Tag Archives: direct contracting model

How has COVID-19 affected physician interest in Direct Contracting?

COVID-19 has had a financially debilitating effect on many medical practices. Some practices are not expected to survive. The impact has been felt by physicians as well as other healthcare entities and led to severe declines in fee-for-service revenue. The pandemic also caused the Center for Medicare and Medicaid Innovation to make adjustments to its Direct Contracting (DC) program. DC adjustments include adding a second cohort that begins January 2022, providing a capitation payment glide path, and increasing physician capitation choices. 

These changes create an opportunity for organizations considering becoming Direct Contracting Entities (DCEs) to attract physicians who may not have been interested in the program previously. The application window for the second cohort of DCEs opens in March 2021. In this brief, Milliman’s Coleen YoungHugh Larson, and Annie Man discuss DC and the impact of COVID-19 on physicians. 

Comparing Direct Contracting to MSSP ACO and Next Generation ACO programs

Last year, the U.S. Department of Health and Human Services announced a new payment model called Direct Contracting for entities that want to take on risk for fee-for-service (FFS) Medicare beneficiary expenditures. This program built upon existing Centers for Medicare and Medicaid Services (CMS) efforts to reduce healthcare expenditures while attempting to improve the quality of care for FFS Medicare beneficiaries. Although Direct Contracting is designed to appeal to a wide range of entities (including those that have not previously participated in risk programs with CMS) many current Medicare Shared Savings Program (MSSP) and Next Generation accountable care organizations (ACOs) are naturally going to want to understand the potential pros and cons of this program, and how it compares to their current ACO risk-sharing structures.

In this paper, Milliman’s Colleen Norris, Brent Jensen, and Dustin Grzeskowiak provide an in-depth technical evaluation of Direct Contracting, based on the CMS request for applications, along with comparisons to its sister programs MSSP and Next Generation ACO.

Direct Contracting and MSSP financial benchmark comparison

In November 2019, the Centers for Medicare and Medicaid Services (CMS) released the request for applications (RFA) for the Direct Contracting (DC) model’s Professional and Global options. The RFA contains a significant amount of important information for program participants. This new payment model gives participating provider organizations two options for risk-sharing arrangements as well as the opportunity to receive a prospectively determined, more predictable revenue stream. Applications for the first program year are due to the Center for Medicare and Medicaid Innovation by May 1, 2020.

The DC payment model options are conceptually similar to the other CMS accountable care organization (ACO) options, the Medicare Shared Savings Program (MSSP), and the Next Generation ACO model. Participants take on risk and earn potential rewards based on the efficiency and quality of care for aligned beneficiaries.

This paper by Milliman’s Matt Kramer, Erica Reijula, and Sam Shellabarger compares and contrasts the financial benchmark methodology between DC and MSSP.