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Last week, the Centers for Medicare & Medicaid Services (CMS) released a Request for Application (RFA) for entities interested in applying for CMS’ new Direct Contracting model, a payment model aimed at reducing expenditures and preserving or enhancing quality of care for Medicare fee-for-service (FFS) beneficiaries. Although interested parties were originally required to submit a non-binding Letter of Intent (LOI) last year, CMS has extended the LOI submission deadline to December 10, 2019. Accordingly, all entities interested in submitting an RFA must submit an LOI by the December 10 deadline to remain eligible to apply for participation in one of the Direct Contracting models.

The payment options available under the Direct Contracting model create opportunities for a broad range of organizations to participate with CMS in testing the next evolution of risk-sharing arrangements to produce value and achieve high quality healthcare. Direct contracting creates opportunities for participants to assume risk and earn rewards, and provides participants with choices related to cash flow, beneficiary alignment, and benefit enhancements.

Background

Earlier this year, CMS announced the CMS Primary Cares Initiative, a new program that will transform primary care to deliver better value for patients. Administered through the CMS Innovation Center, the CMS Primary Cares Initiative will provide primary care physician practices and other providers with five new payment model options under two paths: Primary Care First and Direct Contracting. Direct Contracting is a set of three voluntary payment model options (Professional, Global and Geographic) aimed at reducing expenditures and preserving or enhancing quality of care for Medicare FFS beneficiaries. CMS is still finalizing the Geographic option, so the current RFA applies only to the Professional and Global options.

Current Application Options

Direct Contracting creates opportunities for a broad range of healthcare organizations, including physician practices, to enter the value-based space. Applications are currently open for the Professional and Global payment options.

Professional Direct Contracting Option

Professional Direct Contracting Entities (DCEs) will bear risk for 50 percent of shared savings/shared losses on the total cost of care for aligned beneficiaries. Professional DCEs will receive Primary Care Capitation, a capitated, risk-adjusted monthly payment for enhanced primary care services equal to 7 percent of the total cost of care for enhanced primary care services.

Global Direct Contracting Option

Global DCEs will bear risk for 100 percent of shared savings/shared losses on the total cost of care for aligned beneficiaries. The Global option will provide DCEs with two payment options: (i) Primary Care Capitation (described above), or (ii) Total Care Capitation. Total Care Capitation refers to a capitated, risk-adjusted monthly payment for all services provided by Direct Contracting model participants and preferred providers with whom the DCE has an agreement.

Benefits of Direct Contracting

The payment options available under the Direct Contracting model aim to align financial incentives, provide prospectively-determined and predictable revenue streams for participants, and place greater emphasis on beneficiary choice. Benefits include the following:

  1. Reducing provider administrative burdens by implementing a smaller set of quality measures and waivers to facilitate care delivery;
  2. Refining quality measures that focus on outcomes and beneficiary experience;
  3. Offering both capitated and partially capitated population-based payments that move away from traditional FFS. With 50 percent or 100 percent capitation, participants can choose the program that best meets their capabilities to manage Medicare beneficiaries; and
  4. Expanding participation in CMS Innovation Center Models to organizations that have not typically participated in Medicare FFS or CMS Innovation Center models.

Participant Selection

CMS is requesting an LOI from organizations interested in participating in either the Professional or Global Direct Contracting payment model options. While submitting this LOI is required in order to respond to the RFA, an LOI will not bind an interested organization to participate. However, failure to submit an LOI by the December 10, 2019 deadline will disqualify the organization from submitting an application during the initial application period.

Key Deadlines

There are two RFA submission periods. The first is for applicants interested in participating during the Implementation Period, and the second is for applicants interested in participating during the First Performance Year. The Implementation Period will serve as a “trial run” for DCEs by providing participating DCEs with additional time to engage in beneficiary alignment activities and plan their care coordination and management strategies prior to the first official performance year. The deadline to submit an RFA for participation in the Implementation Period is February 25, 2020. The application for organizations interested in participating in the First Performance Year will open in Spring 2020.