Hi Olivia, thank you so much for writing this piece. I learned a ton about direct contracting!
One question I had was how it interfaces with MA plans and commercial insurers in general. It seems on first glance to be a relationship between CMS and provider groups, by passing commercial insurers. But then later on you say that many argue that the geographic model will end up in traditional Medicare members moving to Medicare Advantage. Can you provide more information on how exactly that would occur. Are MA plans entering into the Geo direct contracting agreements then? Or is it more that these provider groups would become like MA plans?
Another important distinction I think is that MA plans currently have a minimum MLR so they have a cap on how much of the medical savings they can retain (the remainder gets returned to CMS) Whereas I think with the geo capitation model, they would not be capped on how much of the savings they could keep, right?
Thank you for this! Right now, direct contracting is only for traditional Medicare members—I believe those bringing up MA in arguments against direct contracting are more invoking it as a symbol of a (somewhat pricey) offloading of a government service to private payors, and I think they fear direct contracting will be another example of that. And yes, re: capitation! DCEs get the yearly capitation rate and then have full risk/reward whether the patient costs more or less than the capitation amount. Geo is just one of the models, and it’s on pause right now, but the other two direct contracting models also allow for a capitation option.
I am also trying to wrap my head around the nuances of those in favor of and against direct contracting.
We spend more per capita and have worse health outcomes than any other OECD nation - clearly, our current model isn't working. And America seems to have accepted the need to shift away from FFS models and towards value-based care.
But then when the federal government seeks to incentivize capitation in a meaningful way - in doing so, extending primary care focused Medicare Advantage delivery models that have been proven to reduce unnecessary health spending and improve outcomes (Iora, ChenMed, Oak Street, Cano Health, etc.) - people get super worked up. At the same time, America seems to love capitation when it's a Kaiser or an Intermountain providing care (and receiving public dollars to provide care to Medicaid and Medicare eligible patients).
I've oversimplified a lot, I know. And I get that liberal politicians in particular might bristle at the specter of Trump-era policies that "increase privatization." But I do wonder what else I'm missing.
I think this is a good point; from what I can tell, a lot of the pushback comes from entrenched large players that require much more investment and effort to shift their model. But, to your point, that doesn’t mean policymakers should give up trying to incentivize innovation.
Hi Olivia, thank you so much for writing this piece. I learned a ton about direct contracting!
One question I had was how it interfaces with MA plans and commercial insurers in general. It seems on first glance to be a relationship between CMS and provider groups, by passing commercial insurers. But then later on you say that many argue that the geographic model will end up in traditional Medicare members moving to Medicare Advantage. Can you provide more information on how exactly that would occur. Are MA plans entering into the Geo direct contracting agreements then? Or is it more that these provider groups would become like MA plans?
Another important distinction I think is that MA plans currently have a minimum MLR so they have a cap on how much of the medical savings they can retain (the remainder gets returned to CMS) Whereas I think with the geo capitation model, they would not be capped on how much of the savings they could keep, right?
Thank you for this! Right now, direct contracting is only for traditional Medicare members—I believe those bringing up MA in arguments against direct contracting are more invoking it as a symbol of a (somewhat pricey) offloading of a government service to private payors, and I think they fear direct contracting will be another example of that. And yes, re: capitation! DCEs get the yearly capitation rate and then have full risk/reward whether the patient costs more or less than the capitation amount. Geo is just one of the models, and it’s on pause right now, but the other two direct contracting models also allow for a capitation option.
Thanks, Olivia. Definitely an exciting new space. Appreciate your writing about it. Looking forward to reading more of your work!
I am also trying to wrap my head around the nuances of those in favor of and against direct contracting.
We spend more per capita and have worse health outcomes than any other OECD nation - clearly, our current model isn't working. And America seems to have accepted the need to shift away from FFS models and towards value-based care.
But then when the federal government seeks to incentivize capitation in a meaningful way - in doing so, extending primary care focused Medicare Advantage delivery models that have been proven to reduce unnecessary health spending and improve outcomes (Iora, ChenMed, Oak Street, Cano Health, etc.) - people get super worked up. At the same time, America seems to love capitation when it's a Kaiser or an Intermountain providing care (and receiving public dollars to provide care to Medicaid and Medicare eligible patients).
I've oversimplified a lot, I know. And I get that liberal politicians in particular might bristle at the specter of Trump-era policies that "increase privatization." But I do wonder what else I'm missing.
I think this is a good point; from what I can tell, a lot of the pushback comes from entrenched large players that require much more investment and effort to shift their model. But, to your point, that doesn’t mean policymakers should give up trying to incentivize innovation.