Medicare direct contracting (DC) is a set of voluntary payment model options aimed at reducing expenditures and preserving or enhancing quality of care for beneficiaries in Medicare fee-for-service (FFS). These models can be used to reimburse hospitals, nursing facilities, and home health agencies that voluntarily agree to accept lower payments than what they would receive under the standard Medicare FFS payment system. These models include the Hospital Value-Based Purchasing (HVBP) program, the Hospital Readmission Reduction Program (HRRP), and the Bundled Payments for Care Improvement Initiative (BPCI).

Medicare Advantage is a managed care plan that gives you more flexibility and freedom in your health care choices. In particular, you can choose your own doctor or other health care professional. Medicare Advantage plans are available in every state and county in United States, and they offer a wide range of benefits. Today, there are about 20 million people enrolled in Medicare Advantage Plans. The main reason why people choose Medicare Advantage is because it’s a good value for the money. However, some people may have trouble finding a plan that meets their needs or budget requirements.

Sometimes, they are pretty big, like the introduction of Medicare Advantage in 2003, and more recently, the new Medicare Direct Contracting model. Medicare Direct Contracting is essentially a new way for the Centers for Medicare and Medicaid Services (CMS) to pay for covered health care costs.

Direct contracting entity is an option for people with Medicare who want to choose a doctor from a list of contracted providers. If you have Original Medicare, you can get extra benefits and services to help you stay healthy or better manage a chronic condition.

If your doctor participates in this model, you may receive the following:

•Direct access to your doctor through phone and email

•Help choosing health care providers, including specialists, hospitals and other facilities that accept Medicare

•Information about how to use your benefits, including prescription drug coverage, medical equipment and supplies coverage, durable medical equipment coverage (for example, walkers or wheelchairs), hospice care and home health care

•Access to an online tool that helps find doctors who are accepting new patients

Medicare direct contracting allows organizations to contract directly with Medicare for a defined and predictable amount of money for every beneficiary. This model allows organizations to better manage their finances, while also focusing on the aspects of care that matter most to patients. Organizations have expressed interest in developing new payment model options for Direct contracting entitiesthat draw upon private sector approaches to risk-sharing arrangements and payment and reduce administrative burden commensurate with the level of downside risk. The payment model options available under DC take significant steps toward providing a prospectively determined revenue stream for model participants. Relative to existing initiatives, the payment model options also include a higher set of quality measures that focuses more on outcomes and beneficiary experience than on process.

The move to direct contracting in Medicare clearly has implications for hospitals: the Medicare payment system is undergoing fundamental changes. Some of these changes may require hospitals to make significant, upfront capital investments in order to achieve financial sustainability.