Healthmonix Advisor

CMS To Launch New Payment Models For Value-Based Transformation

Posted by Christina Zink on April 26, 2019
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On April 22, the U.S. Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) announced the CMS Primary Cares Initiative, a new set of payment models that are part of HHS Secretary Alex Azar’s value-based transformation initiative. The CMS Primary Cares Initiative will be administered through the CMS Innovation Center. CMS expects the new programs to shift at least one quarter of people in traditional Medicare out of fee-for-service.

The new initiative contains five new payment model options under two paths: Primary Care First and Direct Contracting.

The payment model options under Primary Care First are:

  1. Primary Care First (PCF) – General
  2. Primary Care First – High Need Populations

The payment model options under Direct Contracting are:

  1. Direct Contracting (DC) – Global
  2. Direct Contracting – Professional
  3. Direct Contracting – Geographic


Primary Care First (PCF)

The PCF path is designed to address the need to preserve and strengthen primary care; and to support complex, chronic, and serious illness care services for Medicare beneficiaries. PCF aims to create a seamless continuum of care, making providers at various stages of readiness accountable for patient outcomes.

1. The general PCF payment model option tests whether delivery of advanced primary care can reduce total cost of care. It focuses on advanced primary care practices ready to assume financial risk in exchange for reduced administrative burden and performance-based payments. This payment model also introduces higher payments for practices caring for complex, chronically ill patients.

2. The PCF – High Need Populations payment model option is for advanced primary care practices, including practices with Medicare-enrolled clinicians who typically provide hospice or palliative care services, to take responsibility for high need, seriously ill beneficiaries (referred to as the Seriously Ill Population, or SIP) who lack a primary care practitioner and/or effective care coordination.


Direct Contracting (DC)

The DC path is aimed at reducing cost and preserving or enhancing quality of care for beneficiaries in Medicare fee-for-service (FFS). The payment model options under DC build on initiatives related to Medicare ACOs, such as the Medicare Shared Savings Program and the Next Generation ACO Model, as well as Medicare Advantage and private-sector risk-sharing models.

1. Under the Direct Contracting – Global payment model option, Professional PBP Direct Contracting Entities (DCEs) bear risk for 100% of shared savings/shared losses on the total cost of care (i.e. all Parts A and B services) for aligned beneficiaries. Global PBP DCEs choose between two payment options:

  • Primary Care Capitation - a capitated, risk-adjusted monthly payment for enhanced primary care services equal to seven percent of the total cost of care for enhanced primary care services; or
  • Total Care Capitation - a capitated, risk-adjusted monthly payment for all services provided by DC Participants and Preferred Providers with whom the DCE has an agreement.

2. Under the Direct Contracting – Professional payment option, Professional PBP Direct Contracting Entities (DCEs) bear risk for 50% of shared savings/shared losses on the total cost of care for aligned beneficiaries. Professional PBP DCEs will receive Primary Care Capitation.

3. Under the Direct Contracting – Geographic payment option, Geographic PBP DCEs bear risk for 100% of shared savings/shared losses on the total cost of care for aligned beneficiaries in a target region. Geographic PBP DCEs must apply and be selected, and must commit to providing CMS a specified discount amount off of total cost of care for the defined target region.

Like the other two models under this path, the Geographic payment option offers optional Total Care Capitation. Or, Geographic PBP DCEs can assume full financial risk while having CMS continue to make FFS claims payments to all providers in the target region.

In an effort to further refine specific design parameters for Geographic PBP, CMS is seeking additional input from the public through a Request for Information (RFI). The Direct Contracting—Geographic RFI can be found here.


If you have questions about what all this might mean for your organization specifically, don’t hesitate to reach out! You can schedule a meeting with our team of experts here. Or for more general questions about MACRA and MIPS, check out our MIPS Learning Center and Educational Resources.

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Topics: CMS, Policy, VBC