CMS' New Primary Cares Initiative: What Providers Should Know

April 23, 2019 Ashley Ridlon

"A historic turning point in American health care."

"The next step on our road to value."

"A clear sign that we are changing the status quo."

Top HHS and CMS leaders voiced lofty expectations on Monday for their newest effort to speed the health care system's journey toward value-based care. Called the Primary Cares Initiative, it provides two new pathways for primary care practices and others seeking to assume financial risk for their patients' health outcomes and utilization.

By far, the more aggressive pathway is the highly anticipated Direct Contracting model, which provides two options for providers to take increasing financial risk—up to 100%—for a population of patients. Designed for larger, more sophisticated organizations that care for at least 5,000 Medicare beneficiaries, such as Next Generation Accountable Care Organizations, the program will provide capitated, risk-adjusted monthly payments to providers. CMS is also seeking public input for a third Direct Contracting option, a Geographic Population-Based Payment (PBP) model, in which an organization would assume responsibility for total cost of care for all Medicare beneficiaries in a target region.

For smaller primary care practices more comfortable dipping their toes into risk arrangements, the CMS Innovation Center also announced Primary Care First. The program will provide monthly population-based payments, along with a flat fee for every primary care visit. Providers who help keep their patients healthy and out of the hospital stand to gain a 50% reward, while their downside risk is capped at 10%.

Requests for applications for both programs will go out in June. The first performance year for Primary Care First begins in January 2020, with Direct Contracting one year after that. 

CMS expects that these two pathways will enroll a quarter of traditional Medicare beneficiaries and a quarter of providers. "This is the pivotal hockey stick moment in paying for value in health care," announced HHS Secretary Alex Azar.

We at Evolent hope he's right, and that more providers are at a stage where they are ready to participate in models with significant risk—particularly the kind embedded in Direct Contracting. While there is cause to be optimistic, there are also reasons to hedge against the projections. Providers and other eligible entities will need to make careful assessments of the relative value of these models with an eye to the future, anticipating a continued move away from traditional fee-for-service Medicare.

The Opportunity

While Evolent continues to assess the new Direct Contracting model, we are encouraged by several features, many of which we have called for in letters, roundtable discussions and meetings with CMS officials and staff. For example, the Direct Contracting model:

  • Offers full risk in its Global PBP and Geographic PBP tracks. Evolent has long called for stronger risk options for providers, and to build on successful programs such as the Next Gen ACO model. The Professional PBP model, on the other hand, offers 50% savings/losses and a risk-adjusted monthly capitated payment for enhanced primary care services.
  • Seeks to attract innovative organizations interested in taking on risk for populations of patients, including those operating under Medicare Advantage or Medicaid managed care organizations serving dually eligible beneficiaries.
  • Offers choices for beneficiary alignment, including prospective alignment and the ability for beneficiaries to voluntary align through their health care provider.
  • Aligns payment and benchmarks across organizations through regional payment rates and adjustment factors to account for increasing patient risk.
  • Focuses a smaller set of core quality measures on outcomes and beneficiary experience rather than on process measures, commensurate with organizations taking on increasing risk.
  • Plans to offer benefit enhancements and waivers to increase flexibility and beneficiary engagement, as in other programs such as Next Gen ACO.

The Challenges

While the Direct Contracting model shows CMS is serious about more meaningfully moving Medicare payment into value-based risk models, the presence of much lower risk options for providers could prove to be a barrier. For example:

  • The presence of multiple voluntary models fragments markets, making it harder for providers and other value-based care organizations to achieve the scale they need to meaningfully transform care and lower costs. The Geographic PBP option, however, may provide an interesting counterbalance to this, assuming participants in this model can work with or around the ACOs and other models already operating in the regions they wish to serve.
  • The Medicare fee-for-service status quo, as well as relatively low-risk Innovation Center models and lower tracks of the Medicare Shared Savings Program (MSSP), are still predominant in the market. Given that providers cannot both participate in a Primary Care First or Comprehensive Primary Care Plus and Direct Contracting, it may be difficult in some markets for Direct Contracting participants to recruit providers into the higher-risk (yet higher-reward) options. In other words, there is still not enough pain in fee-for-service vs. gain in advanced alternative payment models to meaningfully accelerate the move to value.

The Questions

We at Evolent are encouraged by Monday's announcement despite the challenges, yet there are still many questions remaining. Among them:

  • What timing considerations will CMS make for organizations already making plans for 2020? For example, the Direct Contracting Geographic PBP, given Monday’s RFI, will require a longer timeline to implementation, while organizations who might otherwise apply to this model have been preparing for months to apply to the MSSP ENHANCED Track in May-July for a January 2020 start date.
  • What other benefit enhancements and waivers will be available for Direct Contracting participants? CMS references the enhancements used in Next Gen ACO as the model for Direct Contracting,  but Evolent and others have long advocated for a more aggressive move toward aligning provider and consumer incentives under full-risk programs—for example, through reduced beneficiary cost-sharing for using preferred providers.  
  • How will CMS refine the benchmarking methodology and risk adjustment design to ensure a sustainable and equitable model? Potential Direct Contracting participants can be forgiven for remaining in wait-and-see mode when basic design elements, such as the relative weighting between historical and regional costs in the benchmark calculation, have not yet been released.

Stay tuned as we work to better understand these new models and discuss their implications.

Learn More
For additional details, read CMMI's Direct Contracting Model: Fact Sheet and Key Questions, developed by Evolent staff. 

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About the Author

Ashley Ridlon

As Evolent’s Vice President of Health Policy, Ashley leads the development and implementation of the firm’s health policy and advocacy strategy to drive value-based health care transformation across the country. Throughout her career, Ashley has worked to improve the way health care is delivered and financed—from the home care and hospice sectors, to the United States Senate, CMS Center for Medicare and Medicaid Innovation, and the Bipartisan Policy Center.

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