Understand how we got here — and how to move forward.


May 30, 2018

Providers weigh in on CMS' proposal to allow direct provider contracting

Daily Briefing

    Health care providers have expressed mixed reactions to CMS' request for information (RFI) seeking "broad input" on ways to allow primary care providers to contract directly with patients.

    Medicare 101: Cheat sheets for Parts A through D


    CMS said it released the request based on responses it received to a separate RFI that asked for input on how the Trump administration could use CMS' Center for Medicare and Medicaid Innovation to make it easier for the health care industry to work with Medicare. According to CMS, comments on that request "focused on a number of areas that are critical to enhancing quality of care for beneficiaries and decreasing unnecessary cost, such as increased physician accountability for patient outcomes, improved patient choice and transparency, realigned incentives for the benefit of the patient, and a focus on chronically ill patients." The responses also "reflected broad support for reducing burdensome requirements and unnecessary regulations," CMS said.

    In response to the comments, CMS issued a new RFI seeking feedback on ways to test a direct provider contracting (DPC) model in Medicare Parts A and B, Medicare Advantage, and Medicaid. CMS said, "Such a model would have the potential to enhance the doctor-patient relationship by eliminating administrative burden for clinicians and providing increased flexibility to provide the high-quality care that is most appropriate for their patients, thus improving quality while reducing expenditures."

    CMS accepted public comments on the RFI through May 25.

    Providers have mixed reactions

    According to Health Exec, major health care provider groups expressed mixed reactions to the RFI, with some saying they are cautiously optimistic about a DPC model and others saying CMS instead should focus on other payment reforms.

    For instance, the Medical Group Management Association (MGMA) said allowing a DPC model in Medicare could act as a "catalyst" for expanding providers' opportunities to participate in alternative payment models (APMs), specifically among independent and specialty provider groups, which MGMA said currently have few APM options. However, MGMA warned that a DPC model also could harm such practices if a DPC model is not open to small provider groups. "Without this commitment, the DPC model could drive further consolidation among health care providers while forcing independent practices out of business–actions which restrict patients' access to care," Anders Gilberg, MGMA's senior vice president of government affairs, wrote.

    According to Health Exec, the American Hospital Association (AHA) expressed similar concerns, saying CMS should ensure that fixed per beneficiary per month payments—which AHA said should be included in a DPC model—are "sufficiently high" enough to attract a wide variety of providers and does not punish providers for treating patients with higher risks." Along those same lines, Tom Nickels, AHA's executive vice president of government relations, said the group "also strongly urge[s] CMS to not cap risk score growth." He explained, "There are many plausible scenarios under which providers could see significant fluctuation in the risk profile of their patients and artificially suppressing risk scores so that they do not account for these fluctuations would penalize providers who care for a particularly sick population in a given year."

    AHA also urged CMS to continue seeking providers' feedback on proposed DPC models and to be transparent about any risks providers would have to take on under such a model. The group said uncertainty about the model is "making it difficult for hospitals and health systems to make an informed decision about applying to participate."

    The American Medical Group Association (AMGA) was more critical of the proposal and urged CMS to focus on APMs it already has in place, Health Exec reports. AMGA said a DPC model could have negative effects on providers currently participating in APMs, such as accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP), by reducing the number of beneficiaries and providers participating in MSSP ACOs. AMGA President and CEO Jerry Penso said, "While it is encouraging that CMS is interested in developing new models that are based on primary care, patients, providers, and the Medicare program would be better served by building on the considerable investments already made in the ACO program."

    Further, Penso said health care providers are struggling to keep up with the various APMs CMS is testing. "The innovations in care delivery and payment envisioned in a DPC model could just as easily be tested in the MSSP or the Comprehensive Primary Care Plus demonstration," he said.

    Group suggests tweaks to CMS' DPC proposal

    Separately, America's Physician Groups (APG) suggested a way CMS could move forward with a DPC model that is different from what the agency has suggested, Modern Healthcare reports.

    Under APG's proposed model, Medicare would pay provider networks known as clinically integrated organizations (CIOs) a capitated rate up front for managing beneficiaries' care. The CIOs then would be responsible for making all professional and hospital services payments.

    APG said the capitated payment rates would be based on benchmarks and other methods similar to those used to determine payment rates for Medicare Advantage plans. The payment rates would be actuarially sound, adjusted for risk, and updated annually, APG said.

    APG said such a model should be voluntary for beneficiaries, but suggested CMS encourage beneficiaries to participate by giving them access to lower co-payment and co-insurance rates.

    APG President and CEO Donald Crane said, "Physician organizations have long called on CMS to articulate the ultimate destination for delivery system reform," adding, "Our proposed [DPC] model offers that destination and will be an attractive [APM] option for capable, risk-bearing organizations across the country."

    Scott Lenz, a partner at the law firm Bradley Arant Boult Cummings, said APG's proposed model gives providers already participating in one of Medicare's APMs a way to move forward in their value-based payment arrangements. "By participating in [CMS' ACO] and bundled payment initiatives, providers have spent the last several years developing the care delivery infrastructure to allow them to participate in programs like this," he said.

    However, some experts said APG's proposed model could harm beneficiaries' access to care or lead providers to pick and choose which beneficiaries they treat. Jane Orient, executive director of the Association of American Physicians and Surgeons, said both patients and "hands-on clinicians" have opposed capitated payment arrangements for decades, saying such models "rewar[d] cherry picking, denial of care, and massive diversion of resources to box-clickers, data miners, and bureaucrats who pretend to be measuring quality" (Gregory, Health Exec, 5/25; Monica, RevCycleIntelligence, 5/25; Dickson, "Transformation Hub," Modern Healthcare, 5/25; Diamond, "Pulse," Politico, 5/29).

    Medicare 101: Cheat sheets for Parts A through D

    Through the years Medicare has grown more complicated, including private supplemental insurance and prescription drug coverage. Download our cheat sheets to learn how each of the four parts of Medicare works, and why they’re so important for provider organizations:

    Get all the Cheat Sheets

    Have a Question?


    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.