Physicians groups can apply for new Medicare direct contracting model

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Crystal Yednak Senior Manager, Health Research Institute, PwC US December 06, 2019


Physicians groups have until Feb. 25 to apply for the implementation period of a new direct contracting model, part of CMS’ effort to encourage value-based care arrangements. The model is aimed at new entrants and organizations that might not have been eligible for Next Generation Accountable Care Organization models or the Medicare Shared Savings Program, either because they did not treat the minimum number of Medicare fee-for-service patients or for other reasons. For organizations concerned about the end of the Next Generation Accountable Care Organization option in 2020, this payment model presents an alternative.

Organizations can apply for the lower-risk professional option, in which shared savings and losses are split 50 percent and the primary care capitation payment equals 7 percent of the total cost of care benchmark for enhanced primary care services. In the full-risk global option, savings and losses are shared 100 percent, and entities receive either the primary care capitation payment or a total care capitated payment, a risk-adjusted monthly payment for all services.

Entities will be measured against quality targets to make sure they are meeting the goal to improve quality of care for Medicare beneficiaries, and will also see 5 percent of each performance year benchmark withheld contingent on the organization’s performance. Those that improve each year have the opportunity to earn higher levels.

The model will be tested over six years, with the implementation period starting in 2020. The application for organizations interested in starting in performance year 1 is expected to open in the spring. Letters of intent required for both phases are due Dec. 10.

HRI impact analysis

This model is in line with the Trump administration’s push toward value-based care, which it hopes will reduce healthcare spending and improve outcomes, and represents one area of overlap between this administration and the Obama administration.

Industry groups that have been involved in similar payment models applauded the move. “Risk-sharing arrangements properly incentivize physicians to provide high-value, high-quality healthcare to the patients and communities they serve,” said Don Crane, president and CEO of America’s Physician Groups, in a statement for the association that represents 300 medical groups and practices operating in capitated, coordinated care models. “We look forward to continuing to work with [HHS] to put more tools in the toolbox to help physicians who are moving from volume to value.”

For their part, participants stand to see less administrative burden but will bear more responsibility for the quality and efficiency of their care delivery. With enhanced primary care payments, the model presents opportunities for providers to change care delivery in ways they may see as a better fit for patients, such as spending more time with patients with chronic conditions or providing more coordinated care. 

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Ben Comer

Senior Manager, Health Research Institute, PwC US

Crystal Yednak

Senior Manager, Health Research Institute, PwC US

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