Medicare Direct Contracting program is a unique opportunity for existing Medicare Shared Savings Program (MSSP) accountable care organizations (ACOs), NextGen ACOs, organizations that have experience serving Medicare fee-for-service (FFS) patients, and even organizations with limited Medicare FFS experience that wish to grow their market share.
The primary goals of Medicare Direct Contracting include:
- Transform to risk-sharing arrangements in Medicare FFS
- Empower beneficiaries through provider choice
- Reduce health care provider (HCP) administrative burden
Provider groups have the option to choose the type of Direct Contracting Entity (DCE) they wish to join based on their experience managing Medicare FFS populations, their existing Medicare FFS patient population, and the level of risk they are willing to assume. Entities can choose among the following DCEs:
- Standard DCE: Organizations that have at least 5,000 attributed Medicare FFS beneficiaries and are composed of existing Medicare FFS providers and suppliers
- High Needs Population DCE: Organizations with a significant beneficiary population and business focused on Medicare, dual-eligible beneficiaries, and other high-cost, complex members
- New Entity DCE: Organizations with limited exposure providing services to a Medicare FFS population but have the ability to grow membership over time
The Medicare Direct Contracting program creates new opportunities for organizations to realize Medicare savings and enhance quality of care through risk-sharing arrangements and primary care redesign. Therefore, it is important for physician groups to understand how their current patient population and payer mix align to the appropriate Medicare Direct Contracting Entity options and level of risk sharing.
What is the Opportunity in Medicare Direct Contracting?
In considering whether to serve an as independent DCE versus joining a larger DCE network, provider groups should consider their size and ability to take on the financial risk associated with Direct Contracting in order to be successful in this value-based model.
A key opportunity for participation in Medicare Direct Contracting is the focus on improving quality and reducing cost, while preserving patient choice. The voluntary alignment of Medicare FFS beneficiaries to participating providers is a key feature under Direct Contracting and empowers patients to seek care with providers with whom they want to build a relationship. The opportunity for providers to outreach to Medicare FFS beneficiaries encourages patient engagement and allows for network expansion. Physician groups can leverage this benefit to grow their practice and invest in new benefit features that will support or enhance population health management initiatives to improve care.
For practices with significant Medicare experience and high-risk patient volumes, the capitated payment model will allow for greater flexibility in how practices deliver care by moving more members under risk, so the financial structure is more similar with Medicare Advantage. These practices can be critical for network enhancement of a larger DCE because of their contribution to the regional benchmark, broadening the DCE’s footprint. Having a diverse provider network will be beneficial to a DCE’s success as network contracts can incorporate upward and downward adjustments that provide enough financial reward for groups that perform more efficiently relative to their region while also mitigating losses for DCEs that drive higher costs compared to their region–thus encouraging participation and improved high performance.
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