Value-Based Leaders Push Back Against Direct Contracting Attacks

Feb. 18, 2022
Leaders of America's Physician Groups and Oak Street Health explain why opponents of the direct contracting model are mistaken—and how their organizations are moving the value-based needle forward

One of the hottest debates right now in the healthcare industry is the direct contracting model. This week, we reported that a large group of 222 healthcare organizations, both national healthcare associations and provider organizations, including accountable care organizations (ACOs), sent a letter on Monday, February 14, to Health and Human Services Secretary Xavier Becerra, urging him not to cancel the Global and Professional Direct Contracting (GPDC) model, but instead make adjustments to it. Among the 222 organizations were the Los Angeles-based America’s Physician Groups (APG) and the Washington, D.C.-based NAACOS, the National Association of ACOs.

We reported that “APG’s press release on the subject began thus: ‘America’s Physician Groups (APG) today, along with hundreds of other groups, urged HHS Secretary Xavier Becerra not to cancel the Global and Professional Direct Contracting (GPDC) model and instead make adjustments to the program. Killing the GPDC model would especially hurt underserved populations where the program has disproportionately more providers caring for patients.’ And it quoted Don Crane, APG’s president and CEO, as stating that ‘The direct contracting program is good for patients, it’s good for providers, and it strengthens the Medicare program. Killing the direct contracting program at this stage is just bad policy,’ Crane said. ‘It would not only hurt Medicare beneficiaries, it would undermine the important work of the CMS Innovation Center. In particular, many of the physicians in this model are now able to provide care to historically underserved communities where there are deep health disparities…why would we hurt this progress?’”

We reported on Oct. 1, 2021, that “On Sept. 30, Donald Berwick, M.D., and Richard Gilfillan, M.D., published an article in the Health Affairs Blog entitled ‘Medicare Advantage, Direct Contracting, And The Medicare ‘Money Machine,’ Part 2: Building on the ACO Model,’ in which they criticized in the very strongest terms the new Direct Contracting program under Medicare, the ongoing evolution of the Medicare Advantage program, and some core aspects of the ways in which accountable care organizations (ACOs) are managed in the Medicare Shared Savings Program (MSSP).”

On Jan. 5, Rep. Pramila Jayapal, who represents Washington’s 7th District, tweeted, “Direct Contracting is a Trump-era privatization tactic that has removed millions of seniors from Traditional Medicare without their knowledge or consent. The Biden Administration can and must immediately end this dangerous program and restore care.”

On Jan. 10, 2022, Rep. Katie Porter, who represents the 45th Congressional District in Orange County, Calif., tweeted, “The Trump Administration started letting @CMSGov shift seniors on Medicare to plans managed by private entities—without their consent. Now, Wall Street-backed companies are lining up for the program. My colleagues and I are urging the Biden Administration to put an end to this.”

Congresswoman Jayapal did not respond to Healthcare Innovation for comment at the time this article was published and Congresswoman Porter’s office declined on her behalf to be interviewed for this article.

Healthcare Innovation recently had the opportunity to speak with Crane to better understand why there is such opposition to the GPDC. When asked about the opposition’s stance and lack of understanding, Crane says, “I think the first thing they don't understand is the importance of the model and what it represents. It represents this galactic, glacial movement away from fee-for-service and into a better model with prospective payment based on a population—the whole value. I don't think they see it or understand fully that this is really the best of the most sophisticated and most recent movement through CMMI (The Centers for Medicare & Medicaid Services Innovation Center)of the value movement. This is all about transforming American healthcare in order to achieve the Triple Aim—lower cost, higher quality, better patient satisfaction. I don't know that they appreciate that background as to what's going on and the reasons fee-for-service is bad and prospective payment is good, the opponents don’t understand that.”

“The second part that I think they don't understand is they see it as an effort to privatize traditional Medicare,” Crane comments. “Indeed, traditional Medicare is a purely operated single-payer governmental program right now; and it is highly flawed. It's without any kind of quality program. Thirty-five percent of the spend in the program is regarded by most experts as being wasteful. And it's slowly but surely in the process of bankrupting the coffers of the federal government and in the process, leading the nation in very much the wrong direction. Which is costing us a lot of money and so forth. They see it as a privatization thing, and we don't at all, frankly. We see it as introducing into [the] traditional Medicare model, one that [is] principally the contract and, one that is very much physician group-centric.”

Crane continues by explaining that physician groups are sometimes owned by “moms and pops,” or doctors themselves. They can also be owned by hospitals or health plans. Additionally, he says, they are sometimes funded by other organizations, including banks, savings accounts, and private equity. “But in the main, these ACOs, these organizations that are direct contracting entities, they are physician group-centric,” he adds. “So, this really isn’t a backdoor effort to bring health plans into traditional Medicare. I don’t see it that way, I don’t even think health plans see it that way, I don’t think anyone does. The fact that some of the direct contracting entities may be owned by a health plan really disturbs them. Overall, this is what I think they understand and don’t understand about the model.”

With respect to what individuals generally do not understand about APMs (alternative payment models), Crane says that “I think the answer is that they see the movement to APMs as creating a kind of a managed care of the 1980s, one where physicians are incented to deny or stint on care. That is a very much retro, long discarded objection to coordinated integrated care. It had validity back in 1975 and 85, but no longer does, and I don't think some people are aware of that. They think that if you prepay a physician group it will immediately get its physicians stinting care, and nothing could be further from the truth. We now have a risk adjustment model that incents physicians [to] actually do outreach to other patients, and so forth, to keep patients healthy by reducing the total cost of care. Keeping the population healthy is where the interest lies. And it's not on stinting care, frankly, they bombard patients with care when it's appropriate in order to reduce costs and improve quality.”

As for the most important points that Crane wants to get across regarding APMS, he says, “It's heading in the right direction, and it's exceeding the rate of speed that we would like. But I think the questions are, where is it going and why are we going there? And almost a single word, the great attribute of value and value-based care is better care. Better care might be lower cost, and indeed it is, but it's also about higher quality—quality is measured and rewarded, and better patient experience is also factored into the assessment of the performance of these groups. It's what Don Berwick coined as the Triple Aim—lower cost, higher quality, and better patient satisfaction. That is where value-based contracting is going.”

Crane also speaks about breaking through to policy leaders regarding APMs, specifically regarding the letter sent Jan. 10, 2021, to Health and Human Services Secretary Xavier Becerra (and copying CMS Administrator Chiquita Brooks-LaSure and CMMI Director Elizabeth Fowler) from APG, signed by Crane himself.

“To me, the most amazing circumstance—and by that, I mean in the health policy world today in 2022— to virtually every individual within the practices is a firm believer that fee-for-service is bad, and we need to eliminate it, and we're in the process of doing it, and that the movement towards accountable coordinated care is directionally the thing we need to do,” Crane says. “There might be some differences in opinion on a type of model or program but broadly, people want to move to prospective, population-based payment, also known as coordinated care. That's the policy world. And it isn't really just a few members of the cognoscenti. That is generally the case of you look at the committees of jurisdiction, the members and the whole lobby industry in Washington, D.C.”

Further, Crane says, “Everyone's grown to accept that and feel pretty permanently about where the problem lies. There is, of course, a lot of Congress people and others out there, understandably, who aren't deeply immersed in health policy, and they don't understand it and so, we're hearing again, these long discarded objections to coordinated care. That it involves spending, that there's privatization, that the profits go off to Wall Street and are siphoned out of the system—those sort of long-discarded arguments are kind of bubbling back up now. That's the kind of circumstance we have, which can be frustrating for us, frankly, but we'll have to meet those objections and talk about them and help people better understand.”

And what Crane wants readers of Healthcare Innovation to know regarding APG’s position, is that “We have a hugely dysfunctional healthcare system, and it's sorely in need of being ‘fixed’—it's sort of prosaic to put it that way. And a lot of people are devoted to that great journey right now, and APG is in the leadership role there. We're trying to fix a very broken system by replacing fee-for-service with payment models that produce the Triple Aim—lower cost, higher quality, better patient satisfaction—and it's hard moving tankers around, because there's vested interests and so on, but slowly but surely, we are succeeding.”

Healthcare Innovation also spoke with Michele Mitchell, M.D., executive medical director at Chicago-headquartered Oak Street Health, and Andrew Schwab, the organization’s vice president and head of government affairs. Mitchell and Schwab discussed how the direct contracting model helps expand care to underserved communities and thus address health equity issues.

Mitchell says the direct contracting model is already helping to expand care to underserved communities. “In 2021, 100 percent of Oak Street patients who are being cared for under the direct contracting model were already in designated underserved areas,” she states. “It was already meeting the needs of those patients. There was limited access to mental health providers, providers, or just primary care providers for both of those services. This is exactly what the direct contracting model is really looking at, making sure that we're getting these resources to areas with limited care for Oak Street. This is true of our value-based care model. It allows us to provide extra services for our patients, whether it's mental health, social work, transportation, right inside the center, and now we're extending that to direct contracting. These are patients that are within traditional Medicare, but we're able to give them the same services that we're giving to patients that have a Medicare Advantage plan.”

Schwab adds that “We now know that the chair of the MedPAC (Medicare Payment Advisory Commission )Board of Commissioners put out a blog that said that fee-for-service Medicare on its own does not promote equity, because it directs resources away from areas that have limited access to care. And this is precisely the opposite of what the direct contracting model is testing—that's whether or not resources can be sent to areas with limited care. That's true of Oak Street in general, because of our value based and fully capitated model. But it's critically important that we're now trying to test if this works, if a value-based model can work inside of traditional Medicare and outside of the purview of Medicare Advantage insurers.”

When it comes to what can be said to those who criticize the models specifically regarding the importance of expanding primary care for underserved communities, Mitchell says, “Organizations, like Oak Street, are doing exactly this and caring about the communities that those who are criticizing this model care about. Ninety-seven percent of our centers across the nation are in areas where the average income is 300 percent below the federal poverty level, or lower. We opened 50 centers across the country in 2021, with plans for another 70 this year. So, while other primary care providers may not want to go to those areas, those are exactly the areas that we're going to with direct contracting model with its value-based care structure and accountability for outcomes—reducing admissions and reducing readmissions. [Oak Street] is managing patients with chronic conditions that have extra needs, like behavioral health needs, and have more social determinants of health like food insecurity, we're screening those patients and we’re identifying those patients.”

“Direct contracting creates this really great space in a value-based model to offer those very critical extra services that Dr. Mitchell mentioned,” Schwab adds. “If you're talking about areas that are 300 percent of poverty or lower, or that have been designated by HHS as medically underserved or mental health provider shortage areas, those Americans need a much higher level of touches from their providers, and they also need more services. They need behavioral healthcare, they need attention to housing and food insecurity, they need transportation to and from appointments. The direct contracting model is testing whether or not giving providers like Oak Street the space to be able to provide these extra wraparound services can happen inside of traditional Medicare. It’s also important to know these folks are still in traditional Medicare. So, unlike being in a value-based arrangement inside of a Medicare Advantage plan, they can still go see any doctor they want that takes Medicare at any time.”

As to whether she thinks that the direct contracting model, is a particularly good one, Mitchell says, “I think that it is, but that's what it's testing. I think we'll see that what patients get; it is reaching the patients that need it the most and it's providing them all the services that they really need. And it's allowing, to Andrew's point, providers to be very high touch with patients. It's hard to do that in the fee-for-service model because panels are larger. When we typically have provider panels that are about 500 or less, you can actually see patients six eight times a year if you need to. You don't have to say, ‘I'll see you back in three months,’ if you're trying to manage something acute when you need to see come back in two weeks, you can't. And so being able to do that and having the space for, again, this other group of patients to do those things that we really find are necessary to effectively manage chronic conditions and keep them out of the hospital. I think we'll see that this is really what really needs to happen for these patients.”

“We have a hunch that that may be true,” Schwab adds. “That's why CMMI is testing it to see if this works. And that's what CMMI was established to do. And so, we think that ending this model prematurely or on an ideological basis, would not be prudent.”

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