In the ongoing effort to improve the level of care for beneficiaries and to lower the costs of healthcare services, the Centers for Medicare and Medicaid (CMS) continues to evolve programs from traditional fee-for-service to value-based “Pay-for-Performance” arrangements. CMS has successfully enticed just over one third of the eligible Medicare beneficiaries to opt-in to the value-based Medicare Advantage program.

CMS can’t afford to wait for the rest of the Medicare beneficiaries to choose a Medicare Advantage plan, so they’ve developed a program with a foundation based on value-based reimbursements to providers that does not require beneficiaries to opt-out of traditional Medicare, the Direct Contracting (DC) model.

In a previous blog post on the CMS Primary Cares Initiative that was announced in April 2019, we explored another value-based payment program, the Primary Care First alternative payment model (APM). In today’s post we will survey the options that make up the second path of this APM initiative, CMS Direct Contracting.

Direct Contracting Overview

CMS Direct Contracting is a set of optional payment models that attempt to approximate the principles of the Medicare Advantage program. They depend in part on risk adjusted pre-payment (captitated) payments to providers. The risk adjustment model is the same model used in Medicare Advantage, the Hierarchical Condition Category (HCC) payment model. For those providers that had not participated in the HCC risk adjustment model via the Medicare Advantage program, Direct Contracting healthcare models will introduce a new set of complexities related to optimizing payment. Those who already participate in Medicare Advantage will become increasingly dependent on the HCC risk adjustment model. Mastering the intricacies of the model may “make or break” the financial health of participants in the DC model. Participants will become increasingly dependent on professional coding advice or less expensive risk adjustment software tools that use artificial intelligence in healthcare to help improve the profitability of these new payment systems.

The DC options are informed by the experience from existing, value-based care models such as Medicare Advantage (MA) Next Generation ACOs (NGACO), and the Medicare Shared Savings Program (MSSP) as well as a variety of risk-sharing models developed by the private sector. Within the Medicare Direct Contracting model, CMS has created three different tracks:

Professional

The Professional track is the lowest risk-sharing option which limits savings or losses to 50% and provides a risk adjusted, capitated monthly payment for enhanced primary care services.
Preferred Providers and other Participants defined by TIN and NPI.
The Primary Care Capitation (PCC) is set at 7% of the total cost of care for enhanced services from primary care.

Global

The Global track represents the highest risk sharing option with 100% savings or losses.
Again, Preferred Providers and other Participants defined by TIN and NPI.
Participants may choose from two payment options: Primary Care Capitation is equivalent to the Professional arrangement (above). Or Total Care Capitation provides monthly, risk-adjusted payments for all services that are provided to beneficiaries of all DCE participating providers.

Timeline for Professional or Global DCE Tracks

Geographic

The Geographic track is the most recent of options and is open to organizations who have an interest in taking on regional risk in partnership with other participants in their region.
This track is aimed at improving the quality of care while reducing costs for beneficiaries of Medicare across a defined geographic region.
Participating organizations are asked to take on full risk with 100% shared savings or shared losses for both Parts A and B services.
The initial fifteen regions defined by CMS contain between 150K to 700K beneficiaries and include: Atlanta, Dallas, Houston, Denver, Detroit, Miami, Tampa, Orlando, Minneapolis, Phoenix, Philadelphia Pittsburgh, Los Angeles, Riverside and San Diego.

Timeline for Geographic DCE Track

Types of Direct Contracting Healthcare Entities (DCEs)

Participants in these three DCE models include the following types of entrants:

New Entrant DCEs are organizations that have not customarily delivered healthcare services to Medicare Fee-for-Service beneficiaries and therefore have limited experience with this population. For the first few years of the program, it is anticipated these participants will voluntary and/or claims-based beneficiary alignment.

Standard DCEs participants differ in that the organizations have substantial experience serving Medicare Fee-for-Service populations as well as Medicare Advantage and Dual eligible populations. Still, this category may still apply to new organizations representing collaborating organizations with experience serving these populations via earlier managed care models including (the assorted ACO models).

High Needs DCEs are participants that focus on high needs populations with complex healthcare needs. This will often include beneficiaries who are dually eligible for both Medicare and Medicaid. It is expected that these DCEs will employ models of care such as those developed for Programs of All-Inclusive Care for the Elderly or “PACE.”

MCO-Based DCEs are participants that currently manage the Medicare Fee-for-Service expenses for full-benefit dual eligible beneficiaries who are receiving Medicaid benefits though a Medicaid Managed Care Organization (MCO). As such, these participants must be a Medicaid MCO or be legally affiliated with the same and under common ownership.

Capitation Payment Options

The DCE capitation payment options are divided into two categories:

Primary Care Capitation or “PPC” provides monthly capitated payments to DCEs either the Global or Professional track but are limited to primary care services delivered to the DCEs aligned beneficiaries.

Total Care Capitation or “TCC” provides monthly capitated payments for all services and are only available to participants of the Global track.

ForeSee Medical’s risk adjustment software is specifically designed to help risk bearing organizations thrive in these various CMS value-based risk adjusted programs. Our proprietary disease detection algorithms and machine learned natural language processing rationalize your patient data across the healthcare system. Using artificial intelligence (AI), we discover diseases from text notes and EHR data you already have. Then, we empower you with insightful HCC risk adjustment support and integrate it seamlessly with your EHR.

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Blog by: The ForeSee Medical Team