Blog | Value-Based Payment

Medicare Advantage concepts come to Medicare fee-for-service with Geographic Direct Contracting Model

Blog | Value-Based Payment

Medicare Advantage concepts come to Medicare fee-for-service with Geographic Direct Contracting Model

  • The Center for Medicare & Medicaid Innovation released the long-awaited announcement for its Geographic Direct Contracting Model on Dec. 3.
  • The voluntary model will test participants’ ability to take risk and improve outcomes for a population of Medicare beneficiaries (minimum of 30,000 aligned) in a defined geographic region.
  • While the MA Stars Rating program is a bonus program where plans can earn additional revenue for achieving high scores, quality in the Geographic Direct Contracting program is treated more like a penalty, says HFMA’s Chad Mulvany.

On Dec. 3, the Center for Medicare & Medicaid Innovation (CMMI) released the long-awaited announcement of its Geographic Direct Contracting Model (a.k.a. Geo).

The voluntary model will test participants’ ability to take risk and improve outcomes for a population of Medicare beneficiaries (minimum of 30,000 aligned) in a defined geographic region, according to the announcement by CMS. A region is defined as a Core-Based Statistical Area. CMMI has identified 15 candidates with between 150,000 and 700,000 fee-for-service (FFS) beneficiaries that may eventually host Geo Direct Contracting Entities (DCEs). CMMI envisions a minimum of three DCEs in a region. Participants could be health plans or provider organizations.

Selected Geo DCE’s will be paid a capitated rate developed in a process that is similar to Medicare Advantage (MA) rate setting. In turn, a DCE may offer total or partial capitation to preferred providers.

A region’s performance-year (PY) benchmarks will be set using a geographic rate book. And participants will be selected, in part, based on the average discount they bid for the performance period. CMS anticipates that the minimum bid for the discount will be approximately 2% to 3%. Geo DCEs that bid a higher average discount relative to the other DCEs in their region will receive a higher proportion of aligned beneficiaries for that performance period. While additional clarification is needed from CMMI, it appears proportional alignment will apply only to the “random alignment” methodology (discussed below).

Ways beneficiaries will  be aligned to a Geo DCE

This is not an HMO model, as beneficiaries will retain the ability to see any provider they like. Beneficiaries will be aligned to a Geo DCE in the following ways, listed in order of precedence:

  1. Voluntary alignment
  2. MCO-based alignment for dual-eligibles
  3. ACO-based alignment
  4. Claims-based alignment
  5. Random alignment (if not aligned based on one of the other methods)

Ways Geo DCEs can engage beneficiaries

Similar to MA, the model provides Geo DCEs with a number of ways to engage beneficiaries, including:

  • Vouchers for vision and dental care services
  • Transportation services to appointments
  • Chronic disease self-management programs
  •  Certain OTC medications
  •  Items that support management of a chronic condition
  • Wellness programs
  • Applications that remind patients to take their medication or that promote compliance with treatment regimens

Additionally, CMS will allow DCEs to provide eligible aligned beneficiaries with gift cards, worth up to $75 annually, to incentivize participation in chronic disease management programs. DCEs may also provide Medicare Part B cost-sharing assistance to beneficiaries who receive care from high-performing Geo preferred providers.

The model also has a quality component, which includes seven quality measures that are aligned with prior ACO quality programs and the MA Star Rating program. The model includes a quality withhold of 1% in PY22, 2% in PY23 and 3% in PY24. The withhold can be earned back based on quality scores. 

Deadline to send a nonbinding letter of interest

The first performance period runs from Jan. 1, 2022, through Dec. 31, 2024. Participants can apply in 2024 for a second three-year performance period. Organizations that are potentially interested in participating should submit a nonbinding letter of interest to CMS by 11:59 p.m. PT on Dec. 21, 2020, through this link. Letters of interest will be used to determine the final regions in which CMS will solicit participants.

The request for applications will be made available in January 2021, and applications will be due April 2. Model participants will be selected by June 30.

Takeaway

The Geo model offers a number of the tools and flexibilities that MA plans have used to effectively manage the total cost of care. However, whereas as beneficiaries actively enroll in an MA plan, the majority of Geo DCE attributed beneficiaries will be aligned through passive methods. So the open-network design, coupled with a lack of awareness by beneficiaries of how they are aligned to a Geo DCE, will be a problem. It will also be interesting to see if CMMI allows Geo DCEs to market themselves to beneficiaries as MA plans do.

Another significant difference between the two models is the quality program. While the MA Star Rating Program is a bonus program whereby plans can earn additional (often significant) revenue for achieving high scores, quality in the Geo program is treated more like a penalty. As in the Medicare Shared Savings Program and other FFS advanced payment models, even if you exceed the quality thresholds for all measures, the best you can do is earn back the withhold. This continues to be a flaw in FFS programs that CMS and CMMI need to address, given that the quality programs really act more like an additional discount off the benchmark in CMS’s favor.

Additional details

HFMA Senior Editor Rich Daly’s article, “CMS unveils the Geographic Direct Contracting model,” provides additional details about the model.

About the Author

Chad Mulvany, FHFMA,

is director, healthcare finance policy, strategy and development, HFMA’s Washington, D.C., office.

Sign up for a free guest account and get access to five free articles every month.

Advertisements

Related Articles | Value-Based Payment

News | Medicare Payment and Reimbursement

Report by Medicare trustees describes a daunting payment picture for healthcare providers

The Medicare Hospital Insurance Trust Fund is on course to run out of money by 2026, and that assessment wasn’t the only concerning part for hospitals in a new government report.

How To | Accountable Care Organizations

4 keys to sustaining financial viability in the shift to value

A leading ACO in Texas has found a way to thrive despite systemic factors that can discourage value-based initiatives.

Blog | Value-Based Payment

Evolving approach to federal value-based payment models will emphasize equity, affordability

Leaders with CMS and the Center for Medicare & Medicaid Innovation have published a rough blueprint of the future of value-based payment at the federal level.

News | Accountable Care Organizations

ACO leaders support new bill designed to boost participation in value-based payment

Accountable care organizations stand to benefit from a new bill that would increase investment funding and make changes to federal ACO programs, several executives said.