Direct Contracting: An Exciting New VBP Option

I know we’re all focused on the holidays now, but for a moment let’s rewind to April 22nd, 2019. This is when CMS announced two initiatives with five options all under the name “CMS Primary Cares.” The first model is called Primary Care First and the second is called Direct Contracting. You can read more about the Primary Care First Model in a blog we published in June: Insights on the New Value-Based Payment Models. Direct Contracting is comprised of a set of three voluntary payment model options (Global Option, Professional Option, and Geographic Option), all of which are aimed at reducing expenditures and improving the quality of care for Medicare fee-for-service (FFS) beneficiaries. When the models were announced they received support from many stakeholders in the value-based care space. For example, NAACOS commented, “The Direct Contracting options represent an important next step in the Innovation Center’s work on accountable care models.”

However, there were also many providers who wanted to understand the details of these models before fully committing their support. Supporters of the Direct Contracting option called for CMS to draw “upon private sector approaches to risk-sharing arrangements and payment with reduced administrative burden commensurate with the level of downside risk.

On November 25, 2019, the Center for Medicare and Medicaid Innovation announced that the Request for Applications (“RFA”) and Letter of Intent (“LOI”) for the Global and Professional options were to begin being filled out. Please note that the Geographic Option is not covered in the November 2019 release. The Global option offers the highest risk-sharing arrangement—100% savings/losses. The Professional option offers a lower risk-sharing arrangement—50% savings/losses.

By providing flexibility with regards to how much risk an organization is willing to accept, the Direct Contracting Option looks to transform risk-sharing arrangements in Medicare FFS and broaden participation in CMS Innovation Center models. The Direct Contracting model additionally reduces the provider burden by reducing the quality measure burden. Each year CMS comes out with a new value-based program, and each year, the programs evolve based on the experience and insights from the prior year’s programs. It will become increasingly more important for organizations looking to take on risk to evolve and innovate too.


Maria Nikol

About the Author


Maria Nikol

Maria Nikol is a senior business consultant with 10 years of experience in healthcare operations and healthcare strategy. Her specialization includes process improvement and the application of emerging models of healthcare delivery such as Patient-Centered Medical Homes and Accountable Care Organizations. She holds a Master of Jurisprudence in Health Law from Widener University and a Bachelor of Science in Pharmaceutical Marketing and Management from the University of the Sciences in Philadelphia.

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