Last April, the Centers for Medicare and Medicaid Service (CMS) unveiled several new payment models designed to help transform primary care by reimbursing providers for health outcomes rather than the services administered. As policymakers increasingly encourage new value-based alternatives to the fee-for-service status quo, one of the models that has emerged is Direct Contracting—which allows a wide range of healthcare organizations (known as “Direct Contracting Entities” or “DCE”) to work directly with traditional fee-for-service Medicare. The providers who participate receive stable monthly payments, reduced administrative burdens, and additional benefits for their patients.
Now, Direct Contracting is at a crucial moment as CMS and the Biden administration contemplate the future of this model, with the agency sharing that a decision is coming “soon.” While we can’t pretend that Direct Contracting is going to solve all of our problems, it does provide consideration for Direct Primary Care (DPC) practices, through which physicians can operate outside today’s insurance-based payment model. That’s because one of the biggest decision factors for those transitioning to DPC is how to handle their relationship with Medicare, since many have long-standing patients who are now or soon will be covered under traditional Medicare. There’s a few different reasons why the Direct Contracting program is being closely considered by DPC practices who want to support Medicare patients.
- Stable payments, distributed monthly for your aligned patients
Similar to a membership fee, providers can receive monthly payments for the traditional Medicare patients under their care and patients continue to determine their provider relationship. So providers are incentivized to prioritize high quality care and patient satisfaction over volume. Payments vary regionally and tie to historic panel utilization.
- An aligned incentive model
Providers earn shared savings tied to reductions in the total cost of care compared to a benchmark. This means providers can directly share in the value they create for their Medicare patients, without relying on private health plans or needing to jump through additional hoops to participate. Providers can typically choose whether or not to also take on downside risk in return for a higher portion of shared savings.
- Addition of voluntary patient alignment
Patients can complete a form designating their PCP. This eliminates the back and forth of trying to figure out attribution through claims and allows providers to focus on managing their whole Medicare panel.
- Supplemental patient benefits for aligned beneficiaries
When participating with a DCE, patients can receive additional benefits on top of their regular Medicare coverage. These could be similar to benefits they receive from a Medicare Advantage plan – like dental vouchers, reduced cost sharing, transportation, or wellness benefits.
- Reduced administrative workload
The quality measures for the Direct Contracting program are based on patient experience surveys and claims-measured utilization (e.g. reducing admissions) instead of complicated data submissions. Quality is determined by patient outcomes versus solely what’s documented in a chart. When combined with no prior authorizations on an open access network, this results in a significant reduction in the administrative workload required to serve Medicare patients.
- Localized, preferred networks – all while remaining open access
There are no referral requirements, but patients are incentivized to follow the care plans laid out by their PCPs. While DCEs create incentives for patients to go to the specialists recommended by their physicians, there are no more administrative headaches or surprise charges if they choose to go elsewhere. This reverses the pains of the HMO model that requires prior authorizations and often results in surprise charges if a patient goes out of network.
The future of direct contracting and DPC
The Direct Contracting model is still new and there is vigorous discussion about it’s path forward, but it’s encouraging to see policymakers entertaining some of the same tenets that the DPC community knows to be important, including “value over volume” and PCP empowerment. Direct Contracting can allow hybrid DPC practices that are participating in Medicare fee-for-service to move Medicare payments into a fully capitated model. For practices that are already entirely DPC, they can now consider welcoming Medicare patients under a model that is more aligned with DPC than any seen in the past.
Regardless of how this policy continues to evolve, it’s crucial that CMS recognize the rapid rise of physicians who are turning to DPC to escape fee-for-service, and continue creating pathways for those practices to share in the rewards of delivering better care outcomes for their patients.
Photo: imtmphoto, Getty Images
