Consumer advocates, accountable care organizations and several experts think CMS' Center for Medicare & Medicaid Innovation should delay its Geographic Direct Contracting model—dubbed "Geo"—until it resolves a number of issues that could create significant confusion among Medicare beneficiaries and operational and financial challenges for providers.
The model builds on the lessons learned from the Medicare Shared Savings Program, Next Generation ACO model, Medicare Advantage and other initiatives. It's supposed to test whether a regional approach to care delivery and value-based payment can improve health and lower costs for fee-for-service Medicare beneficiaries throughout an entire geographic region. According to a Commonwealth Fund blog post, the "model will have the effect of enrolling Medicare beneficiaries into a managed care-like plan."
"It is one of the most significant changes to the way Medicare beneficiaries receive healthcare since managed care was introduced into Medicare in the 1970s," the group said.
CMS opened its request for applications last month and will accept applications from March 1 through April 2.
But experts worry that the model is too complicated to put into practice because it would add another layer of payment and delivery reform on top of ongoing experiments like ACOs. Former CMMI official David Ault, now an attorney at Faegre Drinker Biddle & Reath, said that participants in Direct Contracting's Global and Professional tracks would have to compete against Geo entities immediately upon entering the program, which could undermine their success.
It's also unclear how the demonstration could affect traditional Medicare beneficiaries, and CMMI hasn't fully explained how it will hold the model's participants accountable.
"It seems very convoluted. Not a lot of people are going to understand it," said Jill Donovan, a principal at consulting firm Leavitt Partners. "It creates complexities that participants have had really no exposure to if they have just participated in MSSP or NextGen."
Geo participants—called "direct contracting entities"—will accept full financial risk for inpatient and outpatient care for fee-for-service Medicare beneficiaries in each region and can volunteer for one of two capitation options. In exchange, CMMI will allow them to take advantage of new ways to engage beneficiaries, offer additional benefits and manage utilization. ACOs, health systems, provider groups and health plans can take part in Geo in addition to other alternative payment models.
Donovan said the experiment aims to boost competition among providers, pointing to CMMI's plan to have three to seven direct contracting entities per region in the Geo model.
"Many providers aren't prepared for such fierce competition," she said.
Experts are worried that overlap among payment models could cause several problems for Medicare beneficiaries and providers, even though former CMS Administrator Seema Verma and CMMI boss Brad Smith said most overlap concerns would be addressed through back-end administrative fixes when the agency announced the Geo model in December.
But former CMS Chief Innovation Officer Dr. Mai Pham, now CEO of the Institute for Exceptional Care, said that while those changes might address financial reconciliation problems, they wouldn't tackle other overlap issues related to beneficiary attribution or care coordination and management. It could be challenging to determine in real time which beneficiaries are in which model—a problem that will only grow with scale.
"The vast majority of beneficiaries will have no idea what a Geographic DCE is and what mandatory beneficiary participation will mean for their care and existing provider relationships. While we appreciate that beneficiaries will retain their choice of provider … their assignment to a Geographic DCE with which they have had no past relationship will invite considerable confusion and unnecessary complexity," the National Association of ACOs said in a letter last December. "There is the potential for duplicative care or competing care management programs from a Geographic DCE and the providers the patient sees, who may or may not be participating with the Geographic DCE."
For example, a hospitalized beneficiary assigned to an ACO could be discharged early to a specific skilled-nursing facility during the first quarter of the year. But they might have to go to a different skilled-nursing facility later in the year if CMS reassigns them to the Geo entity.
That could make it difficult for providers or value-based entities to explain the changes to their patients and beneficiaries. And beneficiaries might be upset if they don't know who is responsible for their care or why or how it affects the treatment they receive.
"It's hard enough to understand any Medicare explanation of benefits if you are a normal person, and that's written in a book," Pham said. It's even worse if things happen "willy-nilly throughout the year."
Pham said the degree to which overlap could cause problems would depend on which markets CMS chooses to participate in the model, given that each market has different levels of Medicare Advantage and ACO penetration, as well as other value-based entities and arrangements. She worried Geo might not be scalable if "it only works in places where there are no ACOs."
"I think the industry doesn't fully appreciate the degree to which this model was tailored to specific markets and entities. It's really not an option for the vast majority of existing ACOs," Pham said.
Experts said it makes sense for CMMI to test whether—like Medicare Advantage plans—ACOs can use beneficiary engagement, utilization management strategies and additional benefits to influence quality and costs. But several of them thought it would make more sense to test the new features under Direct Contracting's global and professional tracks rather than create a third track in Geo.
CMMI had argued that Geo entities should get more flexibility because they're taking on more risk than ACOs. Pham said that was CMMI's judgment call and "not a natural law."
Most experts thought Geo could appeal to new participants and existing ACOs. But Dr. Joshua Liao, medical director of payment strategy for UW Medicine in Washington state, said the Geo model's sizable minimum beneficiary and financial capital requirements signal that the model might be aimed at new participants, especially health plans.
"One of the things that stood out to me (is) being able to reduce cost-sharing and essentially create de facto preferred provider networks," he said. "That type of activity seems really well aligned with entities such as health plans."
Liao said health plans and providers with health plans might have the edge over ACOs because they have more experience with utilization management and beneficiary engagement tools, making them more likely to know what strategies are likely to be effective.
CMS clarified in its request for applications that organizations can operate Geo entities in multiple regions if they submit separate applications for each of them.
"This could be an attractive option for some national payers with MA plans in multiple eligible regions (e.g., Humana, UHC, Aetna, etc.)," Leavitt Partners' Donovan said in an email. "For dominant and advanced providers and payers, Geo could present an opportunity to take an even larger foothold in the market and develop more strategic partnerships."
Consumer and provider groups are also concerned that CMMI won't provide enough oversight or accountability for direct contracting entities. A letter to the agency co-signed by seven advocacy organizations noted that, unlike Medicare Advantage plans, direct contracting entities wouldn't have to report encounter data or be subject to the medical-loss ratio. There are also a number of outstanding concerns related to beneficiary choice, education, marketing and equity. And it's unclear how the demo will interact with Medigap plans and other wraparound coverage.
The Biden administration hasn't hinted what, if anything, it plans to do about the Trump-era Geo model. Experts said the rule could be delayed or withdrawn in the wake of the COVID-19 pandemic since very few providers have had the resources to do the long-term strategic planning required to implement it. But career staff have put a lot of time and effort into getting the model off the ground, and there's no sign that CMS will reverse course without a permanent leader in place. A CMS spokesperson said in an email that the agency would make public any decisions regarding the Geo model.
"I'm absolutely fascinated to see if this model will take off," Donovan said. "When it was first announced last spring, we were scratching our heads saying, 'I don't know if this is going to work.' "
