CMS’s overhaul of the Direct Contracting program draws praise from supporters of value-based payment

• CMS announced it will fold its Direct Contracting program into its ACO model portfolio.
• The refreshed model will operate similarly to the expiring program but will place more emphasis on advancing health equity and encouraging provider governance.
• The change seems likely to bolster CMS’s effort to get every Medicare beneficiary into an accountable care relationship by 2030.

Value-based payment (VBP) advocates see reason for optimism in CMS’s recent decision on the future of its Direct Contracting program.

The Global and Professional Direct Contracting (GPDC) Model, which began in April 2021 and was promoted as being the most advanced of the Medicare accountable care models, will be redesigned as an ACO program with similar ambitions. The new model is called ACO Realizing Equity, Access and Community Health, or ACO REACH.

There had been apprehension in some circles that CMS and the U.S. Department of Health and Human Services would simply discard the GPDC Model — with no replacement — as a result of feedback from policymakers and stakeholders.

“What we were really concerned about was the elimination of the program,” François de Brantes, senior vice president for commercial business development with Signify Health, said in an interview. “I think it would have sent a problematic signal generally about the commitment of this administration on moving advanced alternative payment models.”

Among the criticism of the GPDC Model was that it caters too much to private equity groups and health plans as opposed to providers and that participating entities have incentives to restrict care.

CMS’s recognition of those concerns was seen in its statement that until the GPDC Model expires Dec. 31 and gives way to ACO REACH, the agency will operate the model “with more robust and real-time monitoring of quality and costs for model participants. GPDC Model participants that do not meet model requirements, such as participants that restrict medically necessary care, will face corrective action and potential termination from the model.”

Details on the new model

The ACO REACH Model will run from Jan. 1, 2023, through 2026. CMS has posted a request for applications for provider-led organizations, with applications due April 22. GPDC Model participants must agree to meet all requirements of the new model by Jan. 1 if they want to join.

Categories of ACO REACH participants mirror those in Direct Contracting. They can be ACOs with experience serving traditional Medicare beneficiaries; ACOs that traditionally have not been involved in Medicare and initially may need to rely on voluntary beneficiary alignment; and ACOs that serve populations with complex needs, including dually eligible beneficiaries.

As with the GPDC Model, participants can choose between:

• A Professional track with 50% shared savings/losses and risk-adjusted monthly payments for primary care services
• A Global track with 100% shared/savings losses and a choice between the primary care capitation option and risk-adjusted monthly payments for all covered services, including specialty care

ACOs can use waivers to offer benefit enhancements that aren’t available in Medicare fee-for-service, such as increased access to telehealth and post-discharge home visits. ACOs also can provide financial incentives such as cost-sharing support to encourage compliance with treatment plans and use of high-value services.

Addressing issues with the GPDC Model

CMS outlined three areas in which ACO REACH will be an improvement over GPDC:

1. Advancing health equity. The payment approach in ACO REACH will be designed to support care delivery and coordination for patients in underserved communities, with participants required to develop and implement a health equity plan that measurably reduces disparities among their beneficiaries. CMS noted that the Accountable Health Communities Model is the only other federal VBP model to require a health equity plan.

In addition, ACOs serving higher proportions of underserved beneficiaries will benefit from higher benchmarks.

“That’s huge because the data suggests that there isn’t enough ACO participation in those [underserved] areas, and that was in part because of the way the benchmarks had been set,” de Brantes said.

While the requirement to collect and report data on social determinants of health for all aligned beneficiaries is worthwhile, de Brantes said a key next step will be for CMS to figure out what to do with that data.

“There are still elements of the model that can’t be defined because you can’t really define equity measures until you start measuring equity,” he said. “You can’t solve for social determinants of health unless you have a baseline understanding of what the gaps might be.”

2. Promoting provider leadership and guidance. At least 75% of a participating ACO’s governing body must be composed of participating providers or their designated representatives, compared with 25% in the GPDC Model. In addition, at least two beneficiary advocates must be on the voting board, whereas GPDC didn’t require any such advocates to have voting rights.

One highlight of the new model is the way it expands the continuum of ACO participation, de Brantes said. Providers can start in the Medicare Shared Savings Program (MSSP) upside-only Basic Track, then steadily move to the MSSP Enhanced Track, then into ACO REACH.

That would have been more difficult with the GPDC Model because “the structures of the [participating] organizations were actually different than the fundamental rules that govern the structure of organizations in MSSP,” de Brantes said. “What the [CMS] Innovation Center did is realign those criteria for participation so that they’re very consistent with MSSP. And that just makes logical sense.”

If Direct Contracting simply had been phased out, he added, ACOs would have had no options to take on increasing risk after MSSP Enhanced, given that the Next Generation ACO program ended in 2021.

3. Protecting beneficiaries and the model. CMS plans to require additional information on applicants’ ownership, leadership and governing board and to implement stronger protections against inappropriate coding and risk-score growth.

Overall, “Keeping the [Direct Contracting] model with additional focus on equity, increased provider governance, improvements to risk adjustment and other changes is best moving forward,” Clif Gaus, president and CEO of the National Association of ACOs (NAACOS), which had urged HHS not to simply terminate the GPDC Model, said in a written statement.

A likely boost for accountable care

The new model, de Brantes said, likely will attract more robust participation than did the GPDC Model, which has 99 participants in Year 2. That would mark an important reversal of momentum after the number of Medicare ACOs dropped from 612 in 2018 to 518 in 2021.

“There were a lot of organizations that had deferred applying to Direct Contracting,” de Brantes said. “Those of us who’ve been around for a while know that these programs have a tendency to change. There are always course corrections, and sometimes being a ‘fast follower’ is more sensible than being the first in.”

He added that the changes should mean a net increase in the number of beneficiaries in accountable care arrangements — a step toward achieving CMS’s stated goal of getting every Medicare beneficiary into such an arrangement by 2030.

CMS also announced it is officially canceling the Geographic Direct Contracting Model, a more comprehensive version of GPDC in which contracted entities would have been responsible for the cost and quality of care provided to all Medicare beneficiaries in a geographic market. The model was announced in December 2020 but never got underway.