• January 19, 2021

CMS unveils highly-anticipated geographic direct contracting model

Dec 3, 2020

CMS’ Center for Medicare and Medicaid Innovation on Thursday unveiled its highly anticipated Geographic Direct Contracting Model.

The model—dubbed “Geo”—aims to improve health outcomes and lower healthcare costs for Medicare’s fee-for-service beneficiaries across entire geographic regions by encouraging participants to work together to improve care coordination and care management. So-called direct contracting entities, CMMI’s new name for accountable care organizations, “will implement region-wide care delivery and value-based payment,” CMS said in a fact sheet.

During an exclusive interview with Modern Healthcare before the announcement, CMS Administrator Seema Verma said the model should give participants strong financial incentives to cut costs and boost quality. Unlike the global and professional options, participants would accept full financial risk for all traditional Medicare enrollees in their region. To help participants manage their populations, Geo includes new tools to encourage beneficiaries to seek high-value care.

The new tools are “a very significant change from all the other models,” Verma said. “This really is … the next generation of CMMI models.”

She was optimistic that Accountable Care Organizations, health systems, medical groups and health plans would take part. That’s because Geo builds on and embraces lessons learned from the Medicare Shared Savings Program, Next Generation ACO Model, Medicare Advantage and other initiatives. Geo includes in one model “all of the flexibilities” CMMI has ever offered, plus additional benefits, Verma said.

Preferred providers and suppliers could receive value-based payments from direct contracting entities and deliver additional benefits to beneficiaries. They’ll be allowed to create arrangements that include total or partial capitation.

“What we hope happens is that provider entities … will figure out value-based payment arrangements that build on and leverage the existing CMMI payment models, but may go above and beyond that,” CMMI Deputy Administrator and Director Brad Smith said during an interview.

Providers will get the same reimbursement they have unless they sign a contract that changes that, Verma said. The agency is exploring whether direct contracting entities could take capitation for non-preferred providers if they meet specific requirements. It promised to have more details next month.

The model’s new beneficiary engagement tools could be tempting for some organizations. Geo allows participants to offer vouchers for over-the-counter medications, healthcare-related transportation, meal programs, chronic disease management programs, and vision and dental services. Participants can also provide items and services to help enrollees manage chronic disease, including home air-filtering systems and home improvements like railing installation. They can also offer wellness program members and gift cards for adhering to disease management programs, additional telehealth services and other benefits.

Direct contracting entities can opt to offer a wide array of additional Medicare benefits, including the ability to waive Medicare’s three-day, skilled nursing facility rule and home visits for care management. Participants can even lower out-of-pocket costs for traditional Medicare enrollees by lowering their Part A or B copays or offering subsidies for beneficiaries’ Part B premiums.

CMMI will test the model for six years. The first three-year performance period will kickoff on Jan. 1, 2022, and run through Dec. 31, 2024. The second will start Jan. 1, 2025, and end Dec. 31, 2027. But it will only accept applications from organizations in 15 regions. The list excludes major markets like Chicago and New York. The agency will select four to 10 areas, Smith said.

“Each region’s benchmark will be set using a geographic rate book,” he said. Smith added that the agency is introducing “a next-generation risk-adjustment methodology” that guards against payment increases resulting from upcoding alone.

CMS will pick regions and participants based on their proposed discounts.

“CMS will select applicants with the highest average discount,” according to a fact sheet.

Organizations should send CMS a non-binding letter by Dec. 21 to express their interest. CMMI will start accepting applications in January—they’re due Apr. 2. The agency will select model participants by Jun. 30. “We anticipate interest from organizations that have significant experience taking risk in value-based care models,” CMS said in a fact sheet.

Smith said the agency was “very thoughtful in considering how Geo overlaps with other value-based payments.” All Geo participants and beneficiaries are eligible to take part in all other CMMI value-based care models. According to Smith, payments made under MSSP or other CMS payment models will be charged back to the geographic entity and taken into account to calculate its shared savings.

“We didn’t want to roll out Geo and have providers have to drop out of the model (so there is) a financial reconciliation on the back end with the Geo DCE that takes into account all the downstream payments,” he said. For providers taking part in other models, “nothing changes for you at all.”

The agency will assign beneficiaries to a direct contracting entity through voluntary alignment, Medicaid managed care alignment for dual-eligibles, ACO-based alignment, claims-based alignment and random alignment. But voluntary alignment will take precedent. According to CMS, each entity will have at least 30,000 beneficiaries.

“We’ll continue to meet with a number of beneficiary advocacy groups to figure out the best way to educate beneficiaries about their various options,” Smith said. “We’ll most likely leverage the best practices for the models we already have in operation.”

“The model has seven quality measures that are designed to reduce provider burden, all of which align with existing quality measures and ACO programs or the Medicare Advantage star program,” Smith said.

Medicare beneficiaries must be enrolled in Medicare Part A and B, have Medicare as their primary payers, be a U.S. resident and live in an included region to take part in the model. They cannot be in a Medicare managed care plan.

“A number of our models have had adverse selection,” Smith said. “The way we’ve designed the (Geo) model will hopefully prevent that.”

Directing contracting entities will take on various program integrity responsibilities.

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