The pilot will allow providers that deliver evaluation and management services to take on financial risk for original, fee-for-service Medicare patients in exchange for less federal oversight and the opportunity to earn financial rewards. Under the new model, a wide range of organizations can volunteer to accept full or partial risk for managing the care of beneficiaries of traditional Medicare.
The new approach could help providers who couldn't participate in the Medicare Shared Savings Program or the Next Gen Accountable Care Organization model because they didn't meet the requirements. By lowering the number of patients required to participate, the agency hopes more providers will volunteer. Next Gen ACO participants can move into the direct contracting model after the current model sunsets in 2020. The agency hopes that direct contracting will better align payer-provider incentives and create a predictable revenue stream for participating providers.
Direct contracting has support from industry stakeholders.
"This is yet another step by (the Center for Medicare and Medicaid Innovation) in affirming its commitment to ensuring that patients have access to the high-quality, accountable and coordinated care physician groups have been providing for decades," said Don Crane, president and CEO of America's Physicians Group.
"Premier is encouraged by the release of the direct contracting model," said Blair Childs, senior vice president of public affairs for Premier. "We look forward to working with our members to implement this model, which could offer providers an offramp from the fee-for-service treadmill."
The Trump administration is leaning heavily on value-based arrangements to control healthcare spending without sacrificing the quality of care. But the uptake has been slow because doctors and hospitals seem to prefer the financial incentives of the traditional fee-for-service model, which reimburses them based on what they do instead of holding them accountable for patient outcomes.
The CMS is considering a third option for direct contracting. It would allow larger providers to accept full financial risk for "the total cost of care of all Medicare FFS beneficiaries in a defined target region." But the agency hasn't announced if or when it will move forward with the option.
Story correction: An earlier version of this story incorrectly stated that direct contracting was part of the Primary Care First model.
