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Centers for Medicare and Medicaid Services announces 51 direct contracting entities

Direct contracting is the next CMMI model and is based on Next Generation, Medicare Shared Savings and Medicare Advantage plans.

The Center for Medicare and Medicaid Innovation has announced that 51 provider and accountable care organizations are participating in direct contracting, the new risk model that has evolved from Next Generation.

The implementation period, which began in October and runs through March 31, 2021, provides time for the direct contracting entities to prepare for the first performance year, which starts on April 1, 2021. Organizations need to sign up beneficiaries, build a history of claims data and establish care coordination practices before financial accountability starts in April.

The 51 direct contracting entities serve beneficiaries in 39 states as well as in the District of Columbia and Puerto Rico. 

Direct contracting is the next accountable care model from the CMS Innovation Center. To date, Next Generation has been the ACO of highest risk and reward.

The Next Generation accountable care organization model was originally scheduled to sunset at the end of this year after a five-year run. CMS gave the model an extension to the end of December 2021, after numerous organizations requested that the deadline be moved due to the challenges caused by the COVID-19 pandemic.

There will be more opportunities for organizations to join the direct contracting model, including a 2022 start date, after the Next Generation ACO model ends. Many Next Gen participants are joining the direct contracting model in 2022.


Direct contracting is a voluntary, five-year alternative payment model aimed at reducing expenditures for Medicare fee-for-service beneficiaries. 

CMMI aimed to encourage participation for a broad range of organizations and physician practices that have not typically participated in other CMMI models. 

Direct contracting builds upon lessons learned from the Medicare Shared Savings Program and the Next Generation ACO model. It also leverages innovative approaches from Medicare Advantage and private sector risk-sharing arrangements, CMS said.

Risk-sharing payment model options include the lower risk-sharing arrangement of 50% savings and losses and has primary care capitation, a capitated, risk-adjusted monthly payment for enhanced primary care services.

The global option offers the highest risk-sharing arrangement of 100% savings and losses and provides two payment options: the primary care capitation of the first option or total care capitation, which is capitated, risk-adjusted monthly payment for all services provided.

The model has three types of participants: Standard, which is composed of organizations that generally have experience serving Medicare FFS beneficiaries and may have previously participated in Next Generation, Pioneer or MSSP; new entrants; and high needs population direct contracting entities.

The latter serve Medicare FFS beneficiaries with complex needs, including dually-eligible beneficiaries.

Kevin J. Conroy, CFO and chief population health officer at CareMount Health Solutions in New York, said the physician organization has long participated in value-based programs using population health analytics and has seen much success in the Next Gen program. CareMount is staying with Next Generation for the additional year and expects to join the direct contracting model in 2022.

Direct contracting needs clarification around the benchmark when 2020 can't be considered a normal year, he said.

Last month, CMS released more information on the financial aspects of the model. 

CareMount is a physician's practice ACO that, like many providers and especially being in New York City, had to adjust while the COVID-19 pandemic surged in the area.

CareMount invested heavily in infrastructure and talent for value-based care, Conroy said. Years ago it made the decision to invest in analytics and a tech platform for in-house population health. 

"We're knee deep in the road to value," Conroy said. "We're trying to build an integrated network of providers."

More than halfway through the year, telehealth has proved to be successful. Physicians had 1,600 to 1,700 televisits a week during the height of the pandemic in New York City.

"We're back down to 95% of in-person activity," Conroy said. "Telemedicine has dropped down to 250 visits a week."


Health systems that have best weathered COVID-19 are those that have moved from fee-for-service to value, Conroy said. This is because through a capitation model there are financial arrangements regardless of utilization, whereas fee-for-service is based on utilization, with no revenue coming in during the height of the pandemic when all elective procedures were postponed.


"This initial direct contracting cohort demonstrates strong interest in this new model," NAACOS said. "These initial participants should be commended for their commitment to improving the quality of care for Medicare patients while lowering spending."

Twitter: @SusanJMorse
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