Why You Should Consider Participating in CMS’ Direct Contracting

Why You Should Consider Participating in CMS’ Direct Contracting

Centers for Medicare and Medicaid Services

Do you know the real story behind CMS’ new Primary Cares Initiative? For the past 30 years, CMS has offered a variety of payment models to drive high quality, affordable healthcare with bundled payments, value-based purchasing, accountable care organizations, and more. CMS has used a collaborative approach with these models to support entities and providers with the transition to paying for performance. Let’s explore CMS’ Direct Contracting (DC) Model and why it is such a hot topic for those that want to transition while the opportunity to transition in a lower risk environment still exists.

As reviewed in our first blog on the CMS Primary Care Initiative, Primary Care First is for smaller settings (125+ beneficiaries) whereas Direct Contracting targets large practice groups (5,000+ beneficiaries). Last month, CMS released the Request for Application that provides more details around goals, structure, eligibility and implementation timelines. Here are a few takeaways:


A Direct Contracting Entity (DCE) is an ACO-like organization that enters into an agreement with CMS.

Seems like a broad definition, give me an example. Published literature indicates that it can be open to a variety of different organizations beyond your typical ACO, if requirements are met. Possible examples include: skilled nursing facility networks, managed care organizations, technology companies, home care, etc.

What’s the eligibility criteria?

  • Legal entity that contracts with DC participant providers and preferred providers
    • Participant providers? The core care suppliers that align beneficiaries to the DCE. Physicians, practitioners in a group setting, Rural Health Clinics, Critical Access Hospitals, etc.
    • Preferred providers? Providers are all types (tend to be specialists but does not have to be) that engage in advanced payment with the DCE.
  • TIN. The DC model is not a full-TIN, meaning NPIs within the TIN can participate in other CMS innovation models (i.e. split your NPIs between DC and Primary Care First-High Needs Populations).
  • 5,000 beneficiaries. Note: new entrants have a glide path to reach this volume threshold.


DC adopts a risk-sharing payment model with capitation mechanisms to permit predictable flows of funds to better support the development and improvement of care delivery processes. There are two payment options:

  • Professional: 50% savings/losses with primary care capitation (risk-adjusted monthly payment)
  • Global: 100% savings/losses with option of primary care capitation (like professional) or total care capitation (risk-adjusted monthly payment for all services provided by participant providers and preferred providers within the DCE).

The benchmarking methodology is a modified version of the Next Generation Accountable Care Organization model and includes the Medicare Advantage Rate Book, US per Capita Cost and the application of risk adjustment with complex, high needs conditions.


The proposed measure set follows Medicare’s push to simplify reporting requirements with this conservative, proposed measure set:

  • Risk-Standardized, All Condition Readmission
  • All-Cause Unplanned Admissions for Patients with Multiple Chronic Conditions
  • Advanced Care Plan
  • Days at Home (still needs to be developed)
  • As well as, CAHPS for ACO survey (but will not impact payment)

Today, there is a large amount of electronic health information that can be used to manage patient care, coordination and the business aspects of your services. Just as we use technology in our personal lives every day, analytics is an essential component to successfully functioning as a healthcare entity. KPI Ninja supports organizations and providers every day to do these exact things; analytics is the medium between value-based care delivery and payment reform. Our descriptive analytics with financial views, quality indicators and utilization dashboards help you understand yesterday and today. Our predictive analytics with risk scores, predicted cost and sentinel events help you understand tomorrow. With analytics directly aligned to prevalent innovation models, like CMS’ DC, we equip you to be successful with your value-based initiatives.

Renee Towne

About the Author
Renee Towne
VP of Population Health at KPI Ninja, Inc.
Renee provides operational leadership of quality initiatives at KPI Ninja. Towne has a background in occupational therapy, education and experience in operational excellence across a variety of healthcare domains. Based on prior experience as a clinician that drove outcomes patient by patient, she is leaving a larger footprint by improving health care more comprehensively, population by population.

About KPI Ninja
KPI Ninja is a data analytics company that helps healthcare organizations accelerate their quality, safety, and financial goals with a unique combination of software and service. We are differentiated by our signature mix of technology, performance management consulting and healthcare expertise. We don’t merely offer software solutions but work shoulder to shoulder with clients to help them draw on the power of analytics and continuous improvement methodologies to become more efficient. In harmony with our data-centered ethos, we truly believe that our success is strongly co-related with yours.

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