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Direct Contracting Model Options Aim to Support Serious Illness Population

*C-TAC will be holding a webinar on May 23 on these new model opportunities. Please register HERE.

On April 22, the Centers for Medicare & Medicaid Services (CMS) announced two sets of voluntary payment model options designed to support patients with complex, chronic conditions and those with serious illness. One of these is Primary Care First, which you can learn more about by clicking here. The other of these sets is known as Direct Contracting (DC), which aims to reduce expenditures while preserving or improving the quality of care for Medicare fee-for-service beneficiaries. These national DC models are also available for those with serious/advanced illness and may provide multiple opportunities for community-based advanced illness/palliative care programs to contract to provide these services with larger entities willing to accept risk.

The payment model options all include risk-sharing arrangements, financial protections and benefit enhancements, features which CMS expects will appeal to organizations that have experience with assuming financial risk for patients’ costs of care, such as Medicare Advantage plans, Accountable Care Organizations (ACOs), and Medicaid managed care organizations (MCOs). While these entities have yet to participate in Center for Medicare and Medicaid Innovation (CMMI) models to-date, CMS hopes that the DC structure will encourage them to apply. The agency also believes that the options will appeal to Next Generation Accountable Care Organizations (ACOs).

Goals for the Direct Contracting payment model options include transforming risk-sharing arrangements in Medicare fee-for-service by offering capitated and partially capitated population-based payments. It also aims to broaden participation in CMMI models by enabling organizations new to Medicare fee-for-service to participate. Through the Direct Contracting options, CMS hopes to empower beneficiaries to become involved in their own care through voluntary alignment and potential benefit enhancements. It’s anticipated that current ACO’s and larger health systems will be interested in applying for these models.

Direct Contracting is comprised of three voluntary risk-sharing payment model options. The first option, Professional Population-Based Payment, involves the least risk and allows participants to share in 50% of savings and losses. This payment model also provides Primary Care Capitation, a capitated, risk-adjusted payment each month for enhanced primary care services.

The second model, Global Population-Based Payment, offers the chance for participants to take full risk for 100% of savings and losses. This model includes two payment options, one of which is Primary Care Capitation. The second payment option is Total Care Capitation, or capitated, risk-adjusted monthly payments for all services provided by Direct Contracting participants and preferred providers with whom the participant has an agreement.

CMS has noted that the Professional and Global options both “aim to attract a range of health care providers operating under a common governance structure.” The agency expects that voluntary alignment will attract organizations which had previously been ineligible due to their low volume of Medicare fee-for-service beneficiaries.

The third payment option that will be offered under Direct Contracting is Geographic Population-Based Payment. CMS is currently seeking input for this model, under which potential participants would assume responsibility for all Medicare fee-for-service beneficiaries in a defined target region. A Request for Information has been issued regarding this option and responses can be submitted by emailing DPC@cms.hhs.gov.

Subject to responses from the RFI, CMS noted that the Geographic option would encourage participation from organizations like health plans, health care technology companies and other groups interested in contracting with providers and suppliers to take on risk for a Medicare fee-for-service beneficiary population in a defined region. Medicare ACOs interested in maintaining and expanding their participation in Medicare risk arrangements will be eligible to participate in all three options.

CMMI will request a Letter of Intent (LOI) from organizations interested in participating in the Global or Professional options, likely in June. Organizations will have until the fall to apply and can choose not to apply even if they submit an LOI.  The payment models included under Direct Contracting will start in January 2020. CMS expects to begin the application process for the Geographic option in the fall of 2019, after comments have been received and the model finalized.

We look forward to sharing more about this new set of payment model options as we obtain information. Stay tuned for timely updates from the C-TAC team as the Primary Cares Initiative develops. For more information about Direct Contracting, please click here.

CMS also held informational webinars that offer an overview of the Direct Contracting options earlier this month. The slides and audio from these webinars are available here.

We also invite you to join C-TAC Senior Regulatory Advisor Marian Grant and Senior Policy Advisor Andrew MacPherson for a webinar on May 23 that will take a closer look at the new Primary Cares Initiative. To register for the webinar, please click here.

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