Overview: A Costly Experiment in Cancer Care Payment
The Oncology Care Model (OCM) was one of the most ambitious alternative payment experiments in American healthcare history. Launched in 2016 by the Centers for Medicare & Medicaid Services (CMS), it promised to transform cancer care — lowering costs while improving outcomes for Medicare beneficiaries undergoing chemotherapy. Six years later, the final verdict is in. The results are sobering.
Over six years, the OCM showed a net loss of more than $600 million to Medicare, with no significant improvements in quality of care, according to a report published in JAMA Network Open. For policymakers, oncologists, and patients, these findings raise urgent questions about the future of value-based care in oncology.
How the Oncology Care Model Worked
Structure and Participation
The OCM was a voluntary program that invited oncology physician practices to take on financial and clinical accountability for six-month episodes of cancer care. It covered more than 4,500 oncologists across 33 states, serving more than 600,000 people, and tested whether financial incentives could improve quality while reducing Medicare spending for beneficiaries undergoing chemotherapy.
Monthly Payments and Performance Incentives
Under the program, oncology practices could bill Medicare for Monthly Enhanced Oncology Services (MEOS) payments of $160 per patient receiving chemotherapy during an active six-month episode. These payments helped cover care coordination requirements — such as 24/7 physician access and adherence to medical society clinical guidelines. Additionally, practices could earn performance-based payments if they reduced spending while meeting quality benchmarks.
This dual-payment structure — fixed monthly payments plus performance bonuses — was central to the model. However, it also became the source of its financial undoing.
The Financial Verdict: $639 Million in Net Losses
Gross Savings vs. Net Losses
The OCM did generate some gross savings in Medicare episode payments. Episode payments fell by an average of 2.1%, with reductions notably increasing in the last two years of the program. Yet these savings were not enough.
Accounting for MEOS payments and performance-based incentive payments, the OCM resulted in an estimated net loss to Medicare of $639 million over six years. The estimated savings were simply exceeded by the enhanced services payments and performance-based payments made to practices.
Where Savings Actually Occurred
Not all cancer types responded equally. Reductions were found only for higher-risk cancer types, which accounted for 67% of all OCM episodes. More specifically, reductions were concentrated in treatments for high-risk breast cancer, lung cancer, colorectal cancer, and lymphoma. Most reductions came from non-chemotherapy drug spending.
Importantly, the program did not reduce spending on Part B chemotherapy or oral cancer medications — the largest cost drivers in oncology care.
Quality of Care: No Meaningful Gains
Beyond the financial losses, the OCM also failed to deliver measurable quality improvements. The model showed no significant differences in hospitalizations, emergency department visits, or quality outcomes.
This dual shortcoming — financial losses combined with stagnant quality metrics — made the program difficult to defend as a policy success. The model had promised savings with quality gains. Instead, it delivered neither at scale.
Why the Model Fell Short
Drug Costs Beyond Physician Control
Performance-based risk assumes that physician practice patterns drive most spending variation. In reality, oncologists have relatively little control over therapeutic drug use compared with clinicians in other specialties. Previous research showed that only 10% of regional spending variation came from drug prescribing, while 67% was associated with acute hospital care costs.
Rising Drug Prices Undercut the Model
New therapies — particularly checkpoint inhibitors — became standard of care during the OCM period. Oncologists may not have been justified in reducing the use of these superior agents, yet the model’s spending targets included total drug costs. Moreover, adjustments for rising novel therapy costs were calculated at the practice level rather than the disease level. This mismatch made it structurally difficult for practices to achieve meaningful savings.
Too Broad a Scope
The OCM covered a wide range of cancer types, which diluted its impact. Future models may need to narrow their focus to cancer types where care pathways are clearest and cost reduction is most achievable.
Savings Did Grow — But Too Slowly
Despite the headline losses, researchers caution against dismissing the OCM entirely. The study showed evidence that spending reductions grew over time for practices participating in the OCM. Lead author Dr. Gabriel A. Brooks of Dartmouth Cancer Center noted that value-based care delivery transformation takes time to implement, but over time, real savings can start to accrue — especially for common cancer types where it is easier to define the approach for high-quality, high-value care.
This suggests that the OCM’s six-year timeline may not have been long enough to capture the full benefit of practice transformation. Furthermore, research indicates the model may have generated spillover savings for commercially insured patients not even targeted by the program, pointing to broader systemic value not captured in the official Medicare accounting.
What Comes Next: The Enhancing Oncology Model
CMS responded to the OCM’s shortcomings by designing a successor program. The Enhancing Oncology Model (EOM) launched in July 2023, focusing on a narrower range of common, high-cost cancer types identified in the OCM as having the highest potential for savings. Monthly payments were made smaller, and a two-sided risk arrangement — requiring practices to repay spending beyond targets — was made mandatory.
The results so far are underwhelming. Only 41 practices had enrolled as of May 2024. Although monthly payments were subsequently increased and the model extended, only 28 practices were reportedly enrolled as of March 2026. Low participation remains a red flag. It suggests that oncology practices remain skeptical about the financial viability of alternative payment models under current conditions.
Key Takeaways for Value-Based Cancer Care
The OCM experience offers important lessons for healthcare policymakers and oncology leaders:
Financial incentives alone are insufficient. Practices need adequate time, clinical data infrastructure, and meaningful accountability aligned with what physicians can actually control.
Drug pricing is the central challenge. Any future oncology payment model must directly address the cost of novel therapies rather than expecting physicians to absorb those costs within spending targets.
Savings grow over time. The OCM’s trajectory showed improving results in its final years. A longer program horizon, or phased evaluation, may yield more accurate assessments of value-based model effectiveness.
Narrower scope works better. The EOM’s focus on specific high-cost cancer types reflects lessons learned from the OCM’s overly broad design.
As Dr. Ravi B. Parikh of Emory University School of Medicine noted, the concerns raised by OCM practices speak to a need for a more holistic solution to reducing cancer care spending — one that accounts for the full complexity of modern oncology, from molecular diagnostics to precision drug therapies.
