What you need to know about the forces reshaping our industry.


February 28, 2022

Around the nation: CMS to redesign the Direct Contracting model

Daily Briefing

    CMS will replace the Global and Professional Direct Contracting Model with an equity-focused and provider-led Accountable Care Organization (ACO) model in 2023, in today's bite-sized hospital and health industry news from California, Maryland, and Michigan.

    • California: Children's Hospital Los Angeles on Wednesday announced plans to use a "transformative" $25 million gift from an anonymous donor to fund initiatives aimed at supporting its nursing workforce. According to the announcement, the donation will fund nurse education, professional development, and research programs. "This transformative gift allows us to invest in the education and advancement of nurses at every phase of their careers, whether they are new nursing graduates, mid-career RNs looking to transition to pediatric care, or experienced clinical workers who bring an incomparable wealth of knowledge and mentorship to the table," said Nancy Lee, chief clinical officer and chief nursing officer at Children's Hospital Los Angeles. "These investments are being made based on feedback we have received from nurses themselves, who have asked for more opportunities to learn and grow." (Carbajal, Becker's Hospital Review, 2/23)
    • Maryland: CMS on Thursday announced that it will replace the Global and Professional Direct Contracting Model with an equity-focused and provider-led organization called the ACO Realizing Equity, Access, and Community Health (ACO REACH) Model in 2023. In addition, the agency will officially end the Geographic Direct Contracting model, which was halted in March 2021. The ACO model includes new health equity requirements, updates to risk adjustment, and additional application scoring standards. "I believe that the steps that we're taking today are really the right steps, that we've addressed what we think are the concerns of the past model, while ensuring that we rely on our principles," said CMS Administrator Chiquita Brooks-LaSure. "We are very focused on making sure that all beneficiaries, all the people who are served in traditional Medicare, retain all the rights that are afforded to them." (Goldman, Modern Healthcare, 2/24)
    • Michigan: Gov. Gretchen Whitmer (D) on Wednesday signed House Bill 4348, creating Michigan's first regulatory structure to govern pharmacy benefit managers (PBMs) by controlling what the bill sponsor hailed as the "abusive" business tactics of PBMs. The bill established state licensure of PBMs and banned third-party administrators from steering consumers to certain pharmacies. In addition, the bill prevents PBMs from requiring pharmacies to pay a portion of a customer's co-payment. "This [new law] reins in a number of nefarious ways that PBMs have started to create revenue, including the clawbacks," said state Rep. Julie Calley (R). (Livengood, Crain's Detroit Business/Modern Healthcare, 2/23)

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