WASHINGTON — Clinicians could have a lot more services to offer Medicare patients under a new value-based regional direct contracting program announced Thursday by the Centers for Medicare & Medicaid Services (CMS).
“From a high-level standpoint, the agency has been focused on value-based care from Day 1, and it’s enjoyed bipartisan support,” CMS Administrator Seema Verma said Thursday during a phone call with reporters. The new model “represents the best of the best, and takes into account a lot of the lessons learned.” CMS has found that when it allows providers to take financial risks, “we get better outcomes, lower costs, and better quality, and this will allow them to take risk in a particular region or geographic area.” The model, which will allow providers to form networks to care for enrollees, “is going to address a lot of the fragmentation we see in the fee-for-service program today,” she added.
Under the model, healthcare providers — which CMS calls “direct contracting entities,” or DCEs — will competitively bid to manage 100% of the Medicare Part A and Part B costs for a certain number of Medicare beneficiaries within a geographic region, starting at a minimum of 30,000 enrollees. Who can be a DCE? “We anticipate interest from organizations that have significant experience taking risk in value-based care models including sophisticated Accountable Care Organizations (ACOs), health systems, health care provider groups and health plans,” CMS said in a fact sheet about the new model. “We also anticipate some applications might include innovative partnerships between health plans and health care providers.” Providers who join one of the DCEs will still be able to stay in any other value-based care programs they’re already in, including ACOs and Medicare Shared Savings Plans.
Becoming a ‘Geo Preferred Provider’
Providers who are interested in signing up with a DCE as a “Geo Preferred Provider” may be paid in a variety of ways, CMS said. “Geo Preferred Providers can be paid capitation, sub-capitation, quality bonuses, shared savings, or in any other arrangement agreed to between the DCE and Geo Preferred Provider,” according to the fact sheet. In addition, “Geo Preferred Providers may qualify for an APM Incentive Payment under the Quality Payment Program.” Providers may sign up with more than one DCE in their region.
DCEs will be accountable for meeting certain quality measures in areas such as breast and colon cancer screening and hypertension control. There will be a “quality withhold” starting at 1% in 2022 and gradually increasing to 3%.
Beneficiaries in areas covered by DCEs will have all the same benefits as other Medicare enrollees, but they also may have some additional benefits, such as lower out-of-pocket cost-sharing and access to enhanced home care services. Beneficiaries won’t be able to opt out of the new model, but they will have the option to select a DCE in their region at the start of each performance period, as well as to change DCEs either quarterly or annually. (If they don’t select a DCE, they will be randomly assigned to one.) CMS officials said that they “expect beneficiaries will have the option of at least three DCEs per region.” DCEs will be able to offer enrollees other benefits they may not have gotten before, such as vouchers for over-the-counter medications, room air conditioning for asthmatic patients, and transportation to doctor visits.
Testing in Selected Regions
CMS plans to test the model in select regions before rolling it out more broadly, Brad Smith, director of the Center for Medicare & Medicaid Innovation (CMMI), said on the call. The agency will solicit letters of interest from provider groups in 15 specific geographic areas before narrowing down the test areas to four to 10 regions, depending on how many expressions of interest it receives from each region, he said. When asked by MedPage Today how much he expected the model to save in Medicare costs, Smith said that the agency’s early estimates predict it will save “over $2 billion for the time period, but it can vary widely based on the bids.”
The Geographic Direct Contracting Model will have two 3-year performance periods, according to the fact sheet. The first performance period will take applications in 2021 and have a performance period from January 1, 2022 through December 31, 2024. The second performance period will take applications in 2024 and have a performance period from January 1, 2025 through December 31, 2027. For the first performance period, interested DCEs must submit a non-binding “letter of interest” by 11:59 p.m. PT on December 21. CMMI plans to release a Request for Applications for the first performance period in January, with applications due on April 2 and participants announced on June 30.
America’s Physician Groups (APG), which represents 180 practices from across the country that work under value-based care models, applauded CMS’s announcement. “The value-based care community welcomes this new payment and care delivery model,” said Don Crane, APG’s president and CEO, in a statement. “Models of care that are focused on systems of reimbursement such as capitation and holding physicians accountable for cost, coordination, and quality are integral to moving away from the fee-for-service model and toward more transformative models of care that reward value while accounting for improved population health, quality, and the patient experience.”
How Many Will Apply?
Fred Bentley, MPH, a managing director at Avalere, a healthcare consulting firm here, said the model makes sense from a conceptual level. “This is the ultimate permutation of an ACO-like, shared savings, total-cost-of-care contract,” he said in a phone interview. “It is for the most advanced organizations that are moving toward the next level.” However, he added, “my early sense is there isn’t going to be huge uptake. The level of complexity of managing this, administering it, and setting up the kind of relationships to manage across an entire geography — it’s hard for me to envision many organizations who can really do this. It’s not to say there aren’t any; I just think the risk level is pretty daunting.”
He added that the model is somewhat similar to Medicare Advantage, in which private plans have to bid for a place in the program. “This takes the Medicare fee-for-service program closer to a Medicare Advantage model … and gives providers the ability to put their best foot forward and figure out what it would take for them to do this … But it’s also scary to do all that math” if you haven’t done it before, unlike Medicare Advantage plans that have been making such calculations for years, Bentley said.