New CMS Payment Model Demo to Allow Concurrent Hospice Care

The U.S. Centers for Medicare & Medicaid Services (CMS) has unveiled a new payment model demonstration that will include concurrent hospice and curative care. Like other value-based initiatives, the Geographic Direct Contracting Model is designed to improve health outcomes and reduce the cost of care for Medicare beneficiaries.

The demonstration will test whether a geographic-based approach to value-based care can achieve the twin aims of quality improvement and cost savings for Medicare beneficiaries across designated geographic regions, with a particular focus on care coordination and clinical management

“The need to strengthen the Medicare program by moving to a system that aligns financial incentives to pay for keeping people healthy has long been a priority,” said CMS Administrator Seema Verma. “This model allows participating entities to build integrated relationships with health care providers and invest in population health in a region to better coordinate care, improve quality, and lower the cost of care for Medicare beneficiaries in a community.”


The program will include mechanisms to inform patients about which providers have a history of producing better outcomes as well as lower costs.

Within each designated region, direct contracting entities would be responsible for patients’ health outcomes. These entities can include Accountable Care Organizations (ACOs), health systems, health care provider groups or health plans. The program is designed to encourage organizations with experience in risk-sharing arrangements and population health to partner with health care providers and community organizations to improve coordination.

Direct contracting entities would assume responsibility for the total cost of care for Medicare fee-for-service beneficiaries and implement regional care delivery and value-based payment systems. To achieve the program’s goals, CMS will allow participating entities to create a preferred provider network able to provide enhanced benefits to their Medicare-covered patients. They will also have the option to offer beneficiaries lower co-pays of a Part B premium subsidy.


Participating entities would also have the option to implement a slate of coordination and clinical management programs, including telemonitoring, telemedicine, interdisciplinary care teams and care management.

CMS is considering 15 geographic regions in which to test the model. The areas under review include the following metropolitan areas: Atlanta, Dallas, Denver. Detroit, Houston, Los Angeles, Miami, Minneapolis, Orlando, Phoenix, Philadelphia, Pittsburgh, Riverside (Calif.), San Diego and Tampa. Each of these areas includes 150,000 to 700,000 beneficiaries. 

The application process will begin in 2021 with an anticipated implementation date of Jan. 1, 2022. While the agency hasn’t yet set a concrete application due date, CMS anticipates that would be on or near April 1 of next year. 

CMS has experimented with concurrent curative and hospice care previously through the Medicare Care Choices Model demonstration project. A recent report from the agency indicated that model has yielded $26 million in cost savings to date.

“The Geographic Direct Contracting Model is part of the [Center for Medicare & Medicaid Innovation’s (CMMI)] suite of direct contracting models and is one of the center’s largest bets to date on value-based care,” said CMMI Director Brad Smith. “By initially testing the model in a small number of geographies, we will be able to thoughtfully learn how these flexibilities are able to impact quality and costs.”