On November 25th, CMS announced that it is reopening the opportunity submit a Letter of Intent (LOI) to participate in its Direct Contracting: Professional and Global demonstration (through December 9th). This model allows providers that participate in Fee-for-Service (FFS) Medicare to take on a risk/reward-like Medicare Advantage (MA); however, depending on the practice geography and final benchmark methodology, its final financing arrangement and its relationship to MA is uncertain. A few considerations to be aware of are below.
The Direct Contracting: Professional and Global model (DC) is a menu of contracting options that allow for practices to take on more responsibility for care and outcomes for an attributed patient population. While there is no specific limit on what organizations can be Direct Contracting Entities (DCEs), it is likely most appealing to 1) entities that may have previously been interested or had previously participated in the Next Generation ACO or a similar model or 2) innovative primary care organizations that have had some experience taking on financial risk. This is because the risk associated with the model is substantial, with participants choosing either 50% or 100% total cost risk—although built-in risk-corridors blunt extreme financial rewards and penalties.
While potential DCEs will need to consider the ability to align members, create efficient referral relationships, and handle the cash-flows related to this model, for most DCEs the critical participation consideration will be how the expenditure benchmark will be calculated (i.e. the metric against which its savings will be measured). The benchmarks will be determined by a combination of baseline spending, regional expenditures using an adjusted Medicare Advantage Rate Book, and the risk of the aligned beneficiaries. However, exact methodological details will only become available prior to the deadline for signing the Participation Agreement (but after the LOI must be submitted). Within these details, two choices will have an outsized influence on calculated performance: how the Ratebook will be used, and how coding intensity will be limited.
First, the benchmarking methodology specifically references the MA Ratebook. The ratebook rates are not the average FFS rates, but the product of the risk-adjusted FFS rates and a county multiplier, which is up to 115% of FFS in the lowest quartile expenditure counties, plus additional increases for quality performance. If these rates are the ones used by CMMI, then DCE entities could start with a significant advantage versus average FFS in certain markets—depending on the blending of the Ratebook values versus historical spending.
Second, will be the extent to which DCE risk scores will be allowed to increase compared to historical scores. On one hand, if a DCE is not able to account for treating diagnoses not captured in previous care settings, it may struggle to show savings. Alternatively, DCEs could, instead of executing a different care model, simply increase coding intensity and show savings on paper. Other CMMI models have limited the amount an attributed population’s risk score can increase over time, but such limits have made participation in those models less popular.
Thus, for those entities still considering DCE, it may be worthwhile submitting the LOI in the event the methodology does include favorable benchmark provisions. This may be especially true for practices without previously aligned Medicare members and where the MA Ratebook is the highest relative to FFS. Given the short new window to submit, potential DCEs should act fast—supplies are running out.
Contact ZAHealth today. We have immediate availability to help you optimally position your organization and take maximum advantage of this year-end opportunity.