New payment and service delivery models defined

CMS recently introduced the following two new payment and service delivery models.

Primary Care First (PCF) model

The PCF model is aimed at small practices on the lower end of the resources and technology spectrum, some possibly still lacking electronic health records (EHRs). Payment is basically fee-for-service, plus a management fee and a performance incentive or penalty. Cost performance is determined by the Healthcare Effectiveness Data and Information Set (HEDIS) Acute Hospital Utilization measure that compares expected-to-actual utilization of risk-adjusted patients. The incentive could be up to 50% of Medicare revenues, or, alternatively, a penalty of up to 10%.

A variation on the PCF model, dubbed the PCF High Needs Population, is focused on populations with special or high-risk needs and includes additional participating providers such as palliative care providers.

The dilemma for physicians is that the HEDIS indicator is a retrospective algorithm that permits comparison across all physicians but is not actionable. With a 10% penalty on the line, physicians must be able to successfully control hospitalization decisions of specialty physicians and choose their referral partners in advance. Such partners include specialty physicians and hospitalists who manage inpatient care, and they also can be hospitals (where a choice is possible).

The Direct Contracting (DC) model

The DC models (that is, DC Global, DC Professional and DC Geographic) target larger practices with infrastructure to manage services and distribution of money to other physicians. These models build on providers’ past experiences with independent practice associations or physician hospital organizations contracting and incorporating extra flexibility allowed to Medicare Advantage (MA) and accountable care organizations (ACOs).

Direct contracting physician groups must control the full spectrum of patient care costs to achieve savings. Although similar to what’s required of ACOs and MA plans, this effort requires a considerable shift in the core expertise of most group practices. Groups must significantly address cost drivers, generate patient loyalty and cooperation and make it easy for patients to choose and follow therapies.