On December 3, 2020, CMS unveiled a new payment and care delivery model, the Geographic Direct Contracting Model (Model). The Model is a geographic-based approach to value-based care aimed at improving the quality of care and reducing costs for Medicare beneficiaries across an entire geographic region. This new experimental program advances Medicare’s shift towards value-based care.

The Model will enable Direct Contracting Entities (DCEs) to build integrated relationships with healthcare providers and community organizations in a region to better coordinate care and address the clinical and social needs of Medicare beneficiaries. DCEs will take responsibility for the total cost of care for Medicare Fee for Service (FFS) beneficiaries in a specific region and implement region wide care delivery and value-based payment systems with the goal of improving care. DCEs–which may include sophisticated Accountable Care Organizations (ACOs), health systems, healthcare provider groups, and health plans–will have the flexibility to utilize a variety of tools to achieve their goals. In addition to beneficiaries keeping all of their original Medicare benefits, DCEs will also have the option to offer a variety of beneficiary engagement incentives, including but not limited to:

  • Vouchers for over-the-counter medications,
  • Transportation vouchers for healthcare visits,
  • Wellness program memberships, seminars, and classes,
  • Vouchers for those with malnutrition to access meal programs,
  • Up to $75 in gift cards annually for adhering to disease management programs,
  • Vouchers for vision and dental care services,
  • Home air filtering systems for asthma patients, and
  • Rail installations for patients who have a high risk of falls.

Beneficiaries will not be able to opt-out of the new Model, but they will have the option to select a DCE in their region at the start of each performance period, as well as to change DCEs either quarterly or annually. If they do not select a DCE, they will be randomly assigned to one.

The Model will run for six years, split into two three-year performance periods. The first performance period will take applications in 2021 and run from January 1, 2022 through December 31, 2024. The second performance period will take applications in 2024 and run from January 1, 2025 through December 31, 2027.

CMS has already announced a Letter of Interest (LOI) to organizations interested in serving as DCEs to indicate and rank the 15 candidate regions for the Model. These LOIs are due by December 21, 2020. The 15 candidate regions include: Atlanta; Dallas; Denver; Detroit; Houston; Los Angeles; Miami; Minneapolis; Orlando; Phoenix; Philadelphia; Pittsburgh; Riverside, Calif.; San Diego; and Tampa, Fla.

Under the Model, providers interested in signing up with a DCE as a “Geo Preferred Provider” may be paid through capitation, sub-capitation, quality bonuses, shared savings, or in any other arrangement agreed to between the DCE and Geo Preferred Provider. Moreover, Geo Preferred Providers may qualify for an APM Incentive Payment under the Quality Payment Program. Providers may also sign up with more than one DCE in their region. DCE and Geo Preferred Provider agreements may be added as amendments to any existing contracts that already exist between DCEs and DC Preferred Providers, such as contracts that exist for the purposes of ACO or Medicare Advantage programs. Healthcare providers that choose not to enter into an arrangement with a DCE will continue to be reimbursed at 100% Medicare FFS rates.

CMS intends for the Model to improve the quality of care and lower costs for Medicare beneficiaries across an entire region and shift providers from fee-for-service payments towards value-based payment arrangements. The CMS Fact Sheet with additional information on the Model is available here. A copy of the CMS press release and LOI is available here.