Doctors propose new Medicare direct-contracting model.

A group of doctors on Thursday said they have the path forward to help the CMS launch a direct provider contracting (DPC) model.

America’s Physician Groups, an association of medical groups, submitted a so-called “third option” proposal, where a provider network would receive Medicare funds up front to manage their patients’ care.

The suggestion came as a response to the CMS’ request for information on how to launch a DPC model.

Under the proposal, the CMS would set capitation rates using methods and benchmarks similar to those used to establish rates for Medicare Advantage plans. The payments would be actuarially sound, risk adjusted and updated annually, the groups said.

The CMS would pre-pay this amount to provider networks, known as clinically integrated organizations, each month for enrolled beneficiaries, and the CIO would be responsible all professional and hospital services payments.

The model would be voluntary for beneficiaries. The CMS would encourage Medicare beneficiaries to participate through differential co-payments and co-insurance, paying higher co-payments if they obtain care outside a CIO-created network.

“Physician organizations have long called on CMS to articulate the ultimate destination for delivery system reform,” Donald Crane, president and CEO of America’s Physician Groups, said in a comment letter. “Our proposed direct provider contracting model offers that destination and will be an attractive alternative payment model option for capable, risk-bearing organizations across the country.”

The proposal is a positive step forward for doctors that are already working under other value-based arrangements, according to Scott Lenz Jr., a partner at Bradley Arant Boult Cummings, a Nashville-based law firm.

“By participating in the innovation center’s accountable care organization and bundled payment initiatives, providers have spent the last several years developing the care delivery infrastructure to allow them to participate in programs like this,” Lenz said.

But some believe the proposed model could lead to rationed care and gaming of the system by medical practices who are likely to only seek out only the healthiest patients.

“What is new about capitation? It has been despised by patients and hands-on clinicians since Nixon’s HMO Act of 1973,” said Dr. Jane Orient, executive director of the Association of American Physicians and Surgeons. “It rewards cherry picking, denial of care and massive diversion of resources to box-clickers, data miners and bureaucrats who pretend to be measuring quality.”

AMGA also came out against a DPC model, saying the CMS instead should take efforts to improve and strengthen the Medicare Shared Savings Program (MSSP) accountable care organization model.

“Medicare program would be better served by building on the considerable investments already made in the ACO program,” Dr. Jerry Penso, president and CEO of AMGA, said in a comment. “If CMS moves forward with a DPC model, it may compromise the MSSP by reducing the number of providers and beneficiaries who participate in a program that is based on the same goals as a potential DPC model.”

Around 9 million beneficiaries now receive care under a shared savings ACO. AMGA said the CMS could tweak the ACO program by updating how CMS assigns patients to ACOs, as it is currently updated retroactively. This change would make it easier to manage a person’s care needs before they get treatment.

Written by Virgil Dickson of Modern Healthcare May 2018.