Physician Payment and Reimbursement

Medicare reopens deadline for providers to signal interest in direct contracting

December 4, 2019 4:12 pm
  • Providers have until Dec. 10 to submit nonbinding letters of intent to participate in a direct contracting model with Medicare
  • The provisional start of the model was delayed from January 2020 to mid-2020.
  • Among factors determining participants’ success will be CMS’s ability to get beneficiary data to them more quickly.

Primary care physicians have another opportunity to opt in to new direct contracting models after Medicare decided to again accept nonbinding letters of intent, with a new deadline of Dec. 10.

The Centers for Medicare & Medicaid Services (CMS) previously required providers interested in participating in two versions of its new Direct Contracting model — the Global and Professional options — to submit a nonbinding letter in August. But the agency recently reopened submissions to attract additional providers.

Providers then have until Feb. 25, 2020, to submit an application to participate starting in mid-2020. The model originally was scheduled to start Jan. 1.

CMS will accept applications in spring 2020 for organizations to begin participating in January 2021. All versions of the model are scheduled to conclude at the end of 2025.

In the model, CMS will directly contract with Medicare providers and suppliers, which will have financial accountability for the cost and quality of care for a defined beneficiary population. Industry advisers describe Direct Contracting as similar to Medicare Advantage, but without health plan involvement.

Direct Contracting’s voluntary risk-sharing options include:

  • A lower risk-sharing arrangement — 50% of savings/losses — and a capitated, risk-adjusted monthly payment for enhanced primary care services
  • A higher risk sharing arrangement — 100% of savings/losses — and either an enhanced services payment or a capitated, risk-adjusted monthly payment for all services provided by primary care physicians and any others under the agreement.
  • A coming third payment model option for which CMS will release more information later in 2019.

In October, CMS released a separate request for applications for two related model options under the umbrella of its Primary Care First initiative. Those models will launch in 2021.

What makes this model different?

CMS designed the new models to change the existing dynamics of value-based payment in several ways, including:

  • Attracting physician organizations previously ineligible for Medicare models due to low volumes of Medicare fee-for-service beneficiaries
  • Encouraging participation by organizations focused on caring for patients with complex, chronic conditions and for seriously ill populations
  • Advancing primary care as a means to better manage beneficiaries’ overall healthcare

Who can participate?

As part of the different versions of the Direct Contracting model, CMS signs contracts with direct contracting entities (DCEs), which can then enroll other providers. Qualifying DCEs include:

  • Physicians or other practitioners in group practice arrangements
  • Networks of practices of physicians or other practitioners
  • Hospitals employing physicians or other practitioners
  • Federally qualified health centers
  • Rural health clinics
  • Critical access hospitals

Unanswered questions

Industry advisers who have commented on the Direct Contracting model in recent months identified a range of unanswered questions and possible concerns about details that ultimately could affect participating providers’ performance.

Unknown details include:

  • How will the model reduce administrative burdens and generate better health for beneficiaries?
  • How quickly can CMS share the necessary data with participating providers?
  • How can providers in markets with multiple Direct Contracting participants create adequate networks, refer beneficiaries and reduce administrative burdens without participation of a health plan?
  • How many of the 25% of primary care providers that are projected to participate can produce the performance on quality needed to succeed?


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