Center for Medicare Advocacy Urges Incoming Administration to Suspend Direct Contracting Demonstration

On December 3, 2020, the Centers for Medicare & Medicaid Services (CMS) announced a new Geographic Direct Contracting Model demonstration (the “Model”) aimed at coordinating care and clinical management for beneficiaries in traditional Medicare in their region.  The Model will be overseen by the Centers for Medicare & Medicaid Innovation (CMMI), a division of CMS.

According to a CMS press release, Model participants, called Direct Contracting Entities (DCEs), will include health plans that “will take responsibility for beneficiaries’ health outcomes” and “[w]ithin each region, organizations with experience in risk-sharing arrangements and population health will partner with health care providers and community organizations to better coordinate care.”

DCEs “will coordinate care and clinical management for beneficiaries in Original Medicare in their region” and Medicare “[b]eneficiaries in the model will remain in Original Medicare and maintain all of their benefits and coverage rights. Beneficiaries will also keep all of the protections of Original Medicare, including access to all Medicare providers and suppliers, the freedom to choose and change providers at any time, and a strong appeals and Ombudsman system.”  CMS notes that beneficiaries “may also receive enhanced benefits, including additional telehealth services, easier access to home care, access to skilled nursing care without having to stay in a hospital for three days, and concurrent hospice and curative care. Participants will also have the ability to reduce beneficiary cost sharing for Medicare Part A and Part B services as well as offer beneficiaries a Part B premium subsidy.”

DCEs “may create a network of preferred providers” that “may choose to enter into alternative payment arrangements, including prospective capitation and other value-based arrangements” [emphasis added]. According to a CMMI fact sheet describing the Model, for preferred providers, “DCEs may implement a range of program integrity tools including prior authorization, concurrent or pre-claim review, pre-payment claim edits, and pre-payment and post-payment medical and payment review so long as such tools are referenced in the agreement entered into between the DCE and the Geo Preferred Provider” [emphasis added].

Beneficiaries will be aligned with a DCE in one of several ways; they “will have the option to select a DCE in their region at the start of each performance period as well as to change DCEs either quarterly or annually” but may not opt out of the Model.

CMS is soliciting letters of interest this month, December 2020, the Request for Applications will be made available in January 2021, and Applications will be due on April 2, 2021.  Model Participants will be selected by June 30, 2021, to begin the demo in 2022.

Commonwealth Fund Analysis

On December 15, 2020, the Commonwealth Fund issued a blog post discussing the demonstration: “What Does the New “Geo” Model Mean for Medicare?” by Gretchen Jacobson, Elizabeth Fowler, and Melinda K. Abrams.

According to Commonwealth, “[t]his model will have the effect of enrolling Medicare beneficiaries into a managed care–like plan; it is one of the most significant changes to the way Medicare beneficiaries receive health care since managed care was introduced into Medicare in the 1970s” [emphasis added].

The blog notes that “CMS has identified 15 regions as potential sites and will select between four and 10. All are large urban areas, many in counties with the highest per capita Medicare spending in the country. In demonstration regions, virtually all beneficiaries in traditional Medicare will be required to enroll in a [Direct Contracting Entity], including people dually eligible for Medicare and Medicaid” [emphasis added].

While the Commonwealth Fund post does not take a position on the Model, it raises important issues and unanswered questions.  The blog post notes: “In addition to basic operational questions, such as how beneficiaries will be assigned to participating DCEs and what happens if beneficiaries want to switch to another DCE, the Geo model also raises questions about spending and accountability.”

According to Commonwealth, such unanswered questions include:

• With respect to tracking beneficiaries’ spending and use of services, Commonwealth notes that “[t]he model does not require DCEs to report claims or encounter data to CMS. Currently, data on Medicare spending and use of services is used to uncover possible fraud, identify inappropriate care, and develop best practices.” Further, although not noted by Commonwealth, unlike Medicare Advantage (MA) plans, it does not appear that health plans or other entities participating in the Model will be subject to a medical loss ratio (MLR).
• Quality of Care “will be evaluated by surveying beneficiaries and measuring outcomes, similar to Medicare Advantage’s star ratings. Will these data be sufficient to evaluate care for frail and vulnerable beneficiaries?”  However, as addressed in a recent Center for Medicare Advocacy CMA Alert, the Medicare Payment Advisory Commission (MedPAC) has identified significant concerns about the existing Medicare Advantage quality ratings, such that the Commission states that it “can no longer provide an accurate description of the quality of care in MA.”
• People dually eligible for Medicare and Medicaid “will be automatically enrolled in DCEs that also operate Medicaid managed care organizations. Will DCEs be required to coordinate Medicare and Medicaid benefits within their organizations?”
• Looking forward, Commonwealth raises questions about “Future iterations of the model.  How will this model evolve? Could future DCEs look like HMOs with closed provider networks that limit beneficiaries’ access to specific providers? Could DCEs evolve into a premium support model? Will DCEs be allowed to offer Part D benefits in the future? Could DCEs improve or exacerbate inequities in health care?”

Additional Unanswered Questions

As the Commonwealth Fund notes, the current Geo Model builds on earlier versions that CMMI introduced in recent years (see, e.g., the CMMI website here).  The Center for Medicare Advocacy posed a number of questions in response to earlier models (see, e.g., the Center’s comments submitted to CMMI in May 2019 here).  Many previously raised issues and questions remain unaddressed, in addition to the ones posed by the Commonwealth Fund.

For example, how will this Model work with other insurance (such as Medigap or retiree coverage) – will assigned beneficiaries be incentivized to drop coverage they might not be able to get back?  If utilization management tools such as prior authorization are used by preferred providers, how will assigned beneficiaries be able to challenge such usage relying on the appeals system in traditional Medicare which has no such mechanism to do so?  What, if any, consumer protections applicable in the MA program – such as marketing guidelines – apply to DCEs?

What will beneficiary-focused education, outreach and notice look like – how will this Model be explained to aligned beneficiaries? Even though people will be free to see any provider under the rules of the Model, what will they actually be led to believe by DCEs and preferred providers?  If the DCE offers additional coverage, inducements and incentives, will such measures be used to lure beneficiaries absent sufficient explanation and education, similar to the new MA supplemental benefits?

Conclusion

In many ways, the “Geo Model” appears to turn more of the federal Medicare program over to private insurers – privatizing the Medicare program even beyond the growth in Medicare Advantage, (due in part to imbalanced payment, coverage and enrollment changes made in recent years). This new Model would actively target the still-majority of Medicare beneficiaries who choose not to enroll in private, managed care plans, and, in effect, force them to do so.  At the same time, CMS contemplates participation by health plans – including some of the same sponsors of current MA plans – but will not subject them to many of the minimal reporting and oversight requirements applicable to MA plans (e.g., medical loss ratio, reporting of encounter data, etc.).

There remain too many unanswered questions surrounding what the Commonwealth Fund describes as “one of the most significant changes to the way Medicare beneficiaries receive health care since managed care was introduced into Medicare in the 1970s.”  Instead of rushing to implement this program, set in motion in the waning days of the Trump Administration, the Center for Medicare Advocacy urges the incoming Biden administration to suspend implementation of this Direct Contracting Model.