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By Monica E. Oss

The Centers for Medicare and Medicaid Services (CMS) surprised me with their recent announcement of plans for direct value-based reimbursement of provider organizations—a direct provider organization contracting (DPC) model for community-based care for Medicare fee-for-service, Medicare Advantage, and Medicaid beneficiaries. The initiative is focused on primary care—”CMS would pay these participating practices a fixed per beneficiary per month (PBPM) payment to cover the primary care services the practice would be expected to furnish under the model, which may include office visits, certain office-based procedures, and other non-visit-based services covered under the Physician Fee Schedule, and flexibility in how otherwise billable services are delivered…” (see CMS Expanding Population-Based Provider Reimbursement Models In Medicare & Medicaid).

From a financial perspective, the proposed model involves more financial risk than the accountable care organization (ACO) program with its attribution and upside shared savings. The proposed model assigns consumers (with a yet-to-be-defined model), pays a PMPM payment, offers the “opportunity to earn performance-based incentives for total cost of care and quality”, and includes “two-sided financial risk.” Depending on the rates, this could be a great opportunity for entrepreneurial provider organizations and physician practices.

Our team has been thinking about the implications of this model for consumers with chronic conditions and complex support needs, and the specialist provider organizations that serve them. A few key issues, opportunities, and challenges came up in our discussion:

  1. How much specialty care in general—and behavioral health services in particular—are included in the capitation rate is a key planning issue. The “devil is in the details” when interpreting which services “the practice would be expected to furnish under the model, which may include office visits, certain office-based procedures, and other non-visit-based services.” These definitions will define the partnerships that are created to respond to the model.
  2. How consumers “select” a participating provider in this direct contracting model is another key factor. The proposed model touts a consumer-centric model, by giving consumers greater control in selecting their primary care practice through “beneficiary engagement tools to empower beneficiaries, their families, and their caregivers to take ownership of the beneficiary’s health.”
  3. Participating provider organizations and physician practices will need the ability to manage value-based reimbursement. There are a number of competencies (and investments) that are required to be successful in this model. (For more on this, see our team’s recent presentations on value-based reimbursement competencies— How To Prepare For Value-Based Reimbursement: Four Key Competencies For Success and There Is No “Plan B” Alternative To Value: Creating A Value-Focused Competitive Strategy In A Changing Market.)
  4. Participating provider organizations will need data management capabilities. The model’s purported “opportunity to earn performance-based incentives for total cost of care and quality” will make interoperability and data sharing a “must have” competency for participating organizations.
  5. The model will likely open the door even wider for tech-enabled service—”flexibility in how otherwise billable services are delivered.” If the complicated Medicare telehealth rules are repealed in the model, it would conceivably open up 12% of the U.S. population to eligibility for telehealth. But, beyond that, use of eCBT and consumer-directed treatment technologies could become a piece of the VBR “math” of the participating provider organizations.
  6. Anticipate the “jump” from Medicare to the commercial market. If recent history repeats itself, while this model is focused on Medicare plans, commercial health plan managers may find it very useful. (FYI, there are now 632 Medicare ACOs and 215 Commercial health plan ACOs.)

We should know more about this proposed value-based direct contracting model in coming months—and we’ll cover those developments as they happen. This proposed initiative is another step in moving health care provider reimbursement from volume to value. In particular, specialist provider organizations should take note if the final model requires primary care functionality to maintain marketshare for community-based specialty services.

For more on preparing for value-based reimbursement, check out these resources in the OPEN MINDS Industry Library:

  1. Winning The Business – Business Development In A Shifting Health & Human Service Market
  2. “Following The Money” In Specialty Care Management
  3. Better Yield From Business Development Dollars? Go Where The Money Is
  4. The Market Metrics That Shape Your Business Development Tactics: Mapping Your Market & The Payers
  5. Collaborations Demand ‘Proving Your Business Case’
  6. The Nuts & Bolts Of Making A Health Home Sustainable
  7. Déjà Vu, Anyone?
  8. Crawl, Walk, Run To VBR
  9. How To Prepare For Value-Based Reimbursement: Four Key Competencies For Success
  10. Riding The Value-Based Wave

And be sure to join my colleague, OPEN MINDS Advisory Board Member Richard Louis, III on September 17 for his 2018 OPEN MINDS Executive Leadership Retreat Executive Seminar, “How To Build Value-Based Payer Partnerships: An OPEN MINDS Executive Seminar On Best Practices In Marketing, Negotiating, & Contracting With Health Plans.”

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