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Delving Deeper into the Direct Contracting Model

The Direct Contracting Model is a new six-year value-based payment program from the Center for Medicare & Medicaid Innovation (CMMI), which builds on Medicare Advantage, ACO models and commercial best practices. The first Performance Year 2021 (PY2021) began on April 1, 2021.

As of April 9, 2021, CMS has suspended the application process for the second year of the Direct Contracting Model. While the status of first-year participants (April 1 to Dec. 31, 2021) hasn’t changed, the program’s future for additional applicants is unknown. While the long-term future of the program remains to be seen, we wanted to shed some more light on what the program entails, and how it differs from existing value-based programs. Keep reading for some frequently asked questions regarding Direct Contracting:

Who can participate in Direct Contracting?

Direct Contracting broadens the potential pool of participants, allowing for providers that have historically been excluded from value-based payment programs to enroll in the program. Organizations that can take part in this new model include ACOs, independent practice associations (IPAs), integrated delivery systems, health systems, managed care organizations (MCOs), skilled nursing facilities (SNFs), and health plans. 53 DCEs are participating in PY1, which began on April 1, 2021.

How does Direct Contracting differ from other value-based care initiatives such as ACOs and Medicare Advantage?

ACOS: Similar to existing ACO models, the Direct Contracting Model expands the ways in which providers can engage and care for patients outside of pure Fee-for-Service (FFS) reimbursement structures. Direct Contracting improves upon the Next Gen ACO Model’s benchmarking methodology and risk adjustment; under the ACO model, top-performing ACOs become the following year’s benchmark – and ACOs have to compete against themselves, as well as the top-performing ACO – which is disincentivizing for participants. Direct Contracting implements modifications to improve upon that dynamic.

Medicare Advantage: Direct Contracting encourages more providers to take on increased risk without the red tape, complexities and infrastructure required for a Medicare Advantage plan – while still incorporating some of the best aspects of a Medicare Advantage plan, such as supplemental benefits. Under Medicare Advantage, a beneficiary chooses to join the plan, and can only seek care from providers within that network. Under the Direct Contracting Model, however, the beneficiary is not choosing to leave traditional Medicare and can seek care from any Medicare provider – not just those within a specific network.

What are the goals of the Direct Contracting Model?

The program ultimately aims to lower annual total costs of care for Medicare and dually-eligible beneficiaries while improving outcomes. CMMI developed Direct Contracting with four critical goals in mind:

  1. Transform risk-sharing arrangements in Medicare FFS: Direct Contracting offers two voluntary payment systemsfor participating providers that move away from traditional FFS: total capitation and partial capitation. Under total capitation, providers opt into a monthly capitated payment that is equal to the projected decline in FFS spending, and are responsible for any downstream payments to other providers. Under partial capitation, providers will get a monthly payment equal to the reduced FFS billings.
  2. Broaden participation in CMMI models: This program allows participation by organizations new to Medicare FFS – such as physician-managed organizations that currently operate exclusively in the Medicare Advantage program.
  3. Empower beneficiaries to engage in their own care delivery: Similar to the approach taken in the Next Gen ACO model, Direct Contracting will use two models to align beneficiaries to DCEs: claims-based alignment and voluntary alignment. Voluntary alignment is where a beneficiary indicates that he or she wants to be aligned to the Direct Contracting Entity (DCE) by selecting his or her main doctor. CMS will also now allow DCEs to participate in other patient engagement strategies and incentives.
  4. Reduce provider burden but meet healthcare needs effectively: Unlike other programs, Direct Contracting has laid out a smaller set of core quality measures on which participating DCEs will be assessed – as the program’s primary aim is to incentivize organizations for how well they manage their patients’ care.

What are the quality measures under which DCEs will be evaluated?

In the program’s first year, which began April 1, 2021, there are only two quality measures under which DCEs will be evaluated, both of which are based off of claims data. The first, Risk-Standardized All-Condition Readmission (ACR), examines the number of hospital stays that resulted in a readmission within 30 days of discharge. The second measure is All-Cause Unplanned Admissions for Patients with Multiple Chronic Conditions (UAMCC) and looks at the number of hospital admissions that occurred among Medicare FFS beneficiaries who are 65 and over and have multiple chronic conditions.

What risk options are available under Direct Contracting?

Direct Contracting gives DCEs economic incentive to take care of the patient holistically, because they’re not only managing the care of that patient, but also the costs associated with caring for that patient. Direct Contracting also allows for 100% risk sharing – both upside and downside – which is new for CMS and demonstrates CMS’s commitment to the shift to value-based care.

During PY1, the model has two risk options. In the first, Professional, 50% of savings (upside risk) or losses (downside risk) are shared with CMS. In the second option, Global, 100% of savings or losses are shared with CMS. A third option, Geographic, or “Geo,” has been proposed for inclusion in 2022 but is currently undergoing review and with applications no longer open, is unlikely to be put into effect.

How can technology, like CarePort’s care coordination software, help DCEs succeed?

In Direct Contracting, organizations will be incentivized to reduce unnecessary utilization, reduce cost of care and improve quality of care. DCEs will need a technology that is already integrated within workflows, as it’s difficult for payers and physician groups to influence care in acute and post-acute settings without leveraging technologies that are already in place. CarePort ties together all settings of care, and because of its real-time data can allow for course correction before an adverse event occurs – impacting the claims used for quality measurement purposes.

CarePort can proactively influence upstream care during discharge planning workflows, help care managers engage members when they’re most vulnerable and ready for care, and operationalize care management programs with acute and post-acute data.

This is the third post in our Direct Contracting blog series. In case you missed it, we introduced Direct Contracting in this post, and share how organizations can succeed under this program in this post. To learn more about CarePort, please contact us.

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