As part of a series of adjustments that the Center for Medicare and Medicaid Innovation (CMMI) has been making due to COVID-19, the Centers for Medicare & Medicaid Services (CMS) recently announced a new opportunity for the Direct Contracting model; letters of intent and applications are due by July 6 at 11:59 PM ET. The start date for the first performance year is now April 1, 2021.

Organizations potentially interested in this alternative payment model should consider it right now if they are seeking options to move towards value-based arrangements and if they have access to sufficient physicians to drive enrollment in the program. The High Needs Population model has the potential to be of interest to provider-sponsored health plans, Programs of All-inclusive Care for the Elderly (PACE), and post-acute providers with affiliated or employed physicians.

Direct Contracting Model Background

The direct contracting program is a risk-based alternative payment model for Medicare fee-for-service (FFS) enrollees. It was intended as a successor to the Next Generation accountable care organization (ACO) program that was set to expire next year—but that program has now been extended one year. Under this new program, CMMI contracts with a Direct Contracting Entity (DCE) that in turn contracts with participant providers (doctors) who will be responsible for the care provided. DCEs can also contract with preferred providers, who can share in the risk. DCEs will have certain benefit flexibilities and waivers from CMS rules.

High Needs Population Option

The direct contracting program has several models, but the one that is most relevant to post-acute and senior care providers is the High Needs Population option. This option is for DCEs that serve Medicare FFS beneficiaries with complex needs, including dually eligible beneficiaries. These beneficiaries must be aligned to the DCE either through voluntary beneficiary alignment or through a claims-based formula that considers whether a beneficiary receives the plurality of their visits from the physician. The enrollees must meet clinical criteria, including either impairment in mobility or sufficient risk score and/or unplanned hospitalizations in the recent past.

According to CMMI, these DCEs are expected to use a model of care designed to serve individuals with complex needs, such as the one employed by PACE, to coordinate care for their aligned beneficiaries.

Of note, High Needs Population DCEs have a lower population target; they ultimately are required to have 1,400 Medicare Part A & B beneficiaries enrolled by performance year five, with a glide path to reach that. This is a lower target than the other models with direct contracting.

Target Applicants for High Needs Population Option

The linchpins for the High Needs Population program are having access to a high-needs Medicare FFS population and to participating physicians sufficient to meet enrollment targets. High Needs Population DCEs that may meet these criteria include post-acute and long-term care providers, PACE organizations, Managed Long Term Services and Supports (MLTSS) plans, Special Needs Plans, and Federally Qualified Health Centers (FQHCs), among others. The organization must have access to physicians and be willing to take risk.

Next Steps

CMMI did also announce a second cohort for next year, but planning should start now if interested in in this option, especially if considering it for the upcoming performance year, as applications are due Monday, July 6.

HDG can assist post-acute and senior care providers in better understanding and submitting applications to participate as a DCE. For more information, please contact us at or 763.537.5700.