Pause to Alternative Payment Models Gives Some Providers a ‘Golden Ticket,’ Leaves Others Behind

The Global and Professional Direct Contracting Model — a Center for Medicare & Medicaid Innovation (CMMI) creation — has been put on pause.

The holdup is just another example of CMMI pumping the brakes on an alternative payment model in the days since the Biden administration took over the executive branch.  

Broadly, the Global and Professional Direct Contracting Model offers different options to involve private health care companies in risk-sharing arrangements for traditional Medicare. The goal is to lower costs while improving care for Medicare-eligible patients.


The 53 organizations that had been admitted to the direct-contracting program — whether through the “Global” or “Professional” track — already are being grandfathered in, essentially. But for now, any additional applicants will have to wait.

The direct-contracting entities (DCEs) already involved include in-home medical care provider Landmark Health and whole-person senior care company Lifesprk. Value-based primary care provider Oak Street Health (NYSE: OSH) and Walgreens-backed primary care provider VillageMD are also DCEs, among others.

CMMI originally announced the models in early 2019. They took effect for the 53 participants on April 1.


“I feel like I’m [Charlie in] Willy Wonka and I got the golden ticket,” Joel Theisen, the founder and CEO of Minnesota-based Lifesprk, told Home Health Care News. “I mean, I don’t know how we’re going to use it exactly yet. There’s still a lot to learn. But I did feel kind of like, ‘Boy, we got the golden ticket. We have a real opportunity here.’”

Lifesprk is a holistic health care provider that offers a suite of home-based care services. It recently netted a $16.1 million investment from Virgo Investment Group.

Other providers that saw this as a potential tailwind for their companies, however, have been put to the side as new Centers for Medicare & Medicaid Services (CMS) personnel review the ins and outs of all policies and programs from the former administration.

On April 13, dozens of health care organizations — including VillageMD — wrote a letter to CMMI Director Elizabeth Fowler to condemn the pause.

“The undersigned organizations, through the advocacy of the America’s Physician Groups Direct Contracting Coalition, submit this letter strongly urging you to provide an opportunity for prospective applicants to apply for the Global and Professional Direct Contracting Model by reopening the portal for applications and accepting new applicants for a January 1, 2022 start date,” the letter read.

Providers that were eager to engage in the model — or other ones paused by the new administration — have reason to be frustrated.

But outsiders should not look at the pause as anything other than that for the time being, Tyler Cromer, a principal at ATI Advisory, told HHCN.

“I think it’s very normal when there’s a change in administration to take a pause and review recent initiatives, recent guidance documents and regulations,” Cromer said. “Every new administration will do that. It’s a very normal thing to do, and I think that CMMI is definitely doing just that. I would absolutely not interpret this as a move away from continuing to push the envelope forward on value-based care.”

ATI Advisory is a Washington, D.C.-based research and advisory firm.

On the hospice side, for instance, CMS also elected to delay the implementation of the Primary Care First Serious Illness Population payment model.

“I would hope this isn’t a move that’s a push back from fee-for-service entities lobbying on the fact that this opens up the opportunity for others to play,” Theisen said. “I hope it’s not that. Obviously, it’s an administration change, … but it would really break my heart to see the administration — or CMS directly — go backwards. I mean, we’re still in the same spot with a broken system and very fragmented, siloed services for people, where we’re not creating a longitudinal experience and are not creating real value.”

There were some skeptics of the direct-contracting payment arrangements, including the National Association of Accountable Care Organizations (NAACOS), which felt there were too many challenges in the details for legacy accountable care organizations (ACOs) to get involved.

But outside of NAACOS, providers around the country generally met the new models enthusiastically and as an opportunity to advance value-based care in the U.S.

“I was really excited about this model,” Cromer said. “I think that there are a couple of really great things about direct-contracting, including the fact that it provides a path for new entrants, without the 5,000 beneficiary [threshold] off the cuff, that you can build up to more beneficiaries being aligned to you. Over time, I think that’s really a great addition, compared to the ACO models that existed prior to direct contracting.”

There are also more clear benchmarks in the model that Cromer believes will offer more opportunities to more providers over time, when — and if — it’s continued.

“The opportunity there with high-needs patients is also really exciting,” Cromer said. “It lends an opportunity to really focus on a model of care for providing services to those folks who have a [more clinical complexity], who really need a higher level of care and a more intense intervention.”

A “Geographic Direct-Contracting Model” was set to be added to the Global and Professional direct-contracting options as well, but that initiative has likewise been halted. The Geographic model is — in theory — another voluntary direct-contracting pathway that was designed by former CMMI officials to pay health care providers for the quality of their care and ability to cut costs.

The Geographic option was supposed to take applicants in 2021 and subsequently begin on Jan. 1 of 2022. Participants would be taking upside and downside responsibility for Medicare beneficiaries’ health outcomes, giving them more incentive to improve care in their specific markets.

Problems with the pause

Even if the pause is simply the result of an administration change, it pushes back the value-based care timeline and makes providers wait to participate in innovative models that could benefit patients.

“My intention is not just for Lifesprk to thrive. I’m someone who wants to see the industry change. I want to see the industry movement. I want to see other people learn from this opportunity — and I was hoping we’d learn together,” Theisen said. “I mean, by holding off new entrants, it will obviously [stymie] that learning process a bit, and the ability to fail forward and figure this idea out.”

The co-signers of the letter to CMMI called the move an “unfortunate decision” that is a “serious blow to the progress of the movement towards value-based care.”

“For providers to prepare for something like this, it takes analysis, diligence and in some instances building a provider network and creating contracts with those providers,” Cromer said. “It takes a really substantial up-front investment to be prepared to deliver a strong care model and to be able to take on that level of risk. And so when the bars move, that makes it really hard to take on that level of investment.”

The hope for the providers left behind is that the pause will be short lived and unceremonial.

Fowler did say Tuesday during a NAACOS virtual event that the center is still committed to testing models, improving quality and lowering costs during her tenure.

“We want the CMS Innovation Center model tests to work, to lower costs, improve quality of patient care and better align payment systems to promote patient-centered practices,” Fowler said. “But we also need to be honest about the nature of innovation, that not everything is going to be a home run. Some things will work, others won’t.”

A new start date has not been proposed, so for now, those 53 providers with the golden ticket will continue to be sole beneficiaries of the direct-contracting model.

If CMS decides to go ahead with it, there will be a line of providers waiting to jump back in.

“I know of providers that were really excited about using this model as an opportunity to bring their care model for Medicare Advantage over into Medicare fee-for-service,” Cromer said. “And I just don’t want that opportunity to be the last. I really hope that CMMI is working hard — and I’m sure they are — on whatever the next opportunity is … that really allows these providers to bring their care models to fee-for-service beneficiaries.”

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