Part 2 of Our Breakdown of the CMS Primary Cares Initiatives: Direct Contracting

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The Centers for Medicare & Medicaid Services (CMS) Primary Cares Initiative announced in April 2019 was two-part. We have already covered the Primary Care First (PCF) payment model options; now, we are moving into another group of value-based models that organizations can choose from called Direct Contracting (DC). These voluntary payment structures allow providers to take on risk while operating under value-based care principles to cut costs and increase the quality of care. Plus, Direct Contracting offers enhanced flexibility for providers to help their patients beyond their immediate medical needs.

Direct Contracting Objectives

As Primary Care First’s foundation was the previous Comprehensive Primary Care Plus (CPC+) model, DC also builds on established program designs; in this case, the NextGen ACO model. According to CMS, the DC program seeks to:

  • Revamp Medicare fee-for-service (FFS) risk agreements
  • Improve patient participation in the program
  • Engage patients more effectively
  • Reduce administrative burden on providers

Direct Contracting offers more choice and flexibility for patients and physicians. With the voluntary alignment component of DC, CMS encourages Medicare beneficiaries to choose the provider that is the best fit for them while still maintaining their claims-based approaches. On the opposite side, a reduced burden on physicians with respect to reporting and documentation responsibilities allows them to devote more time to fostering the doctor-patient relationship. The program also provides greater flexibility in terms of care delivery.

Direct Contracting Models

There are three Direct Contracting models to choose from based on the amount of shared risk involved: Professional, Global, and Geographic.  Each program has its own payment structure, but both include capitation as a central theme. Taken from the CMS DC Fact Sheet, they are

Primary Care Capitation, “a capitated, risk-adjusted monthly payment for enhanced primary care services.” The primary care cap is set at 7% of the total cost of care. 

Total Care Capitation, a “capitated, risk-adjusted monthly payment for all services provided by DC Participants and preferred providers with whom the [Direct Contracting Entity] DCE has an agreement.”

The three DC payment models are written from the least amount of risk to the greatest:

  1. Professional: The Professional track is the lowest risk-sharing amount at 50% in savings and losses. The model also offers Primary Care Capitation.
  2. Global: On the opposite end, the Global track is the highest risk-share at 100% savings and losses. But, Global DC providers have the choice between two payment options: Primary Care Capitation as well or Total Care Capitation based on their circumstances.
  3. Geographic: At the moment, the Geographic track of direct contracting is still in the proposal phase. What is projected right now is a 100% risk arrangement where enrollees can choose between Total Care Capitation or full financial risk with claims reconciliation in a defined area. CMS requested public input this past spring to decide on the final details, and they are yet to be determined.

Additional Direct Contracting Information

As with PCF, there are expectations to meet when applying to a DC payment model. Generally speaking, a provider must have at least 5,000 aligned Medicare FFS patients at their practice. The benchmarking formulation will include a mix of regional data and Medicare Advantage rate calculations.  The program will have a focus on the complex, historically costly dual-eligible populations.

These new models provide an opportunity for provider organizations to advance their efforts to move from fee for service to risk sharing value-based care.  The request for applications (RFA) for DC is expected to be released sometime in November 2019. 

Manage Direct Contracting Payment Plans with Lightbeam

At Lightbeam, we provide exceptional population health management to organizations that maintain a fee-for-service payment structure. Our advisors are well-informed on PCF and DC, and I recently conducted a model briefing on both of the models via webinar. Watch this and other webinars as part of Lightbeam’s Thought Leadership Series.

Kent Locklear, MD

Read more from Dr. Kent Locklear, Lightbeam’s Chief Medical Officer.

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