Preparing Physician Practices for Direct Contracting, Risk Models

Physicians want three things, according to Anthony Valdés, President of Collaborative Health Systems, and those are to deliver great clinical outcomes, get paid fairly for that care, and stay independent.

But achieving all three of those items at the same time has become increasingly difficult for physicians operating practices during the industry-wide transition to value-based care.

Value-based care models, including the industry’s most popular model, the accountable care organization (ACO), require a lot more from physicians compared to fee-for-service. Physicians need robust data analytics, increased patient engagement, risk management capabilities, and more in order to improve clinical outcomes and earn value-based reimbursement.

Meanwhile, physicians cannot go at value-based models—like the ACO—alone. By nature, these models require care coordination among different healthcare providers to deliver long-term care.

To survive in this environment, many physicians are sacrificing their independence just to achieve quality clinical outcomes and fair reimbursement.

That is where organizations like Collaborative Health Systems (CHS) come in.

“We're a population health management services organization, but we are probably known more as a provider enabler, giving [physicians] the people resources they can't afford upfront and also the technology,” Valdés explained. “The people are typically nurses who come into [physician] offices to help with quality care gaps, proper coding, or utilization management on various patients who are high risk.”

Over the years, CHS partner providers have successfully participated in the Medicare Shared Savings Program (MSSP) and the risk-heavy Next Generation (Next Gen) ACO Model. This combination of people and technology support has resulted in over $389 million in total savings to the Medicare Trust Fund.

More specifically, Next Generation ACOs sponsored by CHS have generated $54.2 million in savings since 2017, returning about $33.2 million back to providers through shared savings payments.

But entering into risk-heavy value-based care arrangements like the Next Generation ACO Model has especially been challenging for physician practices.

Practices tend to be risk-averse because of the level of capital and resources needed to succeed in downside risk models. Yet CMS continues to press providers to take on more financial risk in value-based care models like the Medicare Shared Savings Program and the Next Generation ACO Model’s successor: Directing Contracting.

Described as the next step for Next Generation ACOs when the model sunsets at the end of the year, CMS’ new Direct Contracting Model will test “the next evolution of risk-sharing arrangements to produce value and high quality health care.”

Through Direct Contracting, organizations will work together as “Direct Contracting Entities,” or DCEs, to coordinate and take accountability for the care and costs of a patient population. The model is similar to the ACO but is intended to appeal to a broader range of physician practices and other organizations involved in patient care, such as Medicaid Managed Care Organizations (MCOs).

There are ACO groups like the National Associations of ACOs (NAACOS) that are trying to convince CMS to make the Next Generation ACO Model a permanent fixture in value-based care, especially since program data shows that the program is saving and significantly.

However, CHS is planning to move some of its Next Generation ACOs to the Direct Contracting Model when the time comes, but there could be a learning curve for providers.

To prepare physicians and their practices for success in new risk-based models, including the new Direct Contracting (DC) Model, CHS is working with its provider partners to give them the tools and data, along with the workflow, they need to support that level of care.

"Direct Contracting is a continuation of NextGen," explained Karen Holt, CHS’ VP of Operations for the South Region. "Each year, we look at our strategies and providers, knowing that we need to continually evolve in value-based care. We're looking not only at the strategies for ACO businesses, but also individual practice strategies to ensure the success of the entire business knowing some providers are further ahead than others, and the goal is to ensure patients are getting the right level of care."

Naturally, there is still some concern among physician practice leaders about taking on financial risk, but that constant strategy evolution helps to ensure practices are successful in ACO programs and whatever comes next.

"Every year, we work with our providers to develop new and different programs, asking ourselves ‘where do we need to grow?’" Holt said. "Together, we create goals to align clinical programs for providers across programs to limit burden.”

"It's not just about what happens in the clinic," Holt added. "It's about what is happening outside the four walls of the practice that the provider needs to know to ensure patients receive the right level of care. Our tools and technology support this effort and the ability to hold ancillary facilities accountable to the right level of care."

The ability to evolve and hold physicians accountable is a skill necessary for Direct Contracting Model success, too. But there is some different work that needs to be done depending on the risk-based model. For example, switching Next Generation ACOs to DCEs in the future will require a different mindset.

"It does require a different set of eyes for different programs to make sure that you're helping providers [be] successful in that program. The two are similar, but not exact in how they're performing," Holt explained.

Key differences between the programs include quality metrics and risk scoring as well as how organizations like CHS can pay their providers for value.

"On the Direct Contracting Geographic Model, it's changing quite a bit. In other words, we'll be able to pay providers as long as we contract with them in the first year," Valdés said. "In the second year, we can opt to pay all providers who are doing services for the beneficiaries that are assigned for us."

This is a major difference for a company that largely supported population health management to help physicians succeed in ACO models. Under the Direct Contracting Model, CHS and others like it can be flexible with how physicians get paid for value—like capitated payments or value-based reimbursement—as long as DCEs can marry claims with population health management.

But physicians are optimistic about this change in reimbursement arrangements, Holt added.

Practices took a major financial hit when they had to shut down services early during the COVID-19 pandemic. But practices in capitated payment arrangements seemed to have fared better than their fee-for-service peers since the payment model provided a steady stream of revenue while offering physicians the flexibility to invest that money in much-needed telehealth services, for example.

"Providers are very optimistic about being able to be paid capitation," Holt said. "This will allow them the opportunities to really build more infrastructure inside of their practices, so that they can manage patients based off of applicability, instead of just the volume of services."