Direct Contracting Model Options

Direct Contracting (DC) is a set of three voluntary payment model options aimed at reducing expenditures and preserving or enhancing quality of care for beneficiaries in Medicare fee-for-service (FFS). The payment model options available under DC create opportunities for a broad range of organizations to participate with the Centers for Medicare & Medicaid Services (CMS) in testing the next evolution of risk-sharing arrangements to produce value and high quality health care. Building on lessons learned from initiatives involving Medicare Accountable Care Organizations (ACOs), such as the Medicare Shared Savings Program (MSSP) and the Next Generation ACO (NGACO) Model, the payment model options available under DC also leverage innovative approaches from Medicare Advantage (MA) and private sector risk-sharing arrangements.

The payment model options are anticipated to appeal to a broad range of physician practices and other organizations because they are expected to reduce burden, support a focus on beneficiaries with complex, chronic conditions, and encourage participation from organizations that have not typically participated in Medicare FFS or CMS Innovation Center models. In an effort to further refine one proposed payment model option, CMS is seeking additional input from the public through a Request for Information (RFI) regarding their perspectives on specific design parameters for a Geographic Population-Based Payment (PBP) option.

Request for Information (RFI) for Geographic PBP Option – Extension of Response Deadline thru Thursday, May 30, 2019

Background

Organizations have expressed interest in a model that draws upon private sector approaches to risk-sharing arrangements and payment and reduces administrative burden commensurate with the level of downside risk. The payment model options available under DC take significant steps toward providing a prospectively determined revenue stream for model participants. Relative to existing initiatives, the payment model options also include a reduced set of quality measures that focuses more on outcomes and beneficiary experience than on process. By providing flexible payment model options with regard to, for example, risk-sharing arrangements, financial protections and benefit enhancements, CMS expects that the payment model options under DC will be attractive to NGACO participants, as well as organizations that have experience with risk-based contracts in MA, but have not to date participated in Medicare FFS or CMS Innovation Center models.

The payment model options available under DC are expected to increase beneficiaries’ access to innovative, affordable care while maintaining all Original Medicare benefits. A model participant in any one of the payment model options available under DC, referred to as a DC Entity (DCE), may offer benefit enhancements and certain additional services to beneficiaries with no requirement that beneficiaries accept these benefits or services. Relative to existing CMS initiatives, the payment model options place an emphasis on voluntary alignment, empowering beneficiaries to choose the health care providers with whom they want to have a care relationship. The payment model options also aim to improve beneficiaries’ experience of care by reducing administrative burdens on practitioners, so that they can focus on what is most important, spending time with patients.

Model Details

The payment model options available under DC seek to reduce program expenditures and improve quality of care and health outcomes for Medicare beneficiaries through alignment of financial incentives and an emphasis on beneficiary choice and care delivery while maintaining access to care for beneficiaries, including patients with complex, chronic conditions and seriously ill populations. Specifically, to help ensure that care quality is improved and beneficiary choice and access are protected, CMS will tie a meaningful percentage of the benchmark to performance on quality of care, while also monitoring to ensure that beneficiaries’ access to care is not adversely affected as a result of the model.

The new payment model options also present an opportunity to test novel methods for organizations to manage Medicare FFS expenditures and better integrate care delivery for those dually eligible for Medicaid and Medicare, including through coordinated efforts with Medicaid Managed Care Organizations (MCOs). Further, through refinements in CMS benchmarking methodology and risk adjustment, CMS is aligning financial incentives to attract organizations that manage the complex chronic, and seriously ill beneficiary populations.

Payment Model Options' Goals

The payment model options available under DC aim to reduce expenditures while preserving or enhancing quality of care for beneficiaries. By aligning financial incentives, providing a prospectively determined and predictable revenue stream for participants, and putting a greater emphasis on beneficiary choice, the payment model options aim to:

  • Transform risk-sharing arrangements in Medicare FFS by offering both capitated and partially capitated population-based payments that move away from traditional FFS.
  • Broaden participation in CMS Innovation Center models by allowing model participation by organizations new to Medicare FFS, such as physician managed organizations that currently operate exclusively in the MA program, Medicaid MCOs that provide Medicaid benefits for full-benefit dually eligible beneficiaries, and innovative, new organizations that seek to assume responsibility for Medicare FFS beneficiaries in a geographic target region.
  • Empower beneficiaries to engage in their care delivery through voluntary alignment and potential benefit enhancements.
  • Reduce provider burden to meet health care needs effectively, through for example, a smaller set of core quality measures and waivers to facilitate care delivery.

The payment model options available under DC are expected to increase beneficiaries’ access to innovative, affordable care while maintaining all Original Medicare benefits. A model participant in any one of the payment model options available under DC, referred to as a DC Entity (DCE), may offer benefit enhancements and certain additional services to beneficiaries with no requirement that beneficiaries accept these benefits or services. Relative to existing CMS initiatives, the payment model options place an emphasis on voluntary alignment, empowering beneficiaries to choose the health care providers with whom they want to have a care relationship. The payment model options also aim to improve beneficiaries’ experience of care by reducing administrative burdens on practitioners, so that they can focus on what is most important, spending time with patients.

Participation Options

There are two voluntary risk-sharing payment model options as well as a third payment model option for which CMS is seeking public input:

  1. Professional PBP offers the lower risk-sharing arrangement—50% savings/losses—and provides Primary Care Capitation, a capitated, risk-adjusted monthly payment for enhanced primary care services.
  2. Global PBP offers the highest risk sharing arrangement—100% savings/losses—and provides two payment options: Primary Care Capitation (described above) or Total Care Capitation, capitated, risk-adjusted monthly payment for all services provided by DC Participants and preferred providers with whom the DCE has an agreement.
  3. Geographic PBP, for which CMS is seeking public input on this option. Please see the Request for Information section below.

All payment model options include features aimed at encouraging organizations focused on care for patients with complex, chronic conditions, and seriously ill populations to participate.

The Professional and Global PBP options aim to attract a range of health care providers operating under a common governance structure, with attention given to advancing primary care as a means to better managing health care overall. CMS expects that the use of voluntary alignment will attract organizations that previously were ineligible because of their low volume of Medicare FFS beneficiaries, such as organizations that currently operate in the MA program. Medicaid MCOs that provide Medicaid benefits for full-benefit dually eligible beneficiaries will also be able to participate as DCEs for their dually eligible enrollees who are in FFS Medicare.

Current Medicare ACOs interested in continuing and deepening their participation in Medicare risk arrangements will be eligible to participate in all three payment model options.

The payment model options available under DC will start in January 2020 with an initial alignment year for organizations that want to align beneficiaries to meet the minimum beneficiary requirements. Performance periods will begin January 2021 and will be five years.

Request for Information (RFI) for Geographic PBP Option

CMS is continuing to seek public input to further refine the design parameters of the Geographic PBP Option. Responses to the RFI will be accepted from April 22, 2019 through 11:59 p.m. EDT, May 30, 2019, and can be submitted electronically to DPC@cms.hhs.gov. We are extending the deadline to allow respondents additional time to prepare and submit responses.

Subject to responses from the RFI, the Geographic PBP option would encourage participation from innovative organizations, including health plans, health care technology companies and other entities interested in entering into contractual relationships with providers and suppliers and taking on risk for a Medicare FFS beneficiary population in a defined geographic target region.

Participant Selection

The CMS Innovation Center will request a Letter of Intent (LOI) from organizations interested in either the Professional PBP or Global PBP options. While submitting a LOI will be required in order to apply, a LOI will not bind an interested organization to participate. CMS will use the LOI process to better understand the scope and spread of organizations interested in participating in the payment model options available under DC. Failure to submit a LOI during that period will result in the organization being ineligible to apply during initial application period. CMS will subsequently release a Request for Applications (RFA) for organizations interested in the Professional PBP and Global PBP options. The RFA will describe the eligibility requirements, payment methodology, available benefit enhancements, and selection criteria.

The LOI must be received by Friday, August 2, 2019 at 11:59 pm EDT. Failure to submit an LOI during the allowed timeframe will result in the organization being ineligible to apply during the application period.

Subject to responses received in response to the RFI for the Geographic PBP option, CMS expects to initiate the application process for the Geographic PBP option in the fall of 2019.

CMS may entertain additional application rounds for future years for all payment model options. Failure to submit an LOI during the allowed timeframe will result in the organization being ineligible to apply during the application period.

Information for Interested Stakeholders

CMS will host webinars about the DC Model Options on the following dates for interested stakeholders:

Additional Information