Is a Medicare Direct Contracting Model Right for Your Practice?

The shift towards value-based payment continues to pick up speed, and now, primary care providers have a new value-based payment model to choose from. CMS recently announced two new, voluntary direct contracting pay models that providers can opt into beginning in 2020. These new models will shift approximately 25 percent of Medicare beneficiaries out of fee-for-service models, CMS hopes. Is one right for your practice?

How Much Risk is Too Much Risk?

There are already two alternatives for primary care fee-for-service: the Medicare Shared Savings Enhanced Track and Primary Care First. The new direct contracting models are higher risk than both of those existing programs, offering increased bonuses—but also steeper penalties. There are three participation options:

  • The Professional population-based payment (PBP) is the lowest-risk option. Providers take on 50 percent of the risk, including both savings and losses.
  • The Global population-based PBP is the highest risk option. Providers assume 100 percent of the risk.
  • A geographic PBP will allow health systems and insurance plans to take on 100 percent of the risk for a certain number of communities in a particular geographic region. This option will be available mid-2020, according to CMS.

Bonus: All three of these direct contracting options will be considered Advanced APMs beginning in 2021. That means that if you are currently participating in MIPS, you’ll be able to opt out.

Providers who opt to participate in either the Professional PBP or the Global PBP direct contracting pay models must choose one of two capitation arrangements:

  • Total Care Capitation includes monthly payments for all services provided. Professional PBP participants must choose this option.
  • Primary Care Capitation includes monthly payments for enhanced primary care services only. Global PBP participants may choose either option.

Note: Participants—direct contracted entities or DCEs—must still submit claims to CMS. CMS is currently exploring ways to simplify claims submission under these new payment arrangements.

Choose Between Two Direct Contracting Payment Options

Will one of these options be profitable for your practice? You’ll have some time to think about it, since the deadline for submitting (non-binding) letters of interest for 2020 and 2021 was August 2019. CMS anticipates receiving a large volume of LOIs, many from organizations that won’t end up following through with full applications, experts say.

One issue with this latest iteration of payment reform? CMS expects DCEs participating in the first performance year (2020) to enroll (or already have enrolled) at least 5,000 Medicare beneficiaries. For organizations that don’t already meet that threshold, a significant amount of enrollment work would be involved, when at the same time there are many details and unknowns about the programs yet to be worked out. When considering whether a direct contracting model is right for your practice, think about the following:

  • Assess your current payer contracts. Are you already involved in a value-based model such as the Medicare Shared Saving Program or Primary Care First? If so, you’ll need to determine if the direct contracting options offer more opportunity.
  • If you don’t already participate in a value-based model, are you prepared to invest? For example, your EHR will play a larger role. Plus, leaders at all levels of the practice must be committed. They’ll need to put a lot of focus on getting engagement and buy-in from physicians and staff members.

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