Center for Medicare and Medicaid Innovation (CMMI) – Health Care

Center for Medicare and Medicaid Innovation (CMMI)


The first deadline for the Trump administration’s new direct contracting value-based care payment model is right around the corner. But potential applicants are worried about key missing details.

For instance: How will they get paid?

Feb. 25 is the deadline to apply to be part of the implementation year for direct contracting. But the application period for the first performance year that starts in 2021 is three months away, and value-based care organizations are demanding the Centers for Medicare & Medicaid Services (CMS) fill in the holes in the program. During the implementation period, which runs through 2020, organizations will not have to take on any financial risk.

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Here are three major questions organizations have:

How much will we get paid?

Under direct contracting, an organization would get capitated payments from CMS. The organization would then contract with providers and dole out value-based payments. At the end of each performance year, CMS will compare actual spending by the organization against a benchmark and see whether the organization saved or lost money.  

But what that benchmark is remains a mystery.

CMS intends to put out an adjusted rate book used traditionally by Medicare Advantage (MA), which lists the rates for separate regions and dictates the capitated payment amounts for MA plans.

CMS intends to use a modified version of that rate book for the capitated payments under direct contracting.

“The rate book will tell you how much you get paid per person,” said Joshua Traylor, a director for the Health Care Transformation Task Force, which is composed of payers and providers in value-based payment arrangements.

Without the rate book, value-based care organizations can’t plug information into their own analyses and see how they would perform in the model.

“Let’s say you have a low-risk patient get $50 per patient per month, but high-risk patients $500 per person per month,” Taylor said. “You can go back to look at data and say how much high and low-risk people I have and that will see how many I can get per month.”

When will we get more information?

Value-based care provider groups are getting restless and want to know when more information will be released on the model. CMS told FierceHealthcare last month that it plans to release more information this spring. 

CMS also told interested organizations on a webinar that the rate book will be out by the end of the second quarter of this year, said Clare Pierce-Wrobel, senior director of the task force.

NAACOS said many accountable care organizations (ACOs) and provider groups will likely apply for both the Medicare Shared Savings Program and direct contracting and then make an “educated decision once they have the necessary information,” according to a letter the group sent to the Centers for Medicare & Medicaid Innovation, which is overseeing the model.

“Not providing more information upfront creates more administrative burden for providers and the agency,” the group added.

A value-based care provider group can put together the model and adjust it when more details become available. However, if the details come “too late then folks aren’t going to have time to get comfortable with the program,” said Greg Scrine, senior vice president of advisory solutions for consulting firm Lumeris.

Others questioned whether CMS would delay the implementation performance year.

Pierce-Wrobel noted that CMS pushed off the start date for the Bundled Payments for Care Improvement initiative, comprising four care models, to “allow for participants to change their participation arrangements. Considering how much is left unknown would CMS consider delaying implementation.”

Can CMS ease an administrative burden?

Direct contracting is composed of three tracks: a standard track for organizations that have experience with value-based care programs such as ACOs, a new entrant track for organizations that haven’t served Medicare fee-for-service patients and a high-need track for organizations caring for patients with complex needs.

Right now, an organization must be either in standard or high-need direct contracting and cannot blend the two.

“If you are a standard direct contracting entity and 5% of your population are high-need, and you want to get paid the high-need capitation rate for them then you need to create a separate tax ID and a separate entity and apply as high-need direct contracting entity for that 5%,” said Pierce-Wrobel.

That creates an administrative burden for organizations and can hinder efforts to coordinate care among patient populations, she added.

“The other issue is that it is not clear how CMS will identify that high-need patient,” Pierce-Wrobel said.