More than 200 healthcare organizations ask HHS to keep direct contracts

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More than 200 health care organizations have called on Health and Human Services Secretary Xavier Becerra to keep the global, professional direct contract model as some Democrats rise up against the Trump-era Medicare program.

The 222 organizations sent a letter to Becerra, saying “fix, not terminate” the Centers for Medicare and Medicaid Innovation direct contract model.

Supporters include health systems such as Banner Health, Intermountain and Sutter Health.

In the signing letter, the National Association of CCOs trade group said direct contracting is currently the CMS Innovation Center’s premier responsible care model. It seeks to build on the success of the next-generation ACO model, while rethinking healthcare delivery and payment, NAACOS said.

Fixes could include rebranding and a name change, as the geographical direct contract model – which is very different and has been discontinued – is confused with the global and professional direct contract model.


If global and professional direct contracts were to be abruptly discontinued, healthcare providers would be terminated from participation in value-based payment without warning, making them much less likely to invest and participate in future payment models. CMS, NAACOS said.

In addition, direct contracting entities have proportionately more providers in communities with high numbers of low-income and minority patients, NAACOS said. Killing the model would harm underserved populations.

The next-generation ACO model, on which the direct contract is based, has improved care and generated $1.7 billion in gross savings and $836 million in net savings for the CMS between 2016 and 2020, according to NAACOS .

However, opponents fear the model is a move toward privatizing Medicare. The program allows private companies to participate in Medicare, which aims to reduce costs for the federal government.

Medicare Advantage plans, which are popular with consumers and lucrative for insurance companies, are already a step in that direction, opponents say.

Sen. Elizabeth Warren, D-Massachusetts, has called on the Biden administration to withdraw the direct contract payment model, fearing it could hand Medicare over to “corporate profiteers,” she said during a a Senate Finance Committee subcommittee hearing on February 2.

A group of more than 1,500 physicians have signed a petition to end the direct contract model.


In November 2021, the Innovation Hub announced that 51 responsible care providers and organizations would participate in direct contracts over the coming year.

The model rewards providers who deviate from traditional Medicare fee-for-service by offering capitation and partially capitation payments.

“Contrary to misinformation from opponents, traditional fee-for-service Medicare patients who are involved in the direct contract program retain their freedom to see any consenting provider,” Crane said. “In fact, not only do they retain all of their original Medicare benefits and entitlements, but they also receive additional benefits and reduced costs.”

APG says direct contracts are a necessary, high-risk, value-based payment model that was designed to improve patient care. The CMS Innovation Center, created under the Affordable Care Act, is an important tool for testing value-based payment models, such as the direct contract model, that make health care more affordable while improving the quality of care.

Twitter: @SusanJMorse
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