Navigating new norms: The Inflation Reduction Act’s influence on Enhancing Oncology Model Part D expenditures and total cost of care.

2 Background: The Enhancing Oncology Model (EOM) is an oncology-specific, value-based payment model that assesses participating physician group practices' (PGPs) performance on the total cost of care (TCOC) spend for 6-month episodes of care for seven cancers. Drug costs comprise a large majority of the TCOC in the model, with Part D drug expenditures (PDE) contributing approximately 25% of TCOC. With the introduction of the Inflation Reduction Act (IRA) in 2022, Medicare's share of the gross drug cost above the out-of-pocket threshold (GDCA) will decrease in Part D, and the EOM TCOC will change from 80% of GDCA to 20% of the GDCA for all Part D drugs (whether generic or brand-name), effective January 1, 2025. Similar changes were not incorporated for Part B drugs. We assessed the impact of the IRA on PDE and TCOC in the EOM. Methods: Using EOM performance period claims data from a large, multi-state, community-based oncology practice network between July 2023 to June 2024, we modeled the PDE using 20% of the GDCA and patient cost-share changes of the IRA, calculated the TCOC based on the modeled PDE, and compared the PDE and TCOC against the actual PDE and TCOC (based on 80% of GDCA). Results: For the 2,000 episodes in the model, the IRA changes to Part D reduced the PDE and TCOC used in the model assessment by 72.3% and 19.1% respectively (with no absolute reduction in total spend). The table shows the impacts of IRA on PDE and TCOC by cancer type. The impact of the IRA Part D changes on PDE and TCOC varied significantly by cancer type (-66.5% to -73.6% and -4.1% to -52.4% respectively). Conclusions: These findings indicate a disproportional impact of the IRA on drug costs covered under Part D vs Part B in the EOM which varies significantly by cancer type. Where different treatment modalities are available for different cancer types, this methodology financially favors the use of Part D drugs over Part B drugs, encouraging oral drugs over physician administered injectables, thereby impacting patient care. Additionally, shifting physician administered therapies to be billed under Part D instead of Part B allows PGPs to increase apparent savings. Risk adjustment strategies that balance these variations are needed to ensure fair assessment of performance in TCOC models like the EOM. Impact of IRA on PDE and TCOC by cancer type. Cancer Type Per Episode TCOC PDE as % of TCOC PDE under the IRA as % of TCOC % Change in TCOC with IRA based PDE % Change in PDE based on IRA Breast Cancer $46,417 22.5% 7.7% -16.0% -71.1% Chronic Leukemia $63,110 71.6% 40.2% -52.4% -73.3% Colorectal Cancer $42,825 10.3% 3.7% -6.8% -66.5% Lung Cancer $72,915 5.9% 1.9% -4.1% -69.7% Lymphoma $43,046 20.1% 6.3% -15.5% -73.6% Multiple Myeloma $94,518 41.2% 15.7% -30.5% -73.4% Prostate Cancer $50,012 40.8% 16.3% -29.2% -71.8% All Episodes $59,220 26.2% 9.0% -19.0% -72.3%