Industry Voices—CMMI chief: Direct Contracting Geographic Model a win for all stakeholders

care coordination
The Direct Contracting Geographic model is an important step forward for value-based care, writes Center for Medicare and Medicaid Innovation Director Brad Smith. (Getty Images)

In early December, the CMS Innovation Center announced the Direct Contracting Geographic Model, a new voluntary payment model focused on testing a new approach to value-based care in four to 10 regions across the country.

In the model, accountable care organizations, health systems, physician groups and health plans will take on full financial risk for the Medicare fee-for-service beneficiaries in a region. These entities, known as Geographic Direct Contracting Entities (DCEs), will have a range of new flexibilities that will allow them to form innovative partnerships with healthcare providers and implement a range of care management programs to improve the quality of care and reduce costs for Medicare beneficiaries.

This innovative model is CMS’ largest bet to date on value-based care and was developed through a methodical approach over nearly two years. The Innovation Center first discussed the idea of the model publicly and issued a formal request for information (RFI) in April 2019. 

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Over 85 organizations responded to the RFI, and the Innovation Center worked hard to incorporate this feedback and design the model in a way that would balance the needs of all stakeholders. Through this effort, the Innovation Center developed a model that offers a win-win-win for beneficiaries, the communities in which the model will operate and healthcare providers. 

A win for beneficiaries

Improving care for beneficiaries is at the heart of the model. Beneficiaries will maintain all the benefits and protections of Medicare fee-for-service, and DCEs will have the option to offer beneficiaries enhanced benefits including additional telehealth access, in-home care and care coordination services.

For example, a patient with high blood pressure may receive a free blood pressure cuff from a DCE to help monitor their blood pressure at home, or a patient with asthma may receive a home air conditioning unit that would have not been covered under Medicare fee-for-service.

The model also allows DCEs the option to lower out-of-pocket costs for beneficiaries both by reducing cost-sharing for Part A and Part B services as well as by offering a subsidy to offset beneficiaries’ Part B premiums. Beneficiaries will maintain access to all Medicare-enrolled providers and have the choice of which DCE to align with. Most importantly, the model will provide beneficiaries access to a less fragmented healthcare system that can meet the unique needs of each beneficiary.

A win for communities

By taking a regional approach, the model allows DCEs to transform how care is delivered across an entire geographic area. In the model, DCEs are accountable for the cost and quality of care delivered to beneficiaries, with quality being measured by several metrics including patient satisfaction, hospitalizations, readmissions and the percentage of beneficiaries with their blood pressure and diabetes under control. 

These quality measures will incentivize DCEs to partner with other healthcare providers in the region to innovate new ways to deliver high-quality care. For example, DCEs can build Preferred Provider networks to incentivize beneficiaries to seek care from the region’s high-value providers. The model also gives DCEs the ability to implement a wide range of care management programs that are currently not available in Medicare fee-for-service.

A win for healthcare providers

Healthcare providers are the backbone of the American healthcare system, and the model offers providers several opportunities and flexibilities that do not exist in Medicare fee-for-service. Not only can providers apply to be DCEs, but providers who choose not to be a DCE can voluntarily form innovative partnerships with DCEs. To facilitate these partnerships, the model allows providers to become Preferred Providers with a DCE.

Being a Preferred Provider offers a number of flexibilities including the ability to enter into value-based contracts with DCEs, lower cost-sharing for beneficiaries and offer beneficiaries enhanced benefits including enhanced telehealth and home care services. That said, no provider is required to become a Preferred Provider. If a provider chooses not to become a Preferred Provider, they will continue to receive 100% of Medicare fee-for-service rates.

Most importantly, under the model, providers will continue to be able to participate in all of CMS’ existing value-based care models, including the Medicare Shared Savings Program and all other Innovation Center models. For providers participating in other value-based care models, nothing will change about how their existing value-based care model operates—beneficiaries will be attributed in the same way, participants will receive the same flexibilities they have today and participants will still be eligible for all the same upfront and shared savings payments.

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In addition, to the extent that DCEs lower costs in a region, participants in other value-based care models that include shared savings payments will benefit, as participants will receive a portion of these lower costs as additional shared savings payments.


The Direct Contracting Geographic model is an important step forward for value-based care, as it allows value-based transformation to occur at the regional level in a way that benefits all Medicare fee-for-service beneficiaries in a region. 

Most importantly, it is a win for everyone involved—beneficiaries, communities and healthcare providers. I strongly encourage healthcare entities in the selected regions to consider actively participating in this new and exciting model.

Brad Smith is director of the Center for Medicare and Medicaid Innovation at the Centers for Medicare & Medicaid Services.