Geographic Direct Contracting Model (“Geo”)

Overview

What is the Geographic Direct Contracting Model?

The Geographic Direct Contracting Model (also known as the “Model” or “Geo”) is a new payment and care delivery model being tested by the Centers for Medicare & Medicaid Services (CMS) Innovation Center.  The Model will test whether a geographic-based approach to value-based care can improve quality of care and reduce costs for Medicare beneficiaries across an entire geographic region. Leveraging best practices and lessons learned from prior Innovation Center models, Geo will enable Direct Contracting Entities (DCEs) to build integrated relationships with healthcare providers and community organizations in a region to better coordinate care and address the clinical and social needs of Medicare beneficiaries.

DCEs will take responsibility for total cost of care for Medicare Fee for Service (FFS) beneficiaries in a specific region.  DCEs will implement region wide care delivery and value-based payment systems with the goal of improving care for beneficiaries through higher quality and lower costs. To achieve these goals, the model will enable DCEs – which may include sophisticated Accountable Care Organizations (ACOs), health systems, health care provider groups, and health plans – the flexibility to utilize a variety of tools described in more detail below.

Geo builds on lessons the CMS Innovation Center has learned from prior Medicare Accountable Care Organization (ACO) initiatives, including the Medicare Shared Savings Program and the Next Generation ACO Model, as well as innovative approaches from Medicare Advantage, Medicaid Managed Care, and commercial health plan risk-sharing arrangements. Geo requires participants to take full risk with 100 percent shared savings / shared losses for Medicare Parts A and B services for aligned Medicare FFS beneficiaries in a defined target region. Geo will be tested over a six-year period in four to ten regions and will include two three-year performance periods, the first of which starts on January 1, 2022 and the second of which starts on January 1, 2025.

What are the goals of the Model?

The goal of Geo is to test whether DCEs are able to improve quality of care and lower costs for Medicare beneficiaries across an entire region. Beneficiaries in the region will maintain all their Original Medicare benefits but may receive enhanced benefits and may have lower (but never higher) out-of-pocket costs for certain services than in Original Medicare.  Providers in the region will have the option to enter into value-based payment arrangements with DCEs.  Health care providers that choose not to enter into an arrangement with a DCE will continue to be reimbursed at 100% Medicare FFS rates.

How does the Model differ from the Global and Professional Options of Direct Contracting? 

The Geographic Direct Contracting Model builds on the design of the Direct Contracting Global and Professional Options.  However, unlike in the Global and Professional Options, Geo requires DCEs to take financial risk for a portion of all Medicare FFS beneficiaries residing in a geographic area rather than only the Medicare FFS beneficiaries seeing particular providers.  In order to allow DCEs to take on this broader level of risk, Geo provides DCEs with a range of tools outlined in more detail below.

What is the timeline for the Model?

The Geographic Direct Contracting Model will have two three-year performance periods.  The first performance period will take applications in 2021 and have a performance period from January 1, 2022 through December 31, 2024.  The second performance period will take applications in 2024 and have a performance period from January 1, 2025 through December 31, 2027.

For the first performance period, the Innovation Center released a non-binding Letter of Interest (LOI) on December 3, 2020.  This LOI includes a list of 15 geographic regions and asks organizations potentially interested in applying to be a DCE to indicate and rank the regions in which they would be most interested in participating.  LOIs must be submitted to the Innovation Center by 11:59pm PT December 21, 2020.  LOIs can be submitted to: Geographic Direct Contracting Letter of Interest

The Innovation Center expects to release a Request for Applications for the first performance period in January 2021.  This Request for Applications will include the aggregated historical data needed for potential participants to bid a discount in each region (see bidding details in the DCE section below).  The Innovation Center expects to solicit participants in four to ten regions for the first performance period. 

CMS expects applications to be due April 2, 2021.  CMS then expects to announce participants by June 30, 2021 and that DCEs will be required to submit their Geo Preferred Provider lists by September 1, 2021.  The first performance period will start on January 1, 2022.

Where are the list of regions in the Letter of Interest?

For the Model, CMS will define a region as a Core Based Statistical Area (CBSA), which includes both metropolitan and micropolitan communities. For each CBSA, CMS is expected to follow the delineations defined by the U.S. Office of Management and Budget (https://www.census.gov/programs-surveys/metro-micro/about/delineation-files.html), In the Letter of Intent CMS has identified 15 candidate regions, each of which contains between approximately 150,000 to 700,00 beneficiaries.  The CBSAs CMS is considering for the model are:

• Atlanta 
• Dallas
• Denver 
• Detroit
• Houston
• Los Angeles
• Miami
• Minneapolis
• Orlando
• Phoenix
• Philadelphia
• Pittsburgh
• Riverside
• San Diego
• Tampa

Beneficiaries

Which beneficiaries will be included in the Model?

Beneficiaries included in the model must meet each of the following criteria:

• Be enrolled in both Medicare Part A and Part B;
• Not be enrolled in a Medicare Advantage plan, Medicare-Medicaid Plan (MMP), cost plan, PACE organization, or other Medicare managed care plan;
• Have Medicare as a primary payer;
• Be residents of the United States; and
• Have their address of record in a region included in the Model.

Will beneficiaries lose any of their Original Medicare benefits?

No.  Beneficiaries will maintain all of their Original Medicare benefits.

Can beneficiaries still see any Medicare provider or supplier they want to see?

Yes.  Beneficiaries can continue to see any enrolled Medicare provider or supplier of their choosing.

Do beneficiaries maintain all of their appeal and grievance rights?

Yes.  Beneficiaries maintain all of their appeal and grievance rights under Original Medicare.

What beneficiary engagement incentives may be available under the Model?

DCEs have the option to offer a variety of beneficiary engagement incentives, including:

• Vouchers for over-the-counter medications recommended by a health care provider.
• Prepaid, non-transferable vouchers that are redeemable for transportation services to and from an appointment with a health care provider.
• Items and services to support management of a chronic disease or condition, such as home air-filtering systems or bedroom air-conditioning for asthmatic patients, and home improvements such as railing installation or other home modifications to prevent re-injury.
• Wellness program memberships, seminars, and classes.
• Electronic systems that alert family caregivers when a family member with dementia wanders away from home or gets up from a chair or bed.
• Vouchers for those with chronic diseases to access chronic disease self-management, pain management and falls prevention programs.
• Vouchers for those with malnutrition to access meal programs.
• Phone applications, calendars or other methods for reminding patients to take their medications and promote patient adherence to treatment regimens.
• Vouchers for vision and dental care services.
• Up to $75 in gift cards annually for adhering to disease management programs.

DCEs also have the option to offer certain enhanced Medicare benefits such as:

• Streamlined access to a skilled nursing facility by waiving Medicare’s 3-Day SNF Rule;
• Home visits for beneficiaries following a discharge from an inpatient hospital, psychiatric facility, inpatient rehabilitation facility, long-term care hospital, or skilled nursing facility;
• Home visits for care management;
• Increased access to home health care by waiving the homebound requirement for access to home health services in Medicare;
• Asynchronous telehealth services for certain conditions; and
• Access to curative care while receiving the hospice benefit.
• Additional enhanced Medicare benefits may be detailed within the Request for Applications

Will beneficiaries’ out-of-pocket costs increase or decrease?

Beneficiaries’ out-of-pocket costs will never increase.  DCEs have the option to lower beneficiaries’ out-of-pocket costs in certain circumstances, such as if beneficiaries voluntarily choose to visit DC Preferred Providers. Consistent with Geo Model requirements, DCEs may lower out-of-pocket costs by reducing co-payments for Part A or Part B services or offering a Part B premium subsidy.

How will beneficiaries be aligned to a Direct Contracting Entity?

Beneficiaries will be aligned to a DCE in the following ways, in the following order of precedence (e.g., voluntary alignment prioritized first):

1. Voluntary Alignment: Beneficiaries will in the first instance be aligned to a DCE through voluntary alignment.  The Innovation Center will be working with beneficiary groups to design the voluntary alignment process and expects to release more details in Spring 2021.  Beneficiaries will be able to voluntarily align to a Geo DCE both electronically and through paper-based forms.
2. MCO-Based Alignment for Dually Eligible Beneficiaries: If a DCE or its affiliate operates a Medicaid Managed Care Organization (MCO), all full-benefit dually eligible beneficiaries who are in Medicare FFS and enrolled in the MCO for their Medicaid benefits will be aligned to that DCE, with the exception of a beneficiary who has voluntarily aligned to a different DCE.
3. ACO-Based Alignment: A DCE may enter into an arrangement with an ACO participating in the Medicare Shared Savings or Next Generation ACO Program, in which case the beneficiaries aligned to the ACO and who reside in the DCE’s region may be aligned to the DCE with the exception of a beneficiary who has voluntarily aligned or been aligned based on MCO-based alignment to a different DCE. The number of ACO aligned beneficiaries for a given DCE will be capped at 50% of a DCE’s Enrollment Allocation (see details below on DCE’s Enrollment Allocation).
4. Claims-Based Alignment: Beneficiaries not otherwise aligned based on voluntary alignment, MCO-based alignment, or ACO-based alignment may be aligned based on primary care services received from a DCE’s Preferred Providers, as evidenced in claims utilization data and based on a care link algorithm, which will identify and link beneficiaries that have active care relationships. The combined number of ACO-based and Claims-based aligned beneficiaries for a given DCE will be capped at 50% of a DCE’s Enrollment Allocation.
5. Random Alignment: Any beneficiaries not aligned through voluntary alignment, MCO-based alignment, ACO-based alignment, or Claims-based alignment will be aligned randomly to a DCE.

Can beneficiaries change Direct Contracting Entities?

Yes.  Beneficiaries will have the option to select a DCE in their region at the start of each performance period as well as to change DCEs either quarterly or annually. We expect beneficiaries will have the option of at least three DCEs per region.  Additional details on the ability of beneficiaries to change DCEs after the start of a performance period will be provided in the Request for Applications.

Can beneficiaries opt out of the Model?

No.  Because beneficiaries in Geo maintain all their Original Medicare benefits and rights (while having the possibility of receiving additional benefits and lower out-of-pocket costs), beneficiaries will not be able to opt out of the model.  Having all Medicare FFS beneficiaries in the selected regions that meet the eligibility criteria included in the model is critical for avoiding adverse selection in the Model and being able to accurately evaluate the effects of the model on Medicare FFS quality and costs across the entire region. 

Direct Contracting Entities

Who is allowed to apply to be a DCE?

Participants in the model must be covered entities under the Health Insurance and Portability Accountability Act (HIPAA). Covered entities include most types of provider organizations as well as health plans. We anticipate interest from organizations that have significant experience taking risk in value-based care models including sophisticated Accountable Care Organizations (ACOs), health systems, health care provider groups and health plans.  We also anticipate some applications might include innovative partnerships between health plans and health care providers.

How will DCEs be selected?

The Geo Model will select participants through a two-step process.  First, applicants will be assessed on their capacity to carry out the requirements of the model.  Specifically, applicants will be judged against a rubric on nine domains: (1) organizational structure and experience; (2) leadership and management; (3) financial plan and risk-sharing experience; (4) patient-centeredness and beneficiary engagement; (5) quality and clinical process improvement; (6) network management; (7) care management; (8) compliance; and (9) IT systems. All applicants who meet a pre-determined scoring threshold on this rubric will then move to the second step of selection.

Second, regions and participants will be selected based on their proposed discounts. Applicants will propose a discount (expressed as a percentage of the region’s Performance Year Benchmark) for each of the three years of the relevant performance period. In the Request for Applications, CMS will indicate the minimum and maximum number of DCEs per region.  We expect the minimum number of DCEs per region to be at least 3 and the maximum number of DCEs per region to be between 3 and 7 depending on the number of Medicare FFS beneficiaries in a region.

Only applicants with proposed discounts above a regional minimum (expected to be between 2-3%) and that are actuarially sound (expected to be a maximum discount of between 8-9%) will be eligible to be selected.  For the applicants whose proposed discounts meet these criteria, CMS will select applicants with the highest average discount. Average discounts will be calculated by summing the discount for each Model Performance Year (PY) multiplied by the Model Performance Year Weight (PY1 40%, PY2 30%, PY3 30%).

How many beneficiaries will be aligned to each DCE?

Each DCE will be aligned a minimum of 30,000 beneficiaries. There is no maximum number of beneficiaries that may be aligned to a DCE. To determine a DCE’s number of aligned beneficiaries, CMS will calculate an Enrollment Allocation, which will be equal to the DCE’s average discount across the three relevant performance years divided by the sum of all DCEs’ average discounts in the DCE’s region. DCEs with a higher average discount in comparison to the other DCEs in their region will receive a higher number of aligned beneficiaries for that performance period. The Enrollment Allocation will be equal to a percentage of the total beneficiaries in the region, less those beneficiaries that have voluntarily aligned at the time of alignment. An example calculation of the Enrollment Allocation can be found below:

Performance Year Bid Discount	DCE1	DCE2	DCE3
PY1 Bid Discount	4.00%	4.00%	3.00%
PY2 Bid Discount	4.00%	5.00%	5.00%
PY3 Bid Discount	5.00%	7.00%	5.00%
Weighted Average	4.30%	5.20%	4.20%
Enrollment Allocation	31.39%	37.96%	30.66%

What tools will DCEs have to help improve quality and lower cost?

Geo will have three primary tools for improving quality and lowering costs:

• Preferred Providers: DCEs will have the ability to enter into relationships with Geo Preferred Providers, which will allow DCEs to provide value-based payments to those providers as well as to allow these providers to deliver enhanced benefits to beneficiaries.  DCEs will also have the option to offer lower out-of-pocket costs (in the form of lower co-pays or a Part B premium subsidy) to beneficiaries who receive all or a portion of their care from Geo Preferred Providers.
• Care Coordination & Clinical Management: DCEs will be able to implement a wide array of care coordination and clinical management programs to support aligned beneficiaries, including those with serious and chronic health conditions.  These programs can include the use of telemonitoring, telemedicine, interdisciplinary care teams, and care management.
• Reducing Unnecessary Services or Payments: DCEs will be allowed to perform certain program integrity functions to ensure adherence to Original Medicare policies, including review of coding practices, assessing adherence to national and local coverage determinations and medical appropriateness, and reducing fraud, waste and abuse.

What tools will DCEs have for care coordination and clinical management?

Subject to certain limitations and compliance with all applicable laws and regulations, DCEs, Geo Preferred Providers, and other individuals or entities performing functions or services on behalf of DCEs will be permitted to provide certain in-kind items or services to beneficiaries that have a connection to the beneficiary’s medical care. Examples of these beneficiary engagement incentives that DCEs could consider offering might include:

• Vouchers for over-the-counter medications recommended by a health care provider.
• Prepaid, non-transferable vouchers that are redeemable for transportation services solely to and from an appointment with a health care provider.
• Items and services to support management of a chronic disease or condition, such as home air-filtering systems or bedroom air-conditioning for asthmatic patients or a blood pressure monitor for patients with high blood pressure, and home improvements such as railing installation or other home modifications to prevent re-injury.
• Wellness program memberships, seminars, and classes.
• Decision support tools to support informed decision making and beneficiary education.
• Electronic systems that alert family caregivers when a family member with dementia wanders away from home or gets up from a chair or bed.
• Vouchers for those with chronic diseases to access chronic disease self-management, pain management and falls prevention programs.
• Vouchers for those with malnutrition to access meal programs.
• Phone applications, calendars or other methods for reminding patients to take their medications and promote patient adherence to treatment regimens.
• Vouchers for vision and dental care services.

Additionally, to influence healthy behaviors, subject to compliance with all applicable laws and regulations and CMS approval, CMS will permit DCEs to provide gift cards to eligible aligned beneficiaries up to an annual limit of $75 for the purpose of incentivizing participation in chronic disease management programs. DCEs may also provide Medicare Part B cost sharing support to beneficiaries who seek care from high-performing Geo Preferred Providers, subject to certain limitations and compliance with all applicable laws and regulations.

What tools will DCEs have for program integrity?

DCEs will have a variety of options for validating the medical necessity of services, supplies, and sites of care to ensure appropriate care is furnished to beneficiaries.  All program integrity functions must rely on applicable Medicare statutes, regulations, CMS rulings, National Coverage Determinations (NCDs), coverage provisions in interpretive Medicare Manuals, and Local Coverage Determinations (LCDs) when conducting these program integrity functions. 

For Geo Preferred Providers, DCEs may implement a range of program integrity tools including prior authorization, concurrent or pre-claim review, pre-payment claim edits, and pre-payment and post-payment medical and payment review so long as such tools are referenced in the agreement entered into between the DCE and the Geo Preferred Provider.

For Non-Preferred Providers[1], DCEs may also implement all the aforementioned tools but with one exception.  Prior authorization cannot be required of Non-Preferred Providers but may only be offered as an option to avoid other forms of pre-payment or post-payment review. 

CMS expects details on how DCEs may apply program integrity tools for Non-Preferred Providers will be included as part of the Request for Applications will issue in January 2021. 

Will DCEs be able to take capitation?

Yes.  There will be two voluntary capitation payment mechanisms available to DCEs and Geo Preferred Providers:

• Total Capitation: DCEs and Geo Preferred Providers will opt into reducing Geo Preferred Providers’ fee-for-service billing paid by MACs by 100%.  In turn, DCEs will receive a monthly capitated payment equal to the projected reduction in fee-for-service billings and be responsible for all downstream payments to Geo Preferred Providers.  Geo Preferred Providers will still be required to submit claims to MACs but those claims will treated as no-pay claims.
• Partial Capitation: Partial capitation will work the same as Total Capitation but Geo Preferred Providers’ fee-for-service billing will be reduced by MACs by between 1% and 50%.  In turn, DCEs will receive a monthly capitated payment equal to the projected reduction in fee-for-service payments.  DCEs may make additional downstream payments to Geo Preferred Providers as agreed upon between the DCE and DC Preferred Providers. 

The Innovation Center is exploring whether DCEs could also take capitation for Non-Preferred Providers if DCEs could demonstrate the ability to accurately pay at 100% Medicare fee-for-service rates and follow all Medicare coverage coding and timeliness guidelines.  CMS expects details related to capitation for Non-Preferred Providers will be provided in the Request for Applications in January 2021.

Providers

What are Geo Preferred Providers?

Geo Preferred Providers are Medicare-enrolled providers or suppliers who have voluntarily chosen to enter into an agreement with a DCE.

At a minimum, DCE and Geo Preferred Provider agreements must include: (1) an attestation by the Geo Preferred Provider that it is willing to participate in Geo as a Geo Preferred Provider, including following the applicable requirements of the model as set forth in the Participation Agreement between CMS and the DCE; and (2) specify the payment terms, if any, between the DCE and the Geo Preferred Provider.  DCEs’ agreements with Geo Preferred Providers may also include additional terms and conditions related to other payment and billing rules, care coordination, quality goals, and/or operational functions such as program integrity.

DCE and Geo Preferred Provider agreements may be added as amendments to any existing contracts that already exist between DCEs and DC Preferred Providers, such as contracts that exist for the purposes of ACO or Medicare Advantage programs.

Who is eligible to be a Geo Preferred Providers?

A Geo Preferred Provider is an individual or entity that:

• Is a Medicare-enrolled provider or supplier (as described in 42 C.F.R. § 400.202)
• Bills for items and services it furnishes to Medicare FFS beneficiaries under a Medicare billing number assigned to a TIN in accordance with applicable Medicare regulations
• Is not excluded or otherwise prohibited from participation in Medicare or Medicaid;
• Is identified on the DCE’s list of Geo Preferred Providers; and
• Has agreed, pursuant to a written agreement with the DCE, to participate in the model.

CMS expects to require Geo DCEs to submit Geo Preferred Provider lists the Innovation Center by September 1, 2021.

Can an individual or entity be a Geo Preferred Provider with more than one DCE?

Yes.  An individual or entity may choose to be a Geo Preferred Provider with one or more DCEs in a region.

What are the benefits of being a Geo Preferred Provider?

Being a Geo Preferred Provider offers providers many benefits including:

• Alternative Payment Arrangements: Geo Preferred Providers will contract directly with the DCE, allowing more flexibility for how Geo Preferred Providers are paid. For example, Geo Preferred Providers can be paid capitation, sub-capitation, quality bonuses, shared savings, or in any other arrangement agreed to between the DCE and Geo Preferred Provider.
• Quality Payment Program (“QPP”) Bonus: Geo Preferred Providers may quality for an APM Incentive Payment under the Quality Payment Program. CMS expects that the Geo Model will be an Advanced APM starting in Performance Year 2022, which would result in a subsequent 5% payment bonus on Medicare Part B claims payments for qualifying providers. For more information on APMs and the Quality Payment Program, please visit following link: https://qpp.cms.gov/about/qpp-overview.
• Benefit Enhancements and Care Management: Geo Preferred Providers will be able to offer beneficiaries enhanced benefits relative to Original Medicare. For example, Geo Preferred Providers may have the opportunity to broaden their use of telemedicine and care management, and the beneficiaries they treat may receive SNF services without a 3-day inpatient hospital stay, post-discharge home visits, home health visits when not homebound, and continue curative care while transitioning a beneficiary into hospice.  
• Decreased Administrative Burden: For Geo Preferred Providers in value-based arrangements with DCEs, the DCEs will have the flexibility to decrease some of the administrative program integrity requirements that exist in Original Medicare. This will allow Geo Preferred Providers to prioritize patients over paperwork.
• Lower Cost-Sharing and Increased Patient Volume: DCEs may offer beneficiary cost-sharing support and other incentives for beneficiaries to seek care from Geo Preferred Providers. Accordingly, being a Geo Preferred Provider may result in an increase in patient volume driven by the lower cost-sharing and the health care provider’s relationship with the DCE.

Does a provider or supplier have to be a Geo Preferred Provider?

No.  Being a Geo Preferred Provider is 100% optional (although required to access the benefits described in the prior question).

If a provider or supplier is not a Geo Preferred Provider, how much is that provider or supplier paid?

Non-Preferred Providers will be paid 100% of Original Medicare rates.

If a provider or supplier is a Geo Preferred Provider, can that provider or supplier be in another Innovation Center model?

Yes.  Geo Preferred Providers may participate in other Innovation Center models. A Geo Preferred Provider’s participation in Geo will not impact its participation in other Innovation Center models in any way.

If a provider or supplier is a Geo Preferred Provider, can that provider be in Medicare Shared Savings Program (MSSP)?

Yes.  Geo Preferred Providers may participate in MSSP.  A Geo Preferred Provider’s participation in Geo will not impact its ability to participate in MSSP in any way.

Financial Methodology

How do the finances of the Geographic Direct Contracting model work for DCEs?

The Geographic Direct Contracting Model financial methodology is based on a DCE’s performance against a region’s Performance Year Benchmark.  During the application phase, DCEs will bid a discount against the region’s Performance Year Benchmark.  DCE’s will be responsible for 100% of savings or losses above or below this discount.  The model also includes risk corridors, risk adjustment and quality adjustments as outlined in detail below.

How will the regional Performance Year Benchmarks be set?

A region’s Performance Year Benchmarks will be set using a Geographic Rate Book. The goals of the Geographic Rate Book are to move toward a more predictable calculation of benchmarks in risk-based Medicare FFS models and further align Medicare FFS and MA payment policies. The Geographic Rate Book will utilize a methodology similar to the Medicare Advantage Rate Book, which establishes county-level rates for MA Plans for Aged and Disabled beneficiaries and state-level rates for ESRD beneficiaries.

To create the Geographic Rate Book, CMS will utilize a fixed three year baseline period (CY 2017, CY 2018, and CY 2019) to derive the adjusted Historical Regional Expenditures. To establish the yearly Performance Year Benchmark, CMS will then trend forward the Historical Regional Expenditures to the performance year utilizing a prospective trend. For Performance Years Two and Three, CMS will utilize a national matched prospective trend, therefore not causing prospective trends to decrease due to prior Performance Year performance.  

How does risk adjustment work in the Model?

CMS will use the Hierarchal Chronic Conditions (HCC) risk adjustment methodology to account for the underlying health status of the population of beneficiaries aligned to a DCE.  Risk scores will be normalized and subject to a zero-sum coding intensity factor to ensure there is no increases in payments triggered solely by coding intensity increases.  Specifically, within each region, risk scores will be retrospectively re-scaled by dividing the raw risk score by the normalization and zero-sum coding intensity factors, so that the average DCE risk scores within a region are equal to the 1.0 average used to set the Performance Year Benchmark.

How is model overlap taken into consideration in the financial methodology?

Beneficiaries aligned to a Geo DCE may be eligible for attribution to other value-based care initiatives, including the Medicare Shared Savings Program (MSSP) and all other Innovation Center models except for the Direct Contracting Model Global Option. For overlapping models, all payments (inclusive of shared savings payments, care management fees, and/or other performance-based payments) made under MSSP or other Innovation Center models will be included in the performance year expenditures that are compared against the Performance Year Benchmark for purposes of calculating shared savings or shared losses for the DCE to which the beneficiaries have been aligned. Calculation of payments for overlapping initiatives, including MSSP or Innovation Center models, will not be affected by the Geo Model. An example model overlap calculation can be found below.

Example Model Overlap Payment Calculation

Step	Calculation	Value
(a) MSSP ACO Beneficiaries	-	2,000
(b) MSSP ACO Benchmark	-	$2,000,000
(c) MSSP ACO Performance Year Spend	-	$1,960,000
(d) MSSP ACO Shared Savings Payment	c * 50%	$20,000
(e) DCE 1 Overlapping Beneficiaries	-	1,000
(g) DCE 1 Overlap Payment	(e / a) * d	$10,000

 

Given that the financial methodology in the Direct Contracting Global Option includes an upfront discount that may or may not be equal to the discount bid by a DCE in Geo, CMS is considering potentially excluding beneficiaries aligned to participants in the Direct Contracting Global Option from alignment to a Geo DCE. If CMS decides to exclude these beneficiaries from Geo, beneficiaries aligned to a participant in the Direct Contracting Global Option will be excluded from alignment to a DCE in Geo and thus excluded from shared savings / shared losses calculations under Geo. Additional information on the overlap policy will be released within the Request for Application.

How do the risk corridors work in the Model?

The aggregate amount of savings or losses that DCEs will be eligible to receive as shared savings or be required to repay as shared losses will be constrained by a series of risk corridors. DCEs will receive a portion of shared savings, or be liable for a portion of shared losses, above each risk band, with the portion of gross savings / losses decreasing with each risk band.  Risk corridors will be applied to a given DCE’s savings minus its bid discount and after adding a standard 5% percentage point administrative load. Within the reconciliation process, CMS will cover risk corridor related shared losses only to the extent that it receives risk corridor payments from the DCEs. This risk corridor notional funding pool will persist over the life of the model, where risk corridor payments made by DCEs in early years can be used to make risk corridor payments to DCEs in later years. If in a given Performance Year there are not enough risk corridor payments to fully pay out DCEs’ risk corridor payments, the DCEs will receive payments that are prorated using their total expected risk corridor payments. Risk corridor bands will be as follows:

Risk Bands (Relative to Benchmark + Bid + Administrative Load Factor)	DCE Shared Savings/ Shared Losses cap	CMS Shared Savings/ Shared Losses cap
Risk band 1: plus or minus 5%	100% of savings/losses	0% of savings/losses
Risk band 2: between 5% and 10%	70% of savings/losses	30% of savings/losses
Risk band 3: between 10% and 15%	40% of savings/losses	60% of savings/losses
Risk band 4: greater than 15%	10% of savings/losses	90% of savings/losses

 

Is there a financial guarantee required to participate as a DCE?

Yes.  DCEs will be required to provide a financial guarantee equal to 10% of the DCE’s benchmark for each Performance Year.  CMS shall pursue payment under the financial guarantee for any shared losses or other monies owed.  DCEs shall submit their financial guarantee plans, which must include escrowed funds, a line of credit, a surety bond, or a proposal for an alternative financial guarantee mechanism for approval by CMS (for example, other risk-based capital reserves the DCE is already holding).  Any proposed alternative financial guarantee approach must address how the proposed financial guarantee mechanism will offer sufficient protection to CMS for any shared losses or other monies owed under the model. A financial guarantee must comply with all applicable state laws and regulations regarding risk-bearing entities.

Is there a financial incentive for DCEs to continue their participation in the model?

Yes.  DCEs will be subject to a retention withhold, that will be equal to 100% of the minimum expected savings of that region (likely 2% to 3% depending on the region) for the remaining performance years for a given performance period that are left after a DCE withdraws from of the model, called the retention amount. For example, if a DCE were to withdraw from the model at the end of 2022 and the minimum discount in the DCE’s region was 2%, the DCE’s would be subject to a retention withhold of 4% (2% for 2023 and 2% for 2024). The retention withhold amount will be secured with the same financial guarantee the DCE will use to secure its ability to repay CMS shared losses or other monies owed.

Quality

What is the Model’s quality strategy?

The goal of the quality strategy is to incentivize quality in three areas: patient experience, hospital admissions, and prevention.  The quality strategy is designed to be highly achievable in the first performance year and become increasingly challenging during subsequent performance years, encouraging both continuous improvement and high performance. All Quality Withholds (see details below) will be paid out to Model participants such that the Quality Withhold will not result in additional savings to CMS but may result in redistribution of payments among Model participants. 

What are the Model’s quality measures?

The Model’s quality measures are designed to align with prior ACO quality programs as well as the Medicare Advantage STAR ratings program.  There are seven quality measures:

• Consumer Assessment of Healthcare Providers and Systems (CAHPS)
• Risk standardized, all cause readmission measure
• Risk-Standardized Acute Admission Rates for Patients with Multiple Chronic Conditions
• Colorectal Cancer Screening
• Breast Cancer Screening
• Controlling High Blood Pressure
• Diabetes: Hemoglobin A1c (HgbA1c) Poor Control (>9%)

Data on each quality measure will be collected by CMS using a combination of strategies employed in existing ACO initiatives and Medicare Advantage including following the specifications in the STAR ratings program where applicable. For example, CMS will collect results of the CAHPS survey from a contractor hired by the DCE, and the readmission and admission metrics will be collected via submitted claims data. Cancer screening metrics, blood pressure control measures, and diabetes control measures will be collected in a manner consistent with the Medicare STAR ratings program.  CMS expects to provide additional details on how these measures will be collected in the forthcoming Request for Applications.

How large is the Model’s quality withhold?

The quality withhold begins at 1% in Performance Year 2022, is 2% in Performance Year 2023, and is 3% in Performance Year 2024 and beyond. The quality withhold amount will be calculated by applying the withhold percentage to the DCE’s Performance Year Benchmark.

How do DCEs earn back their quality withhold?

DCEs may earn back their quality withholds based on their quality scores. CMS will calculate the quality score in three steps:

Step 1: Calculate the Composite Quality Score: The quality score will be calculated by comparing the DCE’s performance on each quality measure against a national benchmark[2].  For each measure, CMS will set and publish a minimum and maximum benchmark threshold ahead of each performance year utilizing national data.  A DCE will receive a score between 0 and 100 for each measure, 100 if the measure is at or above the maximum benchmark, 0 if the measure is below the minimum benchmark, and partial credit if the score falls between the minimum and the maximum benchmarks. For partial credit, the DCE will receive a minimum score of 50 on that measure if the DCE’s score is greater than or equal to the minimum benchmark.

Step 2: Improvement Factor: Beginning in Performance Year Two, CMS will create an Improvement Factor that assesses whether a DCE demonstrates statistically significant improvement annually that exceeds most of its peers.  To determine if a DCE warrants an improvement factor, the DCE’s year over year improvement for each and all of its measures will be assessed against the mean improvement for all measures from all of its peers. CMS will determine on a measure-by-measure basis if the DCE’s improvement on that measure is statistically significant at a 95% confidence interval in comparison to all DCEs. If the DCE demonstrates significant improvement on all of their measures, the DCE will be considered to have met the Improvement Factor criteria and would receive an Improvement Factor award worth an increase of 10 points to the DCE’s overall Composite Quality Score up to the maximum of 100 percent. 

Step 3: Determine the Quality Payout: To determine the quality payment, the DCE’s Composite Quality Score (expressed as a percentage) will be applied to that year’s withhold amount.  The Quality Composite Score will include the Improvement Factor if applicable.  For example, if a DCE scores 80 in a given year, it will receive 80% of its withhold back for that year.

How does the High Performers Pool work?

The intent of the High Performers Pool (“HPP”) is to distribute any quality withholds not earned back by a DCE to DCEs who have exceptional quality performance. To distribute the HPP, CMS will rank all DCEs by their Composite Quality Score (after taking into account the Improvement Factor). DCEs with Composite Quality Scores that fall in the top third of all DCEs nationally will be eligible to receive payment from the HPP. To determine the HPP amount for each DCE, CMS will take the ratio of available HPP dollars to the sum of quality withhold dollars for all DCEs eligible for the HPP (e.g. those DCEs in the top third of quality performance) and multiply that ratio by the DCE’s quality withhold amount.  In other words, an individual DCE’s HPP would be calculated using the formula:

  DCE1 HPP Bonus= Total Available HPP dollarsSum of Quality Withhold dollars for all DCEs in the HPP×(DCE1 Quality Withhold dollars)

The payout to each DCE will be capped by the DCE’s quality withhold amount, meaning that a DCE would have the potential to earn up to a maximum of twice its quality withhold. Any unused HPP dollars will roll over to the next year’s pool.

 

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