CMS Taking ‘Laissez-Faire’ Approach to Direct Contracting

Signify Health’s (NYSE: SGFY) leaders are as cautiously optimistic and encouraged by the prospects of direct-contracting models as almost anyone.

For now, Signify works with the government to give the Centers for Medicare & Medicaid Services (CMS) insight on how the models could work in the future. The company also works with adjacent organizations that may want to get involved in direct contracting.

With all those moving parts, Francois de Brantes, the SVP of commercial business development at Signify, believes that value-based care in the U.S. is at a critical juncture.


From a lawmaking perspective, despite pauses to the direct-contracting models once the Biden administration took the helm, things are looking mostly solid, he told Home Health Care News.

“I’ve actually been really surprised by the bipartisan support for direct contracting,” de Brantes said. “At the edges, you always have people who either don’t have a full understanding of a program or who are critical for the sake of being critical.”

That hasn’t been the case with direct contracting, one of the newest alternative payment arrangements from CMS and its innovation hub.


“In the past week and a half, we’ve had conversations with a number of staffers in various congressional offices about direct contracting and other issues pertaining to value-based payment programs,” de Brantes added. “And they like it. They’re all supportive, and they all seem to understand.”

Broadly, direct contracting with CMS gives private health care providers a chance to engage in risk-sharing arrangements with traditional Medicare, hoping the concept brings down costs and improves care. There are various direct-contracting “options,” with each presenting a different level of potential upside or downside risk.

Dallas-based Signify is a value-based platform that leverages analytics and technology to divert care into the home. The company went public earlier this year, posting a market capitalization of $7.12 billion in its stock market debut, and sees direct contracting as a great opportunity moving forward.

The Center for Medicare & Medicaid Innovation (CMMI) has been busy tinkering with the concept for the better part of 2021. The Global and Professional Direct Contracting Model got under way on April 1, with 53 participants.

“I think there is this general view that it fills a gap,” de Brantes said. “There’s also a general view — and an appropriate one — that this is far more administratively challenging than the other programs.”

To alleviate some of that burden, regulators have given direct-contracting stakeholders plenty of runway.

“CMS has actually much more of a laissez-faire, figure-it-out-on-your-own attitude in this program,” de Brantes said.

All around, the direct contracting models are more complex than others that have been created by CMMI, he explained. That includes the Next Generation ACO Model, which will officially cease to exist by the end of this year.

The Next Generation ACO Model was one of the more advanced value-based arrangements that CMS had tried its hand at, with risk-bearing entities taking between 80% and 100% of upside and downside risk. But it ultimately did not pan out as CMMI hoped.

Those who participated in the Next Generation Model are able to move into direct contracting, however.

Thinking things through

The aforementioned pause had to do with the inherent complexity in the direct-contracting models. There was also some blowback to the proposed Geographic Direct Contracting Model, de Brantes believes.

That direct-contracting option was designed to test whether a geographic-based approach to care delivery and value-based care could improve health and reduce costs for Medicare beneficiaries across a given region.

After receiving concerns about its expansiveness, CMS put the option “under review” and said it will no longer begin on Jan, 1, 2022.

Apart from the total stop to the Geographic Direct Contracting Model, CMS said it was temporarily blocking any additional organizations from becoming approved direct-contracting entities (DCEs) as well.

But that doesn’t worry Signify, de Brantes said.

“I think they were justified in saying, ‘Let’s put a small pause on this. Let’s understand exactly what this means, how it works, whether or not we’re creating a level playing field for all the participants,’” he said. “I think they’re through that assessment and [are] now trying to figure out what would be the conditions of participation for organizations moving forward.”

Some believed that the pause itself may unlevel the playing field and give the initial 53 participants a leg up in direct contracting.

But de Brantes does not see that as the case, and he’s not concerned about Signify losing an edge as things get sorted out.

“To the extent they know what they’re doing, it would give them an advantage,” he said. “Signify had filed and intended to participate. But you had to make a whole bunch of decisions without really knowing what you were getting into. And so, if you’re Humana, that doesn’t matter, because it feels much like what you’re doing in Medicare Advantage. But if you’re another organization, you didn’t necessarily know how this all would work.”

Signify also announced a partnership with Humana Inc. (NYSE: HUM) on Tuesday. Signify will help offer support to Humana’s Medicare Advantage members in the San Antonio, Texas, area, especially with social services such as food, transportation, housing and financial assistance.

Companies featured in this article:

, ,