NAACOS, APG Urge HHS to Adjust Direct Contracting Model, Not Cancel

More than 200 healthcare organizations, including America’s Physician Groups (APG) and the National Association of ACOs (NAACOS), have urged the Department of Health and Human Services (HHS) to make adjustments to the Global and Professional Direct Contracting Model instead of canceling the program.

In a letter to HHS Secretary Xavier Becerra, the groups stressed that shutting down the Direct Contracting program would undermine the industry’s shift to value-based payment models and negatively impact care quality for Medicare fee-for-service (FFS) beneficiaries.

The Direct Contracting model allows a wide range of healthcare organizations – known as Direct Contracting Entities (DCEs) – to participate in alternative payment models that offer quality improvement incentives and capitated payments for care coordination in Medicare FFS.

The Direct Contracting model is the head accountable care organization (ACO) from the CMS Innovation Center (CMMI) and builds upon the Next Generation ACO, which ended in December 2021.

As HHS and the Biden administration contemplate the future of Direct Contracting, the organizations have asked officials to make changes to the model and avoid canceling it.

“Should this model be abruptly ended, health care providers would be terminated from value-based payment participation without warning, making them far less likely to invest and participate in future CMS payment models,” the letter stated.

The organizations noted that ending the payment model would particularly hurt the ACOs that transitioned into Direct Contracting after the conclusion of the Next Generation ACO model.

The letter proposed several changes for HHS to consider. First, the department could limit Direct Contracting participation to certain DCEs, such as provider-led organizations. Second, HHS could add more beneficiary protections to the model.

The organizations suggested that rebranding and changing the model’s name would also help communicate the program’s intent more clearly, as people have confused this model with the Geographic Direct Contracting Model. To help clear up confusion, CMS should also publicly announce that the Geographic Direct Contracting model has ended, the groups added.

The letter emphasized that the recent criticisms against the model are misleading.

For example, a group of lawmakers recently penned a letter urging the Biden administration to end the Direct Contracting program. The authors stated that the model could limit patient care options, as DCEs receive incentives to funnel patients to providers within their networks to maximize profits.

However, NAACOS, APG, and their fellow healthcare organizations claimed that Medicare FFS beneficiaries maintain their freedom of choice to see any willing provider in the model. In addition, beneficiaries receive more benefits, experience lower costs, and avoid prior authorization, the letter stated.

“This is not the end of traditional Medicare, as advocates have falsely claimed, but is a way to provide additional beneficiary and provider tools as part of a whole-person care approach,” the groups wrote.

The letter also highlighted that the Direct Contracting model benefits underserved populations, including low-income and minority individuals. According to CMS officials, DCEs have higher numbers of providers that serve disadvantaged communities. Additionally, the model offers incentives for care for sicker and high-needs patients.

“The direct contracting program is good for patients, it’s good for providers, and it strengthens the Medicare program,” Don Crane, APG president and chief executive officer, said in a press release.

“Killing the direct contracting program at this stage is just bad policy. It would not only hurt Medicare beneficiaries, it would undermine the important work of the CMS Innovation Center. In particular, many of the physicians in this model are now able to provide care to historically underserved communities where there are deep health disparities.”

The Direct Contracting model is a high-risk, value-based payment model that aims to improve patient care; thus, HHS should not eliminate it, the letter concluded.