Medicaid MCOs covering dual-eligibles to join direct contracting

MM Curator summary

CMS will start allowing health plans that serve duals to participate in shared savings on the Medicare side under a new payment model (they currently can participate in shared savings on the Medicaid side). There will be 2 types of applications accepted: professional (with 50% of shared savings and losses) and the global (the plan is fully at-risk).



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CMS’ Center for Medicare and Medicaid Innovation will allow Medicaid managed care organizations serving beneficiaries dually eligible for Medicaid and Medicare to take part in its new direct contracting model, the agency said Thursday.

It’s the first payment model to enable Medicaid MCOs to coordinate and manage care for beneficiaries enrolled in both Medicaid managed care and Medicare fee-for-service coverage, according to CMMI. The agency wants to encourage Medicaid MCOs to coordinate care to lower Medicare fee-for-service costs by allowing them to take part in direct contracting’s global and professional options.

The professional track offers participants 50% shared savings/shared losses, while the global track puts participants fully at-risk.

“CMS believes that dually eligible individuals can benefit from more integrated systems of care that meet all of their needs — primary, acute, long-term, behavioral, and social — in a high quality, cost-effective manner. This new opportunity to participate in direct contracting creates the incentives and flexibilities for Medicaid MCOs to better integrate care for these beneficiaries,” CMS said in a statement.

Medicaid MCOs with dually eligible beneficiaries currently have no incentive to coordinate care to lower Medicare costs, CMS said. That’s because current savings from managed care investments in Medicaid services that reduce acute care utilization benefit Medicare, not Medicaid MCOs.

The agency suggested Medicaid MCOs and their affiliates could improve care and lower costs for dual eligibles by connecting them with high-value primary care providers, targeting care coordination to high-cost beneficiaries and better coordinating long-term services and supports, among other strategies and tactics.

CMMI plans to start accepting applications for all professional and global participants early next year, including MCO-based direct contracting entities.

Unlike other direct contracting entities, CMS will only use enrollment-based alignment to assign beneficiaries to MCO-based entities. It won’t use claims-based or voluntary alignment.

In addition, entities that don’t name participating or preferred providers won’t have to enter capitation-based arrangements. But if they do, they can use those payments to support population health.

For example, an MCO-based entity could enter “value-based payment arrangements with its downstream (providers) or to invest in healthcare management tools, such as innovative healthcare technologies (e.g., remote monitoring),” CMS said in a fact sheet.

According to CMS, CMMI will make sure MCO-based direct contracting entities align with states’ plans to better serve dually eligible beneficiaries by requiring them to get a letter of support from their state Medicaid agency to participate in the model.

“CMS will track both Medicare and Medicaid expenditures in order to ensure there is no cost-shifting from Medicare to Medicaid or vice versa,” CMS said in a statement.

Direct contracting is an evolution of CMS’ accountable care models and offers new waivers, beneficiary engagement tools and other flexibilities. Experts say its professional and global tracks favor new entrants over existing ACOs. CMMI has been on a tear in recent weeks, debuting its geographic option for direct contracting earlier this month. The geographic option created new ways for health plans to participate in direct contracting, just like this latest annoucement. Some stakeholders aren’t enthusiastic about the recent focus on insurers.

“We urge the Innovation Center to … put back the provider emphasis into this model. Specifically, to ensure ACOs and providers who are already focused on value-based care have an equitable opportunity to be successful in the professional and global options,” the National Association of ACOs said in a letter to CMS on Wednesday.