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7 Key Takeaways for Succeeding with Medicare Direct Contracting

The Centers for Medicare & Medicaid Services’ latest model for risk-based payments and care offers the potential to significantly advance clinical transformation and value for payers, providers and their patients. As we noted in the recent webinar “Medicare Direct Contracting: What Payers and Providers Need to Succeed,” Medicare Direct Contracting Entities (DCE) have a unique opportunity to capture more of the premium dollars across the care continuum for Medicare fee-for-service (FFS) beneficiaries.

It is important to note that CMS recently announced, in early April 2021, that it will not accept new applications for Medicare Direct Contracting for January 2022. CMS is however moving forward with the launch of previously accepted DCEs in April 2021 and those previously accepted DCEs that deferred their start until January 2022 will also be allowed to launch at that time.

DCEs can leverage care management and other population health capabilities and services already in place to support a larger group of patients, delivering economies of scale for their overall value-based payment strategy.

Other benefits include:

  • Enhanced cash-flow and first-dollar savings with no minimum loss rate (MLR) or minimum savings rate (MSR)
  • Development of a contracted network with updated aligned benefits for Medicare FFS beneficiaries
  • Consolidated quality metrics aligned with total cost of care reduction and beneficiary experience goals
  • Ability to reach out to beneficiaries and grow attribution
  • Ability to add supplemental benefits outside of the medical loss ratio
  • Coordinated benefits for dual-eligible members


Critical Success Factors

MDC is voluntary and beneficiaries can choose to receive care from any Medicare provider at any time. DCEs will need to ensure quality, control costs, manage referral patterns and prioritize patient engagement and satisfaction to keep care within the network, improve quality and reduce the cost trend. We asked some of our experts to share some key insights on what will be required for new DCEs to be successful.


1. Identify the best model for you

CMS is offering three models: standard, high-needs populations and new entrant. For each model, there are also two risk levels, global and professional, and two types of capitation, primary care and total care. Some considerations to keep in mind include assessment of existing population health infrastructure, financial pro forma outputs and ability to secure beneficiary attribution through contracted participating providers.


2. Leverage data and analytics

Data analytics is crucial to fact-based decisions for designing all aspects of a DCE, including financial considerations related to regional benchmarks and potential provider performance. The right data analyses can pinpoint top-performing providers, evaluate and rank other possible participants and develop a shared savings program that works for all. Those DCEs starting with lower costs versus regional benchmarks are more likely to be a success, at least early on.

The right data analytics and dashboards also enable monitoring and adjusting the program as needed. Setting up key metrics, communicating them to providers, sharing ongoing results and holding providers accountable are all crucial to staying on track.


3. Build a high performing DCE provider network

The right participant provider network is fundamental because participant providers:

  1. Drive attribution
  2. Are aligned through the DCE capitation payment model selected
  3. Participate in benefit enhancements
  4. Report on quality with responsibility for improvement of outcomes

It is important to develop a set of financial incentives, funds flow model and overall payment arrangement with participant providers that will align them with the DCE goals. Financial incentive alignment of providers with the DCE will be most successful when undertaken in alignment with a larger, overall value-based payment (VBP) arrangement strategy for all VBP attributed members for a particular provider.

Another category of providers, preferred providers, can agree to fee reduction and/or capitation and participate in benefit enhancements. However they do not drive attribution through the MDC alignment methodology and do not report on quality through the DCE.

Once you submit your annual network roster, you cannot add specialists or other providers for that year.


4. Engage participating and preferred providers

Signing up providers is only the first step. DCEs need to develop and implement ways to make it easy and beneficial for providers to stay engaged. The MDC program needs to be put into context for primary care and specialty providers with other value-based payment offerings across payors and lines of business from an aligned independent physician association (IPA), clinically integrated network (CIN) or payer. IPAs, CINs and payers have more influence over provider behavior by obtaining a critical mass of patients from the same practice.

It is also important to develop provider engagement tools and activities that help providers to support the total cost of care and health outcomes goals of the DCE. For example, one DCE has created a virtual provider onboarding process paired with a workflow tool. A banner pops up in the tool as the doctor is ordering lab work or a referral and suggests an in-network option. Providers must use the tool but are not obliged to follow the recommended referral. Success managers are assigned for each practice to support and coordinate these efforts.


5. Optimize beneficiary alignment

CMS is showing little to no leniency on attribution for MDC, so meeting the minimum threshold within each option is essential prior to launch. Be sure to build in a cushion for alignment. Some DCEs that were preparing for the April, 2021 launch were seeing attribution of at least 20% lower than initial projections based on data from EHRs. This will be a key consideration for those DCEs accepted that have chosen to delay implementation until 2022.

Voluntary alignment, a unique attribute of MDC, requires a physical signature from the beneficiary, not a verbal attestation. With some patients who won’t be able to receive or execute DocuSign links, for example, a detailed execution plan for providers and the DCE will be required in order to maximize voluntary beneficiary alignment.


6. Engage beneficiaries

Take advantage of your ability to market directly to and engage beneficiaries so they see the benefits of staying in the MDC network. Develop and secure approval from Medicare for a marketing outreach program. Make sure beneficiaries know their options and emphasize quality, convenience, prevention, and support.


7. Don’t expect MDC to necessarily serve as major gateway to Medicare Advantage

If Pioneer and Next-Gen ACOs are a guide, don’t expect wholesale movement to Medicare Advantage (MA) plans. It will be important to make the MDC model viable on its own merits for members attributed to it.

That said, it will also be important to have high-value Medicare Advantage offerings available for beneficiaries to select that enable similar financial incentive alignment and engagement opportunities for providers.


Please contact us at info@copehealthsolutions.com for more information on how to be successful with Medicare Direct Contracting and other CMS Medicare programs.

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