CMS Revamps Direct Contracting Model

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In response to feedback from stakeholders, the Centers for Medicare & Medicaid Services (CMS) announced on Thursday that it will cancel one direct contracting accountable care organization (ACO) model and replace a second direct contacting model with a redesigned version focused on improving health equity for patients.

Stakeholder groups shared clashing responses to the new announcements, with one physician group arguing that the redesign repeats the “fatal flaws” of the original model.

The Center for Medicare and Medicaid Innovation (CMMI) has decided to cancel the Geographic Direct Contracting model and replace the Global and Professional Direct Contracting (GPDC) model with the redesigned ACO Realizing Equity, Access, and Community Health (REACH) model.

“The Biden-Harris Administration remains committed to promoting value-based care that improves the health care experience of people with Medicare, Medicaid and Marketplace coverage,” said CMS Administrator Chiquita Brooks-LaSure in a press statement.

As part of that commitment, she stated, CMMI is making changes to current models and launching new ones and testing all of them, with the goal of increasing quality of care — particularly patients in underserved communities, she stated.

The patients who have suffered the most over the last 2 years have been those with chronic illnesses who transition in and out of their homes or nursing homes to hospitals, said a senior CMS official during a press call on Thursday.

With that in mind, CMMI is focused on advancing care models focused on making care more accountable for patients with chronic diseases, because better payment models can translate to better patient care and if done right, better cost outcomes, the official said.

All GPDC participants who wish to continue in the Direct Contracting program will have to agree to meet the ACO REACH model requirements by January 1, 2023, noted a CMS fact sheet.

“The GPDC model will be renamed the ACO REACH model to better align the model’s name with its purpose: to encourage health care providers to coordinate care to improve the care offered to people with Medicare – especially those from underserved communities, a priority of the Biden-Harris Administration,” the press release noted.

“CMS is also committing to greater transparency by releasing more information on current GPDC model participants and strengthening monitoring to ensure beneficiaries whose providers participate in GPDC and ACO REACH receive high-quality, patient-centered care during 2022 and beyond,” according to the agency’s fact sheet.

There are a few marked differences between the original GPDC model and ACO REACH, senior CMS officials noted during Thursday’s press call, which was held on background. Officials also shared a side-by-side comparison table of the original model and the redesign.

First, the REACH model calls for four key changes related to health equity, that all participants must do the following:

  • Develop a Health Equity Plan that identifies disparities and concrete actions to address them
  • Incorporate a health equity benchmark adjustment for underserved communities
  • Collect beneficiary-reported data related to social needs and demographics
  • Adopt a Benefit Enhancement to expand the types of services that nurse practitioners can provide to beneficiaries with the aim of improving access

Second, while the original GPDC model providers were required to hold at least 25% of a governing board’s voting rights in the REACH model, participating providers must hold 75% of those rights. In addition, each governing board under the ACO REACH model must have a separate beneficiary and consumer advocate, which under the GPDC model might have been the same person. Under the ACO REACH model, the beneficiary representative and consumer advocate must also have voting rights.

Third, the new model will include greater beneficiary protections such as “enhanced vetting, compliance and monitoring activities,” noted senior agency officials. Participants in the ACO REACH model will also be audited to ensure they are clearly communicating information regarding beneficiary participation in the models, and participants will be watched closely to “identify inappropriate coding practices,” according to the agency’s comparison table.

One significant element of the new model is that it aims to limit code growth, which has been a “great concern” in Medicare Advantage plans, noted a senior agency official on Thursday.

“And so we see this as not creating the same vulnerabilities that we have to the statutory construction on to the [Medicare Advantage] side, but [an] opportunity for us to test ways to continue to risk adjust,” said a senior CMS official.

“Today’s announcement we think reaffirms CMS’ overall commitment towards Accountable Care and reaffirms the purpose of the Innovation Center, to continue to test and help to inform better policy going forth,” added the official.

Susan Rogers, MD, an internal medicine physician and president of Physicians for a National Health Program (PNHP), slammed the agency’s announcement.

“ACO REACH is Direct Contracting in disguise … This new model doubles down on Direct Contracting’s fatal flaws, inserting a profit-seeking middleman between beneficiaries and their providers,” Rogers said in a press release. “The ACO REACH payment model establishes a dangerous incentive for middlemen to restrict patient care, an incentive that has never previously existed in Traditional Medicare.”

PNHP argued that the new model gives “middlemen” a flat fee to oversee seniors’ care, and then lets them keep 40% of whatever isn’t spent on care as profit and overhead. The model automatically enrolls seniors without their understanding or consent, and once enrolled, seniors cannot opt out without changing primary care providers, the group stated.

And like the original direct contracting model, the ACO REACH model places “virtually no limits” on the types of companies that can participate — “entities can be owned by commercial insurers, private equity investors, and other profit-seeking firms, including current Direct Contracting entities,” noted PNHP.

While new requirements increase provider governance from 25% to 75%, Rogers stated, “Investors want a return on their investment, creating a dangerous incentive for ACO REACH middlemen to both maximize revenues through upcoding, and minimize expenditures by restricting patient care.”

Clif Gaus, ScD, president and CEO of the National Association of ACOs, strongly disagreed, calling the agency’s changes “the right decision for both traditional Medicare patients and the future of value-based care. Many of the criticisms against Direct Contracting were a product of great misunderstanding about the model and the overall shift to value-based payment. Instead, keeping the model with additional focus on equity, increased provider governance, improvements to risk adjustment, and other changes is best moving forward.”

“In spite of the rhetoric being used, traditional Medicare patients need more access to coordinated care and providers who are accountable for their quality and total cost of care,” Gaus said in a press release. “When a patient’s doctor is accountable for their outcomes, patients are more likely to have team-based care, care coordinators helping their transitions out of hospitals, an emphasis on prevention and chronic disease management, and more efficient care through telehealth or home visits, all of which leads to higher quality care and lower out of pocket costs for patients. ACO models are helping improve our healthcare system and produce better outcomes for patients.”

The original GPDC model will continue as is until Dec. 31, 2022, with the ACO REACH model slated to begin Jan. 1, 2023, said CMS officials.

CMMI has issued a request for applications for participants in the ACO REACH model and will begin accepting applicants this spring, officials added.

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    Shannon Firth has been reporting on health policy as MedPage Today’s Washington correspondent since 2014. She is also a member of the site’s Enterprise & Investigative Reporting team. Follow

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