I too had difficulty feeding my oscar...... he refused most brands of pellets, or like yours, would chew them up then spit them out through his gills. Oscars really should have a staple diet of pellets though. Pellets provide a more complete nutrition than blood worms alone.
I use New Life Spectrum brand........ the very best fish food there is. I'd recommend this brand, if you can find it where you live.
Regardless of which brand you buy, you need to consistently offer the pellets, and not break down and feed him what he likes when he refuses the pellets. He WILL eat, eventually. Oscars can be very stubborn. (You can certainly offer frozen foods as treats, but you should get him accustomed to the pellets first.)
How big is your oscar? My 8 inch oscar doesn't seem to like small pieces of food........ He refused the large NLS pellets I bought for him, instead going for the pleco's wafers....... now I just feed him the wafers.