In April 2019, federal health care officials unveiled a new direct-contracting payment model to accelerate the shift toward value-based care for U.S. primary care providers.

The goal of that model — which has 51 entities already signed up — was to bring a private-sector approach to risk-sharing arrangements in traditional Medicare.

The U.S. Centers for Medicare & Medicaid Services (CMS) — along with the Center for Medicare & Medicaid Innovation (CMMI) — is now adding to its direct-contracting portfolio while also shining a light on home care.

CMS announced on Thursday that it’s launching the “Geographic Direct-Contracting Model,” another new, voluntary direct-contracting pathway designed to pay health care providers for the quality of their care and ability to cut costs.

The launch shouldn’t come as a surprise to those who have been listening to CMS Administrator Seema Verma or CMMI Director Brad Smith over the past couple of months. Even with immediate coronavirus-related challenges within the health care system, both underscored the government’s commitment to value-based care during an October virtual presentation. 

“The Geographic Direct-Contracting Model is part of the Innovation Center’s suite of Direct-Contracting models and is one of the Center’s largest bets to date on value-based care,” Smith said in a statement from Thursday’s announcement. “The model offers participants enhanced flexibilities and tools to improve care for Medicare beneficiaries across an entire region while giving beneficiaries enhanced benefits and the possibility of lower out-of-pocket costs.”

By initially testing the new direct-contracting model in a small number of geographies, CMS and CMMI will be able to thoughtfully learn how emerging flexibilities are able to impact quality and costs, he added.

Under the model, participants will take upside and downside responsibility for Medicare beneficiaries’ health outcomes, giving them a direct incentive to improve care in their given markets.

Within each geographic region, participants with experience in risk-sharing arrangements and population health will partner with health care providers and community organizations to better coordinate care.

“The need to strengthen the Medicare program by moving to a system that aligns financial incentives to pay for keeping people healthy has long been a priority,” Verma said in a statement. “This model allows participating entities to build integrated relationships with health care providers and invest in population health in a region to better coordinate care, improve quality and lower the cost of care for Medicare beneficiaries in a community.”

Medicare beneficiaries in the model will remain in traditional Medicare, maintaining all of their benefits and coverage rights.

Organizations that participate in the new Geographic Direct-Contracting Model may create “a network of preferred providers, armed with the model’s enhanced flexibilities to provide the right care for beneficiaries at a lower cost,” according to CMS. That will certainly include home-based care businesses, many of which go by the mantra of delivering “the right level of care at the right time.”

Additionally, participants and preferred providers may choose to enter into alternative payment arrangements, including prospective capitation and other value-based arrangements.

In other words, home-based care providers may have a new runway to take off into value-based care.

“Beneficiaries may also receive enhanced benefits, including additional telehealth services, easier access to home care, access to skilled nursing care without having to stay in a hospital for three days, and concurrent hospice and curative care,” CMS noted in its announcement.

The Geographic Direct Contracting Model will have two three-year performance periods.

The first performance period will take applications in 2021 and have a performance period from Jan. 1, 2022, through Dec. 31, 2024. The second performance period will take applications in 2024 and have a performance period from Jan. 1, 2025, through December 31, 2027.

CMMI expects to release a request for applications for the first performance period in January.

The agency has already identified 15 “candidate regions” for the new model, each of which contains between roughly 150,000 to 700,00 Medicare beneficiaries. Those regions include major metropolitan such as Philadelphia and Pittsburgh in the eastern to U.S., to San Diego and Los Angeles in the West.

More information on the new model is available here.

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