Direct Contracting - Are You Ready?

2 minute read

Direct Contracting - Are You Ready?

Topics: Data Insights

By Monte Regier on 9 June 2020

I was recently having a conversation with the CEO of a large health system and he told me that his ratio of Commercial to Medicare patients had for the first time shifted to Medicare now representing a larger percentage of patients.


I asked him, what do you need to do? And he replied, “get efficient at caring for our Medicare patients.” And he is right. If your health system has not yet begun to engage in the value-based care programs rolled out over the past few years the market will soon become unrecognizable, as CMS moves toward more advanced Direct Contracting models.


The Direct Contracting Model builds upon Next Generation ACO Model and offers higher levels of risk and reward than the Medicare Shared Savings Program. There are at least two options, Professional and Global, each with three types of Direct Contracting Entities; Standard, New Entrant and High Needs Populations. The five-year model is set to launch in 2021.


Part of CMS long-term plan to curb growth in medical costs – The program aims to improve outcomes and lower annual total costs of care for Medicare and dually eligible beneficiaries. Direct Contracting is the highest risk-sharing program to come from CMS, the next logical step on the risk continuum.


Across all lines of business, the value-based care movement has expanded in recent years and the adoption of value-based payment models has shown signs of accelerating. However, organizations still face critical challenges when entering Value Based Payment arrangements. Hurdles include balancing fee-for-service and payment for value mindsets. It is unlikely that we will go back to our fee for service roots. The new driver in care is no longer revenue its cost. Recently I have read articles that suggest COVID-19 will slow emerging value-based models. Do not be fooled, it’s going to accelerate these models. For-profit health systems have already figured out how to benefit from the changes in care accelerated by COVID-19.


Previously the advanced contracting models were only available thru ACO participation. With Direct Contracting CMS is opening the model to a wide group of providers based on application approval. While this is good for providers it also introduces a whole set of operational challenges.


In Direct Contracting Providers will need to understand complex risk adjustment models related to benefit-cost ratios and stay focused on quality measurements. Access to data analytics drives and creates the path to success.


Getting ready starts with organized data and Calligo's Data Insights Services aim to help healthcare providers during this difficult time of change.



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