Hospice and palliative care providers may now apply to participate in the direct contracting payment models that exist under the auspices of the U.S. Centers for Medicare & Medicaid Services’ (CMS) Primary Care First Initiative.

The direct contracting options include three voluntary payment models that are designed to help CMS and health care providers reduce the cost of care and improve quality within Medicare fee-for-service programs. The models adapt and integrate concepts from other CMS programs such as Accountable Care Organizations, the Medicare Shared Savings Program, and Medicare Advantage, as well as strategies used in the private sector.

“This is if you are a practice that is willing to take some risk and take full responsibility for a population, patients and practice size, structure, payment model, and cost benchmarking,” said Eric De Jonge, M.D., chief of Geriatrics for Capital Caring during a presentation at the Coalition to Transform Advanced Care (C-TAC) National Summit. 

The first of the three direct contracting models is the Professional option. Within this model, providers would accept the risk for 50% of shared savings or losses for all Medicare Part A or Part B services for patients that fit the Primary Care First eligibility requirements. Organizations working in this model would receive a risk-adjusted monthly payment for primary care services equivalent to 7% of the total cost of care.

“For example, if your total costs, or expected costs, are $20,000 per patient, you would get 7% of that, about $140 a month. Plus, you would get to keep 50% of any of the savings,” De Jonge said during the presentation. “So your upside is greater, and your monthly payment might be in the ballpark of $150 to $200 a month.”

Also under the direct contracting rubric is the Geographic option, in which contracted providers would accept 100% of the risk of shared savings or losses on the total cost of care for a particular geographic area. Within this program is a voluntary Total Care Capitation option, which includes a capitated, risk-adjusted payment for all services the contracted agency provides, as well as preferred providers who have contractual relationships with the contracted agency, such as a hospice that contracts with a primary care practice to provide services to eligible patients under their care.

CMS would select agencies to participate in the Geographic option through a competitive bidding process and would have to offer CMS a specified discount on the cost of care for the patient population in the designated region.

Finally, providers have the Global option. Within this model, providers would also bear 100% of the risk associated with eligible patients. Contracted agencies would have to choose between a Total Care Capitation option or a Primary Care Capitation option. Similar to the Professional direct contracting option, this would be a capitated, risk-adjusted monthly payment for enhanced primary care services equal to 7% of the total cost of care.

Initially, CMS announced that providers would have to serve 5,000 patients or more to be eligible to participate in direct contracting. However, CMS is working on a so far unannounced a “complex track” that would allow smaller organizations to get involved, De Jonge said in the conference session. This forthcoming track could include organizations with fewer than 1,000 patients.

Some have cautioned providers, smaller organizations in particular, that operating within these programs may be easier said than done, especially during the program’s early days.

“There is a lot of complexity to getting this right, particularly in direct contracting where there is a big downside [due to the level of risk],” Kristopher Smith, M.D., senior vice president for population health clinical transformation at Northwell Health, during the C-TAC Summit presentation. “I think you got to be really, really careful before jumping in. I might even recommend if when they come out — they say you can participate in year two — you might stand on the sideline for year one while they work out the details.”