Until recently, the CMS Medicare Shared Savings Program and the Next Generation ACO Model were the best options for risk-sharing. Now, the introduction of the Global and Professional Direct Contracting (GPDC) Model provides a new direction and creates opportunities to take on a broader sense of risk. Now that the sun is setting on the Next Generation ACO Model, direct contracting (DC) seems to be the most natural path for organizations that are already working to improve or enable value-based care (VBC).
While the GPDC model is a promising value-based purchasing option, it also comes with the risk of downside exposure. To capture the same amount of risk that served as guard rails for VBC, providers must now take on additional administrative responsibilities. This new model brings many new unknowns that might make the model slow to generate ROI in the beginning.
Providers need to start building new skills to manage these administrative responsibilities and understand how to get the most out of their quality metrics. Additionally, most risk-bearing entities don’t have experience with downstream contracting, so they’ll have to learn more in order to keep costs down.
The DC model enables more favorable revenue-sharing profiles than previous models, and CMMI is committed to expanding this model. In light of the pandemic, the model assumes even more importance as it opens enhanced revenue streams for providers over the next several years. However, to use the model to its full potential, providers need to develop several new capabilities.
In general, specialists have been more difficult to bring into VBC models than primary care physicians. Participating providers must be able to negotiate with specialists and provider entities outside their own network and convey why VBC is a more beneficial model. But DC lays out a way to get specialists involved.
DC models have the potential to increase the number of patients that specialists see by assigning certain specialists to preferred networks, reducing network leakage. The specialists hold their end of the bargain by taking a reduced fee-for-service (FFS) rate than the typical Medicare allowable amount.
To succeed in DC models, providers need to convince downstream entities that DC can drive up the overall volume of patients in exchange for a more aligned FFS rate. This could also mean engaging specialists in a shared savings program to generate interest in VBC models.
These negotiations are brand new, so providers may struggle to model their total cost of care or determine what the FFS rate should be for downstream specialists. Typically, groups have teams or individuals that negotiate with payers, but now they’ll need a similar resource pool to harbor downstream provider contracts. To determine appropriate care costs at scale, providers need to bring in experienced personnel or vendors.
Understanding ways to align with downstream providers is just one step toward optimizing DC models. Providers also need to ensure that the contracted downstream providers are appealing to members. Large downstream networks are only effective when participating or preferred providers can deliver quality results.
Properly contracting the total cost of care or capitation rate takes 6 to 9 months. But many groups have implemented the model without that kind of lead time to build successful partnerships. On the other hand, some had the lead time but haven’t proactively engaged in downstream contracting. This could mean they’re not leveraging the reduced FFS rate for specialist engagement.
The DC model also offers organizations an opportunity to adjust benchmarks according to risk scores. Payments may be calculated differently than in other models, but risk scoring in DC models is specific, resulting in more accurate payments than in previous models.
There is a delicate balance between accurate calculation of the cost of care and the appropriation of revenue, i.e. risk score decides the cost payable to the provider and it will be higher in case of high risk score of the patients. As a result, organizations need to capture codes for the current, past, and potential conditions of their patients. Providers must think beyond information aggregation in their own health ecosystem to capture suspected conditions of a disease state.
Many provider groups are prepared to take on downside risks. But to effectively manage risk, they need to align their patients with the process as well.
By participating in this model, groups can potentially increase their membership. However, it’s important for providers to identify and understand which is the subset of new patients in this bonus of attribution that needs to be brought in. Providers have the least amount of information on their newest patients. Many of these newly attributed patients may be high-risk, but their annual wellness visit may not be scheduled until months later, which can increase their risk—and the cost of their care—even more.
Health plans have succeeded with open enrollment, but providers have not had the same results. Providers need to customize their engagement programs to empower, educate, and influence their members. CMS is also providing DCEs additional tools, such as dental vouchers, wellness memberships, and phone apps to engage beneficiaries. When patients are engaged in their care journey, providers can drive voluntary alignment of members with the process
The introduction of the DC model is part of a broader trend that is forcing providers to take on more risk. Just as Medicare Advantage companies have moved toward capitated agreements to ensure discounts and other benefits, we’re expecting to see a similar trend in the value-based care space.
With total capitation or total cost of care models, providers are responsible for efficiently managing funds. But it also allows those closest to care delivery sites to negotiate agreements with in-network and out-of-network specialists alike.
As the first set of entities participating in this model navigate the ins and outs of the quality system, the onus of generating a buy-in from more provider groups lies with CMS. Providers need a degree of clarity on the metrics and CMS needs to understand and convey how the model can scale efficiently as new entrants come in.
Cash flow access is a key benefit of the DC model. This will allow providers (typically existing health care delivery organizations or newly organized physician aggregators) to indulge in downstream contracting with preferred providers. As a result, entirely new levels of innovative relationships can be developed to align clinical and financial outcomes in the new VBC arena.
The model not only allows but encourages entities to form true partnerships with groups that provide services such as remote patient monitoring. This approach makes access to technological support much more seamless and easier for risk-bearing entities.
The DC model provides the opportunity for downstream organizations to enter a model that emphasizes beneficiary engagement and improved patient outcomes. This is beneficial for those entities that have traditionally not been embedded with prior CMMI models or those organizations already on a VBC journey who wish to increase their risk profile.
While the benefits are abundant, most entities are waiting on the sidelines for pioneers to dive in and start defining the way forward. There are many unknowns that hold the key to success in this model. While those unknowns become known, our advice to value-based providers is to either form formal partnerships with assigned direct contracting entities or use the wait-and-watch time (till the next enrollment opens) to prepare for success.