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Biosimilar Substitution Within OCM Could Result in Lower Total Cost of Care


Researchers found that the total cost of care per oncology episode was significantly lowered when biosimilar substitution was implemented in Medicare’s Oncology Care Model (OCM), suggesting that biosimilar uptake can serve as a critical tool to mitigate risk and improve financial performance for providers.

Biosimilar substitution within Medicare’s Oncology Care Model was found to significantly lower total cost of care (TCOC) and improve provider financial performance, according to a recent study published in Advances in Therapy.

The results of the population-based simulation study provide valuable insights into the role of biosimilars in managing financial risk and enhancing provider performance in value-based care models, with implications for stakeholders across the health care ecosystem.

The focus of health care payment reform efforts in the US lies heavily on oncology due to the projected increase in cancer-related medical costs. These efforts involve transitioning from fee-for-service (FFS) reimbursement to value-based payment (VBP) models. The Oncology Care Model (OCM) and its successor, the Enhancing Oncology Model, are significant examples.

Biosimilars are crucial in VBP models as they can reduce TCOC without compromising quality. However, challenges exist in transitioning to biosimilars, such as knowledge gaps and complexity for providers. This study assesses the impact of biosimilar adoption on TCOC and provider risk within the Medicare OCM, using observed data and simulations. Insights from this study could guide providers in managing costs within VBP models like the OCM and EOM.

The researchers assessed the Medicare Limited Data Set (LDS) analytic field from 2020 to evaluate the impact of biosimilar adoption on TCOC and provider performance relative to TCOC benchmarks. The LDS analytic files contained Medicare FFS claims from a random 5% sample of Medicare FFS beneficiaries, which included information about claims for inpatient and outpatient care, skilled nursing facilities, home health agencies, hospice, and durable medical equipment. They also used prior-year claims data to frame prior episodes of care for patients as well as data from Tuple Health and Medicare.

TCOC was computed for each episode of care using reference products exclusively, and then contrasted with TCOC involving corresponding biosimilars. The simulation assessed TCOC outcomes in cohorts of 100 episodes drawn from the Medicare LDS study population, employing a Monte Carlo simulation with 10,000 iterations.

Among the 3,296,240 beneficiaries entered in the 2020 files, 8281 6-month-long treatment episodes of care were identified with antineoplastic treatment trigger events between January 2, 2020, to July 1, 2020. Of those, 1586 (19.2%) met the criterial for Biosimilar Applicable Products (BAPs) and OCM eligibility. Eighty percent of the episodes were assigned to 1 of 7 OCM cancers with the highest prevalence in the cohort:

  • Breast (19.4%)
  • Lymphoma (18.5%)
  • Lung (12.9%)
  • Colorectal/small intestine (12.7%)
  • Prostate (6.5%)
  • Pancreatic (5.3%)
  • Ovarian (4.9%)

Overall, during episodes, 49.9% of the population used a BAP antineoplastic (rituximab, epoetin alfa, bevacizumab, trastuzumab), 66.6% used a BAP supportive therapy (filgrastim, pegfilgrastim), and 16.0% used a BAP antineoplastic and a BAP supportive therapy.

Biosimilar substitution resulted in an average reduction of $1198 per episode (95% CI, $583-$1840), representing a 2.4% decrease relative to the benchmark TCOC. This reduction occurred in the majority of simulated cohorts, with biosimilar substitution resulting in TCOC below the benchmark in 9996 out of 10,000 simulations.

Additionally, biosimilar substitution effectively decreased the proportion of cohorts owing performance-based recoupments for exceeding TCOC benchmarks. In simulations using reference products only, 44.4% of runs had TCOC above the safe zone, but with biosimilar use, this proportion decreased, with 30.4% of runs ending in neither owing nor receiving additional payments and 4.3% resulting in earning performance-based payments.

The study expanded on previous research by focusing on provider perspectives within a specific VBP model and considering multiple biosimilar substitutions. It aimed to inform providers participating in VBP models and potentially reduced barriers to biosimilar adoption. Moreover, the findings highlighted the need for aligning provider and policymaker perspectives to enhance the effectiveness of future VBP models in oncology.

The study had limitations, such as focusing solely on Medicare's OCM, assuming uniform biosimilar adoption, and using data from a specific time period, potentially impacting the generalizability of the findings.

The authors concluded, “Our findings can inform strategy for oncology providers attempting to manage TCOC while using biologic therapies in the context of value-based payment models in the USA.”


Yang J, Chaudhry BI, Yue AT, et al. The impact of biosimilar use on total cost of care and provider financial performance in the Medicare Oncology Care Model: A population-based simulation study. Adv Ther. 2024;41:349-363. doi: 10.1007/s12325-023-02703-x

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