Medicare Value-Based Contracting Model Emphasizes Care Coordination

CMS has introduced a new Medicare value-based contracting model that encourages greater care coordination and requires participants to take full risk for Medicare fee-for-service beneficiaries based on region.

The Geographic Direct Contracting Model uses outcomes-based payment models to address care quality, healthcare spending, care coordination, clinical management, and program integrity in targeted regions.

“Within each region, organizations with experience in risk-sharing arrangements and population health will partner with health care providers and community organizations to better coordinate care,” the press release explained.

Beneficiaries will not have to switch providers or payers. They will continue to have their Original Medicare benefits as well as their enhanced benefits and they may receive reduced cost-sharing for Medicare Part A and Part B, including Part B premium subsidies.

“The need to strengthen the Medicare program by moving to a system that aligns financial incentives to pay for keeping people health has long been a priority,” said CMS Administrator Seema Verma.

“This model allows participating entities to build integrated relationships with healthcare providers and invest in population health in a region to better coordinate care, improve quality, and lower the cost of care for Medicare beneficiaries in a community.”

Mainly, the model aims to improve care coordination to address regional needs through their current primary care provider, telehealth options, and other strategies.

“The Geographic Direct Contracting Model is part of the Innovation Center’s suite of Direct Contracting models and is one of the Center’s largest bets to date on value-based care,” said CMMI Director Brad Smith. 

“The model offers participants enhanced flexibilities and tools to improve care for Medicare beneficiaries across an entire region while giving beneficiaries enhanced benefits and the possibility of lower out-of-pocket costs. By initially testing the model in a small number of geographies, we will be able to thoughtfully learn how these flexibilities are able to impact quality and costs.”

The Geographic Direct Contracting Model allows direct contracting entities—which are payer or provider organizations engaged in certain alternative payment models with CMS—to better integrate care while taking full risk with 100 percent shared savings and shared losses for Medicare Part A and Part B. Direct contracting has been the basis for models in the past, including some chronic kidney disease models and the Direct Contracting Global and Professional Options.

Instead of basing financial risk on whether a patient sees a certain provider, as in the case of the Direct Contracting Global and Professional Options, this model requires direct contracting entities to take financial responsibility for a portion of all Medicare fee-for-service beneficiaries based on geographic region.

Direct contracting entities may exercise three tools for quality and healthcare spending improvement.

Entities may initiate preferred provider relationships, allowing certain providers to engage in value-based contracting and offer enhanced benefits. They could leverage programs that utilize strategies such as care management, telemedicine, and telemonitoring. Finally, entities will have the authority to exercise program integrity functions to reduce unnecessary payments.

Direct contracting entities will have access to many care coordination and clinical management tools.

They may provide incentives such as vouchers for over-the-counter medications offered by a suggested provider, wellness programming memberships, chronic disease management products and services, and digital tools to support treatment and medication adherence.

Additionally, direct contracting entities have a couple of tools that they can utilize for program integrity functions.

For preferred providers, direct contracting entities may use strategies including prior authorization, concurrent or pre-claim review, or pre-payment claim edits to check integrity. For non-preferred providers, direct contracting entities may use these tools as well, except for prior authorization.

CMS is accepting non-binding letters of interest from participant candidates until December 21, 2020 at 11:59pm Pacific Standard Time.

Participants can apply from January 2021 through April 2, 2021. CMS will choose the participating organizations by June 30, 2021.

The performance period will occur in two shifts of three years. The first will extend from January 1, 2022 through December 31, 2024 and the second will last from January 1, 2025 through December 31, 2027.

Previous coordinated care pilots through Medicaid have demonstrated that the major challenges in care coordination are partner engagement, data sharing, and regulatory restrictions.