U.S. Centers for Medicare and Medicaid Innovation Invites Applicants for New Direct Contracting Voluntary Payment Model

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The Centers for Medicare and Medicaid Innovation (CMMI) has announced a series of new voluntary payment models and are seeking facilities and organizations interested in participating to submit an initial Level of Interest (LOI) by Friday, August 2.

One of the models being tested is a Direct Contracting model. This model is one of 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 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 Direct Contracting 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.

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 the Direct Contracting program 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.

The payment model options 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.

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 lowest 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 Direct Contracting Participants and preferred providers with whom the Direct Contracting Entity 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 Direct Contracting Entity’s for their dually eligible enrollees who are in FFS Medicare.

The payment model options 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.

The CMS Innovation Center will request a 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 Direct Contracting. 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.
CMS may entertain additional application rounds for future years for all payment model options.

To read more about the model and the LOI, click here.

To complete the Direct Contracting Profesisonal and Global PBP Letter of Intent, click here.