acheson. “If we do not work together to develop a solution for oncology reimbursement, then it will be forced upon us. We’ve seen the consequences that can bring—let’s get this done.”

ASCO wants to hear from its membership on this and other payment options. The Society recognizes the wide array of practice settings, environments, demographics, and challenges within the oncology community, and does not believe that practices should be forced into only one payment system. If you have questions, or comments regarding this and other payment reform options, please contact

For the most current developments on ASCO payment reform efforts, please visit