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Providers press Biden Administration for second chance at Direct Contracting model

The signees view the lack of a second application period as a hindrance to the move toward value-based care.

Jeff Lagasse, Associate Editor

(Photo by Sam Edwards/Getty Images)(Photo by Sam Edwards/Getty Images)

Dozens of provider groups, including America's Physician Groups, American Academy of Home Care Medicine and VillageMD, have signed onto a letter imploring the Biden Administration to open up one more chance for providers to sign up for the Direct Contracting Payment model.

In the letter to Elizabeth Fowler, deputy administrator and director of the Center for Medicare and Medicaid Innovation, providers lamented the fact that while the Centers for Medicare and Medicaid Services promised a second application period to sign up for the model, there in fact will not be one.

Last year, the innovation center created a new type of direct contracting entity that allows Medicaid managed care organizations to participate in the global and professional options of the direct contracting model. Currently, Medicaid MCOs have no incentive to coordinate care for their dually eligible beneficiaries in a way that reduces Medicare fee-for-service costs.

CMS believes that creating this incentive opportunity will help dually eligible individuals get access to a full scope of care, including primary, acute, long-term, behavioral and social care.


The model rewards providers who move away from traditional Medicare fee-for-service by providing capitated and partially capitated payments. The signees view the lack of a second application period as a hindrance to the move toward value-based care.

Many of the organizations listed expect they will not be able to participate in the program as a result, which is set to begin on January 1, 2022.

"We have worked steadfastly for over ten years since the ACA was enacted to mature the risk model and the goal that was envisioned: a capitated payment model supported by robust quality improvement measurement incentives," the groups wrote. "Direct Contracting represents that goal, and having it curtailed now will do a major disservice to the country, the providers that have worked hard to make it succeed, and to the Medicare beneficiaries that depend upon it."

The U.S. pays about twice as much per capita for healthcare as other countries who are members of the international governmental Organization for Economic Co-operation and Development (OECD), and yet receives the lowest quality care in return, the groups said. They framed the Direct Contracting Model as central to the effort to reverse these statistics.

They added that the move thwarts the efforts of many potential participants in the model, who have made substantial investments and conducted significant preparation in attempting to meet the requirements by the start date.

"The only known and proven way to improve quality and lower costs is bringing value into the delivery system and curtailing this effort is shortsighted," the groups wrote.

CMMI said there would be 53 entities participating in the first performance year of Direct Contracting, which began April 1. 


Last year, more than 12 million Americans were enrolled in both Medicare and Medicaid, according to CMS. This population is especially at risk, with 70% of dually eligible individuals having three or more chronic conditions and more than 40% having at least one mental health diagnosis.

In November, the innovation center announced that 51 provider and accountable care organizations are participating in direct contracting in the upcoming year, a number that was later amended to 53. The direct contracting entities serve beneficiaries in 39 states as well as in the District of Columbia and Puerto Rico.

Rather than opening up a second application period, Direct Contracting Entities accepted to start in 2021 may defer their participation to 2022. This means Next Generation ACOs will be forced into the Shared Savings Program next year, absent any change from CMS.

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