In late April, CMS introduced five new value-based payment model options that aim to transform primary care and shift providers to take risk on the cost of care for their patients. Providers are increasingly recognizing the need to make the shift to keep up their incomes but want to approach risk responsibly. CMS is continuing to create innovative ways to transition from fee-for-service to fee-for-value.
The Monday, April 22 announcement introduced Primary Care First and Direct Contracting. Both build on previous CMS models that promote quality care, cost savings, and primary care transformation. These models use full or partially capitated payments to encourage risk, allow patients to voluntarily align with a primary care provider, and will feature streamlined quality measures to reduce burden on providers.
Caravan Health applauds CMS for creating and investigating these new arrangements through the Innovation Center. Because most organizations will need to wait for these models to develop, iterate, and improve before taking on the risk required, we expect that most community health systems will continue to prefer the Medicare Shared Savings Program options – and its years-long track record – as the more stable option for the next three to five years.
The New Models
Primary Care First is a set of two voluntary model options that builds on the Comprehensive Primary Care Plus program. In Primary Care First, a primary care practice would receive a monthly prospective capitated payment for each patient and a flat fee for each face-to-face visit. In addition to this regular monthly revenue, the practice can earn a performance-based adjustment of up to 50% of revenue for meeting certain quality standards. If the practice fails to meet the quality standards, 10% of practice revenue is at risk.
A practice with 70% of revenue from primary care can participate in Primary Care First either for a general population, a high needs population, or both. For a high needs population, referred to as a Seriously Ill Population (SIP) the payments and quality standards will reflect the complex health needs of the patient base.
Direct Contracting is a set of three voluntary model options in which direct contracting entities (DCEs), which can be providers, payers, or other organizations, enter into full or partial capitated population-based payment (PBP) arrangements to implement enhanced primary care and take risk on the health care costs of a defined population. These model options build on some principles of the Next Generation ACO Program.
There are three Direct Contracting model options:
Professional PBP is the lowest risk option. The DCE can have a minimum of 5,000 Medicare attributed lives with 50% shared savings or losses. The DCE will be paid through Primary Care Capitation equal to 7% Total Cost of Care for enhanced primary care services.
Global PBP is a higher risk option. As with Professional, the DCE can have a minimum of 5,000 attributed Medicare lives, but takes 100% risk on the cost of care. Global participants will have a choice between Primary Care Capitation (same as Professional) or Total Care Capitation for all services.
Geographic PBP is the highest risk option with the most innovative model design. This option is still under development with CMS accepting responses to a request for information (RFI) until May 23, 2019. A Geographic DCE would be responsible for 100% of the cost of care for all Medicare FFS beneficiaries in defined geographic area. The target region must have at least 75,000 Medicare lives. CMS plans to select at least two DCEs in each target region to promote competition. DCEs would have a choice between taking full financial risk with CMS processing FFS claims or Total Care Capitation.
Key Elements of Primary Care First and Direct Contracting Model Options
Providers should keep an eye on a couple of factors as they consider these new options:
How do these models fit into my plans?
The new models are intended to push providers toward more risk while encouraging enhanced primary care. Providers in Shared Savings Programs ACOs are already on a path to two-sided risk through the Pathways to Success Program. Primary care practices already in an ACO may also join Primary Care First if they meet the requirements. They should keep an eye out for the request for application coming in the next couple of months.
There are deadlines coming soon for all of these options. For Primary Care First, CMS expects to seek applications this Spring for a 2020 start. For Direct Contracting Professional and Global, interested contractors will be asked to submit a letter of interest to CMS soon, followed by a full application. The Direct Contracting - Geographic RFI has a deadline for responses of May 23, 2019 for responses to the. CMS will request a letter of intent or a complete application in the next few months. For the Direct Contracting Geographic option, responses to an RFI can be submitted now up until May 23, and CMS expects to take applications in Fall 2019.
Though the recent models are voluntary, CMS is expanding the menu of models to get even more providers into payment reform. In recent remarks, Administrator Verma stated that CMS may introduce mandatory models to counter the effects of self-selection. There are no announced plans and no specifics quite yet, but we will be watching closely to see what direction is next.