Toward the end of last year, the United States Centers for Medicare and Medicaid Services (CMS) announced a new voluntary payment model, aimed at improving the care across entire geographic regions. The Geographic Direct Contracting model is a test to see whether direct contracting entities can improve quality and lower costs for beneficiaries across an entire region. Providers within the region can enter into value-based care payment arrangements.
The model will allow for providers to work in a specific region and leverage a beneficiary’s existing provider relationships to develop a care delivery solution that accounts for local needs in the region. Model participants will coordinate care and clinical management for beneficiaries in original Medicare in their region, which may include care management services, telemedicine, and help for beneficiaries to understand which providers have a history of delivering better results in a cost-efficient manner. To that end, providers may decide to create a network of preferred providers that enter into alternative payment arrangements.
The model is building off of CMS’ Direct Contracting model and will be launched in as many as 15 regions initially, including potentially Atlanta, Dallas, Miami, and Philadelphia.
How Does it Work?
There will be two voluntary payment systems for participating providers: total capitation and partial capitation. Under total capitation, providers opt into a monthly capitated payment that is equal to the projected decline in fee-for-service spending and are responsible for any downstream payments to other providers. Under partial capitation, providers will get a monthly payment equal to the reduced fee-for-service billings between 1 and 50%.
The financial methodology will weigh a provider’s performance against the region’s performance benchmark, which will be based on the historic Medicare fee-for-service spending in the region. Quality measures will also account for 1% of the model’s benchmark in the first year, a figure that will then increase to 3% in the third performance year and beyond.
Looking Forward
CMMI plans to evaluate the model under two separate three-year performance periods. The first period will take applications this year (expected March 1 – April 2) and run from January 1, 2022 to December 31, 2024, while the second period will open for applications in 2024 and run from January 1, 2025 through December 31, 2027.
Beneficiaries that are included in the model will keep their original Medicare benefits and their out-of-pocket costs will not increase. Providers will be able to offer new benefits, though, such as wellness programs, coupons for OTC drugs, or other health services, such as dental or vision. CMS’ goal is to have at least three direct contracting entities in each region.
CMS Statement
“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,” said Seema Verma, former CMS Administrator.