Improve, not cancel the Medicare Direct Contracting Program


  • Published On  Feb 16, 2022
  • Author  Melanie Tan, VP, Strategy & Growth, Medical Home Network

As you may have heard, federal regulators are considering the future of the Direct Contracting (DC) program. This program allows traditional Medicare members to participate in an accountable care model designed to get support to patients most in need. However, now the program may be abruptly canceled by the Biden administration. The push comes after some lawmakers have called on the administration to stop the program, saying it transforms traditional Medicare into Medicare Advantage managed care and that profit-driven participants could hurt patient care.  The reality is that this program helps improve health equity and deserves a chance.

At Medical Home Network (MHN), we are strongly advocating for the continuity of the Direct Contracting program because it supports our model of primary care embedded care coordination and care management. We ask federal regulators to improve, not cancel, the program and learn from the previous Center for Medicare and Medicaid Innovation (CMMI) programs and Medicare Advantage to include more protective guardrails.

Federally Qualified Health Centers (FQHCs) in this country serve as a national source of primary care for our at-risk communities, and MHN is a not-for-profit organization whose mission is to transform care and improve the health of safety net communities. Stopping Direct Contracting will undermine safety net providers’ move to value-based payment models, which is sorely needed to achieve the triple aim of better patient satisfaction, higher quality, more affordable care, and address health inequities.

Direct Contracting’s Global Capitation model benefits underserved communities

One of CMMI’s strategic goals is to focus on health equity with a greater emphasis on expanding value-based care for safety net providers. The traditional FFS payment system does not promote equity; it inherently directs resources away from populations that have limited access to care. Safety net providers lack access to capital, which limited participation in previous CMMI models (e.g., MSSP). Direct Contracting, with a global capitation model, allows safety net organizations to invest in the necessary Community Health Workers / Care Coordinators and Care Managers to provide proactive care for our underserved communities, conduct health risk screenings and address social needs for our patients. Care managers caring for sicker and higher needs patients can collaborate with our primary care teams to provide comprehensive whole-person care. Abolishing this program means we will not have the upfront funding to invest in the right care programs for our patients and our underserved communities.

Direct Contracting is not managed care

Managed care models traditionally focus on reducing costs by managing utilization and controlling limited networks. At MHN, our core belief, care model and proven approach to reducing total costs of care is to provide care coordination for all and care management for higher risk, complex patients with a whole-person care approach wrapped around primary care services.

Direct Contracting is different from managed care in several ways:

  • No narrow network
  • No prior authorization is required
  • Patients can switch and choose their medical home or primary care provider at any time. A key component of Direct Contracting is Voluntary Alignment, which means that Medicare patients still can choose where they get care. Voluntary Alignment also means that providers must compete to attract patients and earn their loyalty under strict CMS compliance rules.
  • Organizations cannot “game” risk scores. One criticism of Medicare Advantage is that payers may code as many diagnoses as possible to increase their risk premium and artificially inflate savings. This criticism is summarized by Don Berwick and Richard Gilfillan in their Health Affairs article. Under Direct Contracting, CMS only allows prospective risk coding and limits the risk score growth relative to a baseline period and between participating DCE providers. So “gaming” risk scores no longer generates shared savings.

Opportunities to improve the Direct Contracting program without erasing its gains

  • Require Direct Contracting Entities (DCEs) to have a minimum of 75% provider representation in their governance structure with 25% of those providers serving Medically Underserved Areas (MUAs)
  • Build guardrails for MA-focused investor-backed entities, such as limiting the number of MA insurers participating in DC or their geographic reach
  • Limit the total number of patients under any single DCE, except for DCEs serving vulnerable, underserved populations with health inequities

Abruptly discontinuing the program directly harms safety net organizations

Our collective safety net organizations have invested a significant amount of effort to implement this program, especially during an ongoing pandemic. This work has been done despite challenges in staff shortages, clinician burnout and grave financial struggles. With the anticipated available funding from DC, we can hire Community Health Workers / Care Coordinators and Care Managers to:

  • Conduct Health risk screenings for whole person care needs, such as medical, behavioral, social risks, cognitive abilities, and Activities for Daily Living
  • Support scheduling appointments, arrange transportation, and secure referrals to community-based organizations that address Social Determinants of Health (e.g., food insecurity and housing instability)
  • Conduct complex care management and manage an interdisciplinary care plan for patient with complex needs
  • Manage transitions of care between care settings using our real-time ADT alerts and providing support structure to transit back to the primary care medical home

We urge federal regulators not to cancel the program but work with stakeholders like MHN to improve the model and address concerns. By cancelling the program, we risk reversing the progress we’ve made with our efforts to provide safety net patients with higher quality of care at a lower cost. We are excited and confident that our care model will reduce inequities in access to care and healthcare outcomes, build stronger relationships with patients, and reduce costs of care.