Last April, the Centers for Medicare and Medicaid Services (CMS) introduced several new payment models designed to help transform primary care by reimbursing providers for health outcomes rather than managed services. As policymakers increasingly encourage new value-based alternatives to the fee-for-service status quo, one of the models that has emerged is direct contracting—which allows a broad range of health care organizations (known as “direct contracting”) Contracting Entity” or “DCE”) works directly with traditional fee-for-service health insurance. Participating providers receive stable monthly payments, reducing administrative burdens and providing additional benefits for patients.
Now, direct contracting is at a critical juncture as CMS and the Biden administration consider the future of the model, with the agency saying a decision will be made “soon.” While we can’t pretend that direct contracts will solve all of our problems, it does provide considerations for direct primary care (DPC) practices through which physicians can operate outside of today’s insurance-based payment models. That’s because one of the biggest deciding factors for those transitioning to DPC is how they handle their relationship with Medicare, as many long-term patients are now or soon will be covered by traditional Medicare. There are several different reasons why DPC practices that want to support Medicare patients are looking closely at direct contract programs.
- Stable payments, allocated monthly to your aligned patients
Similar to membership fees, providers can charge a monthly fee for the traditional Medicare patients they care for, and the patient continues to define their provider relationship. As such, providers are incentivized to prioritize high-quality care and patient satisfaction over quantity. Payments vary by region and are related to historical panel utilization.
- Consistent incentive model
Providers gain shared savings by reducing the total cost of care compared to the baseline. This means providers can directly share in the value they create for Medicare patients without relying on private health plans or needing to jump through additional hurdles to participate. Suppliers can often choose whether to also take downside risk in exchange for a higher percentage of shared savings.
- Increase Voluntary Patient Alignment
Patients can fill out a form specifying their PCP. This eliminates the back-and-forth trying to figure out attribution through claims and allows providers to focus on managing their entire Medicare team.
- Supplemental patient benefits to align beneficiaries
When participating in DCE, patients receive additional benefits beyond their regular health insurance. These may be similar to the benefits they get from a Medicare Advantage plan — such as dental vouchers, reduced cost-sharing, transportation or health benefits.
- Reduce administrative workload
Quality measures for direct contract programs are based on utilization of patient experience surveys and claims measures (such as reduced admissions) rather than complex data submissions. Quality depends on patient outcomes, not just what is recorded in the chart. When combined with no prior authorization on an open access network, this will significantly reduce the administrative effort required to serve Medicare patients.
- Localized preferred network – while maintaining open access
There are no referral requirements, but patients are encouraged to follow the care plan established by their PCP. While DCE encourages patients to see a doctor-recommended specialist, if they choose to go elsewhere, there will be no more administrative hassles or unexpected charges. This reverses the pain of the HMO model, which requires prior authorization and often results in unexpected charges if a patient leaves the network.
The future of direct contracting and DPC
The Direct Contracting model is still new, and discussions about its way forward are intense, but it is encouraging that policymakers embrace some of the same principles that the DPC community knows are important, including “value over volume” and PCP empowerment. A direct contract could allow participation in Medicare’s fee-for-service hybrid DPC practice to shift Medicare payments to a fully capitation model. For practices that are already fully DPC, they can now consider a more DPC-compliant model than ever to welcome Medicare patients.
Regardless of how this policy continues to evolve, CMS must recognize the meteoric rise of physicians turning to DPCs to escape fee-for-service physicians, and continue to create avenues for these practices to share the rewards of delivering better care outcomes for patients. their patients.
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