A New Approach to Cancer Bundled Payments in Medicare—The Enhancing Oncology Model

This article first appeared in JAMA Health Forum part of JAMA Network. It is co-authored with Eli Y. Adashi, MD, MS.

On June 27, 2022, the Center for Medicare and Medicaid Innovation (CMMI) announced the Enhancing Oncology Model (EOM).1 The EOM is a voluntary 6-month, 2-sided, risk-based payment model for clinicians caring for Medicare patients with 7 common cancer types beginning on July 1, 2023, for 5 years. The EOM provides practices with $70 per patient per month to fund a set of activities that are focused on enhanced patient experience, quality improvement, and cost saving. Clinicians receive an additional $30 per patient per month for dually eligible patients and may earn up to a 4% bonus if their total cost of care is below an estimated cost benchmark and they achieve quality targets. Additionally, clinicians must make a performance-based recoupment payment of up to 2% if the total cost of care exceeds the benchmark. Here we delineate the key elements of the EOM, explore its likelihood of success, and discuss its relative shortcomings.

The EOM is being launched after 6 years of experience and evaluation of the CMMI’s first foray into bundled payments for oncology, the Oncology Care Model (OCM). The OCM launched in 2016 and was used by 201 oncology practices that cared for 25% of Medicare patients undergoing systemic chemotherapy. The OCM paid clinicians an additional $160 per patient per month for care management during 6-month episodes of chemotherapy and awarded bonus payments if the total cost of care was below the benchmark. Concurrent evaluation revealed that the OCM model was not cost-effective, and Medicare lost $377 million testing this model based on analyses of the initial 5 performance periods.2,3 Despite payments for care coordination, no change was noted in emergency department visits, hospitalizations, and quality of care. Small end-of-life cost savings were derived from a 1% reduction in hospitalizations. Patient satisfaction was found to be unchanged. The OCM did generate cost savings for some cancer types, including breast cancer, lung cancer, colorectal cancer, and lymphoma.

With lessons learned from the disappointing results of the OCM, the CMMI designed the EOM with the goal of generating cost savings. The CMMI has a mandate from the US Congress to conduct research and development for Medicare to identify innovations that are cost saving and quality neutral or better. The EOM is aiming to maximize cost savings by lowering the monthly payment to clinicians from $160 to $70 per patient per month and by limiting the clinical scope to only 7 cancer types: breast cancer, lung cancer, small intestine/colorectal cancer, lymphoma, chronic leukemia, multiple myeloma, and prostate cancer. Because the excess cost of the OCM was driven by the monthly care management and not the excess treatment costs, lowering the former may have a large impact on cost-effectiveness. Finally, the OCM evaluation noted more unplanned admissions for Black patients and slightly worse patient-reported outcomes for Hispanic patients. The EOM is tweaked with the goal of reducing inequity by requiring clinicians to perform social needs screening, collect data on health equity as well as patient-reported outcome measures, and perform quality improvement work to reduce disparities across demographic groups.

The CMMI hopes that these changes will render the EOM more cost-effective, quality neutral or better, and more equitable. This expectation may prove to be a risky bet. The voluntary incentive offered to clinicians is relatively modest: a $420 care coordination fee plus a possible bonus payment if care costs are between 92% and 96% of the benchmark and the risk of having to pay a penalty if care costs are 98% to 100% of the benchmark. Benchmarks are established by the US Centers for Medicare & Medicaid Services (CMS) based on predicted costs for various cancer types and adjusted for clinical risk factors, cost trends, and the need for novel therapies. The EOM offers clinicians less of an economic incentive to participate since monthly payments are lower and the knowledge from the OCM is that exceeding the savings benchmark will be hard. While some savings were generated for specific cancer types during the OCM performance periods studied, the savings ranged from 2.2% for high-risk breast cancer to 3.2% for lung cancer—both of which are below the 4% bonus payment threshold set by the EOM.

The EOM imposes several requirements on clinicians to qualify for the monthly payments. Clinicians must offer 24-hour/7-day access, care navigation, and care planning and adhere to evidence-based guidelines, collect patient-reported outcomes data, perform social needs screening, collect data on health equity and quality improvement, and use a certified electronic medical record. While most practices likely already offer most of these services because they were also OCM requirements, additional costs may be incurred to ensure compliance. If a practice needs to make investments to meet these requirements, they may not be cost-effective for practices with small numbers of eligible patients. The CMMI is hoping to overcome this challenge by enlisting other payers to join the EOM model. As of June 30, 2022, 5 commercial payers were also testing the OCM model with commercially insured patients. It is uncertain if non-Medicare payers generated cost savings with the OCM model or will join the EOM.

A worrisome feature of the EOM is that the model offers a smaller incentive to participate ($540 less per patient over 6 months relative to the OCM) and a high threshold for earning bonus payments, along with a risk of having to repay up to 2% of costs above the benchmark. If very few oncologists take up the EOM, the potential savings will be limited.

Although the EOM was adapted to increase the likelihood of cost savings, the data on bundled payments leading to cost savings have heretofore been unimpressive.4 The CMS has previously tested bundled payments for acute care episodes, care improvement, and joint replacement in addition to the OCM. Savings generated for the joint replacement bundle were limited to 4%, which would not result in bonus payments to clinicians in the EOM. Similarly, the impact of bundles on quality was modest. Some bundled payments have led to small reductions in readmissions, but results have been inconsistent. One exception is a study of 5 oncology groups with bundled payments for commercially insured patients that reduced expenses by 33%.5

The underwhelming data on the effectiveness of bundled payments beg the question of how to better align incentives for cost savings and higher quality. Some evidence suggests that stronger economic incentives may lead to greater care redesign and savings.6 The cost-saving success of fully capitated primary care practitioners in the Medicare Advantage program is a by-product of purpose-built models of care that are fully aligned with generating cost savings and quality measure performance. These models deliver 10% to 30% total cost of care savings that far exceed the 2% to 4% savings generated from bundled payments. Critics would argue that differences in risk adjustment methodologies confound and account for some of these savings.

Policy makers may be wise to explore payment models that provide stronger rather than weaker economic incentives to participate, generate savings, and improve quality. To unlock larger cost savings and quality improvements, greater investments may be needed than those supported by the EOM payments. These stronger incentives will need to be tied to a larger downside risk to make the model cost-effective. Stronger incentives may reduce voluntary participation from risk-averse practices. However, we believe practices that opt into a model with stronger incentives will make structural changes that are not possible under the current weaker bundled payment models and thus generate much better performance.

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Article Information

Published: January 20, 2023. doi:10.1001/jamahealthforum.2022.4904

Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2023 Kocher RP et al. JAMA Health Forum.

Corresponding Author: Robert P. Kocher, MD, Stanford Medicine, 3340 Hillview Ave, Palo Alto, CA 94304 (rkocher@stanford.edu).

Conflict of Interest Disclosures: Dr Kocher reported receiving personal fees from the National Institute for Health Care Management Advisory Board and nonfinancial support from Premera Blue Cross for serving as a board member outside the submitted work. Dr Kocher also reported serving as a partner in the venture capital firm, Venrock. Venrock does not have any investments in oncology practices or participants in the Enhancing Oncology Model. No other disclosures were reported.


1. US Centers for Medicare and Medicaid Services. Enhancing Oncology Model. June 27, 2022. Accessed August 1, 2022. https://innovation.cms.gov/innovation-models/enhancing-oncology-model

2. Hassol  A, West  N, Newes-Adeyi  G,  et al. Evaluation of the Oncology Care Model: performance periods 1-5. January 2021. Accessed August 1, 2022. https://innovation.cms.gov/data-and-reports/2021/ocm-evaluation-pp1-5

3. Keating  NL, Jhatakia  S, Brooks  GA,  et al; Oncology Care Model Evaluation Team.  Association of participation in the Oncology Care Model with Medicare payments, utilization, care delivery, and quality outcomes.   JAMA. 2021;326(18):1829-1839. doi:10.1001/jama.2021.17642
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4. Agarwal  R, Liao  JM, Gupta  A, Navathe  AS.  The impact of bundled payment on health care spending, utilization, and quality: a systematic review.   Health Aff (Millwood). 2020;39(1):50-57. doi:10.1377/hlthaff.2019.00784PubMedGoogle ScholarCrossref

5. Newcomer  LN, Gould  B, Page  RD, Donelan  SA, Perkins  M.  Changing physician incentives for affordable, quality cancer care: results of an episode payment model.   J Oncol Pract. 2014;10(5):322-326.PubMedGoogle ScholarCrossref

6. Pearl  R, Madvig  P.  Managing the most expensive patients.   Harvard Business Review. January to February 2020. Accessed August 1, 2022. https://hbr.org/2020/01/managing-the-most-expensive-patientsGoogle Scholar

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