The Facilities for Medicare & Medicaid Companies (CMS) Innovation Heart introduced a Letter of Curiosity (LOI) for a brand new geographic mannequin possibility throughout the Direct Contracting portfolio. The geographic mannequin would switch full monetary danger for at least 30,000 Unique Medicare beneficiaries in an outlined geographic market to entities similar to well being plans, accountable care organizations (ACOs), well being techniques or healthcare suppliers.
Under we define key concerns for these evaluating the Geographic Direct Contracting Mannequin alternative. CMS plans to start the primary three-year efficiency interval for this mannequin on January 1, 2022, and anticipates a second three-year efficiency interval beginning January 1, 2025.
Motion Gadgets for Entities
The LOI was launched December 3, 2020, and have to be submitted by 11:59 pm PST on December 21, 2020. The LOI kind contains fundamental details about the applicant, a possibility to rank curiosity within the 15 particular goal areas, details about the applicant’s capabilities and a most three-page narrative about how the applicant can use sure features to advance value-based care within the area.
The LOI is non-binding, and organizations aren’t obligated to take part within the mannequin in the event that they submit the LOI. Additionally, for the geographic mannequin, entities could have the choice to use even when they don’t submit an LOI, which differs from many earlier Innovation Heart fashions the place an LOI was required with a view to take part. CMS expects the Request for Purposes to be launched in January 2021.
Key Takeaway: The LOI is a reasonably gentle elevate to submit, however with solely two weeks to finish it, entities might want to transfer shortly.
Kinds of Entities
CMS seems to be casting a large internet and plenty of totally different entities are talked about as potential Geographic Direct Contracting Entities (Geo DCEs): ACOs, well being techniques, healthcare supplier teams, well being plans and revolutionary partnerships between well being plans and healthcare suppliers.
One potential space the place entities could search clarification from CMS is across the company’s assertion in its Truth Sheet that individuals within the mannequin have to be lined entities underneath Well being Insurance coverage Portability and Accountability Act (HIPAA). This might probably preclude the participation of some entities, similar to ACOs, if they don’t qualify as a lined entity. This requirement could find yourself being moot in states that require a Geo DCE to be a licensed insurer or well being upkeep group (HMO) as a result of extent of monetary danger concerned.
Key Takeaway: CMS desires to make this system accessible for a broad vary of entities, however the construction of this system and monetary danger concerned will seemingly act as a sensible restrict on the quantity and sort of entities capable of qualify as a Geo DCE.
Choice of Areas
The LOI identifies 15 geographic areas and asks organizations probably taken with taking part to rank their curiosity in these areas. Primarily based on suggestions, the Innovation Heart expects to slim this record down and to solicit individuals in 4 to 10 areas within the first efficiency interval. The 15 areas are:
Atlanta, Dallas, Denver, Detroit, Houston, Los Angeles, Miami, Minneapolis, Orlando, Phoenix, Philadelphia, Pittsburgh, Riverside, San Diego and Tampa.
CMS expects to have between three to seven Geo DCEs per area, relying on the variety of beneficiaries in a area. CMS estimates that every area has between 150,000 and 700,000 Unique Medicare beneficiaries. Every Geo DCE might be aligned with a minimal of 30,000 beneficiaries, and there’s no most.
Key Takeaway: Entities with a powerful curiosity in a particular area ought to contemplate submitting the LOI to enhance the chance their area is chosen.
Bringing Options of Medicare Benefit Program to Unique Medicare
Geo DCEs could be permitted to scale back cost-sharing under normal Unique Medicare cost-sharing when beneficiaries use suppliers which might be contracted with the Geo DCE. This is able to enable Geo DCEs to develop de facto supplier networks and encourage utilization of their most popular suppliers though beneficiaries would keep freedom of selection in step with all different Unique Medicare fashions.
As well as, Geo DCEs would be capable to make use of prior authorization and different utilization administration mechanisms which might be frequent in Medicare Benefit so long as protection determinations are made in step with Unique Medicare protection requirements.
Key Takeaway: Permitting Geo DCEs to create most popular supplier networks and carry out utilization administration brings two instruments sometimes related to the Medicare Benefit program to Unique Medicare. This additionally makes it extra seemingly that entities taken with changing into Geo DCEs might be well being plans or well being techniques with their very own provider-sponsored well being plan due to their capability to leverage their current claims processing and utilization administration infrastructure.
Vital Monetary Dedication
Geo DCEs could be required to offer a monetary assure equal to 10% of their combination benchmark. This is able to require a a lot bigger monetary assure than underneath the World or Skilled tracks of the Direct Contracting Mannequin, each as a result of it’s a considerably larger share of the benchmark (10% vs. 2.5% to 4%) and since the minimal variety of aligned beneficiaries for a Geo DCE is far larger. Utilizing tough math for illustrative functions, if we assume a Geo DCE has the minimal 30,000 aligned beneficiaries in a area and the benchmark is ready at $10,000 yearly per beneficiary, the DCE would wish to offer a $30 million assure by means of escrowed funds, a line of credit score or a surety bond. The quantity would improve proportionally if the DCE’s variety of aligned beneficiaries exceed the minimal.
Though not addressed by CMS, Geo DCEs might want to contemplate state legal guidelines governing risk-bearing entities, which might topic the Geo DCE to risk-based capital and monetary solvency necessities along with the CMS monetary assure described above. CMS traditionally has not preempted the appliance of state insurance coverage licensing requirements underneath CMS Innovation Heart fashions, so we count on that Geo DCEs would seemingly must adjust to any relevant state requirements. As a result of Geo DCEs might be taking danger from the federal authorities, reasonably than straight from shoppers or employers, and the federal authorities stays finally liable for the availability of Medicare advantages to relevant beneficiaries, there could also be a considerable diploma of ambiguity in regards to the applicability of current state regulatory frameworks to Geo DCEs. Many states haven’t but addressed whether or not any state licensure or regulatory necessities apply to entities taking part within the World and Skilled Direct Contracting Fashions, so we could anticipate related delays in readability round these points for Geo DCEs.
Key Takeaway: Due to the numerous monetary dedication required of a Geo DCE, well-capitalized giant firms similar to well being plans and probably giant well being techniques are higher positioned to finance participation in this system.
As a part of the transition to a brand new presidential administration, we count on new management on the Division of Well being and Human Companies, CMS and the CMS Innovation Heart, who will need to advance their very own priorities and dictate the path of mannequin growth. This may occasionally have important implications for the additional refinement and development of the geographic mannequin, particularly with many particulars of the mannequin nonetheless in growth.
Word that we count on the World and Skilled Direct Contracting Fashions accessible for an April 1, 2021, begin date to proceed as deliberate.
Key Takeaway: Stakeholders with a particular perspective on this mannequin’s growth ought to share these ideas with the CMS Innovation Heart as there’s potential to proceed to tell the design of this mannequin.