Founder and CEO of a leading care coordination technology company discusses the buzz about the new Direct Contracting Model.
Hu founded CarePort while she was a graduate student at Harvard. The care coordination technology company was acquired a second time last fall by Wellsky, a healthcare technology company for $1.35 billion.
Senior Editor Peter Wehrwein spoke with Hu about the new CMS Direct Contracting Model, the latest addition to the value-based care menagerie, and what it means for ACOs, Medicare Advantage and care coordination. The model's first performance year is scheduled to start next month.
Here are some excerpts of the transcript of their conversation:
We are a care coordination technology company that bridges hospitals with post-acute care. So all the nursing homes, home health agencies, hospice, all of the needs that patients have, after a hospital stay, we connect the two together and enable smooth transitions from hospital and out into the community.
Our customers are hospitals as well as post-acute care providers. Many health systems are taking a risk, so we are in over 1,000 hospitals. As you can imagine, a fair number of them are in various risk models, whether it's bundle payments or ACOs. Through our work with risk-based entities, we've also started to work a lot more with payers over the last couple of years, especially as providers and payers continued to come together.
I've heard a lot of buzz about the Direct Contracting Model, as I as I'm sure you have, both from our provider customers, as well as the health plan side.
At the end of the day, it's a new CMS program to bring more providers into risk-based arrangements, so it is empowering providers to take care of the patient holistically, because they're not just managing the care of that patient, but also the costs associated with caring for that patient. It gives providers more incentive to think about what we call the value. What's the trade-off, the quality of care and the cost? And how do we deliver high value care?
The way that I would think about direct contracting is that it is a way to expand what ACOs have been able to do. I think what CMS was anticipating when ACOs came out was that through ACOs, people would learn how to take on risk and eventually what we would see is that ACOs would become sort of the precursor to MA (Medicare Advantage).
But what we also know is that for the provider to transition to a full-blown MA plan, there is a lot more involved than just knowing how to manage the risk of the patient. I mean, there's networks and how do you certify your networks and the contracting element.
I think the way people are talking about direct contracting is that it is a way to encourage more providers to take on more risk without the complexities and infrastructure that you need to set up an MA plan. It's a way to get some of the best parts of a MA plan, like the supplemental benefits piece, which we started to see with Next Generation ACOs, without all the infrastructure that one would need to stand up an MA plan. So I think that's why people are seeing this as a successor to ACOs because instead of making that jump from ACO to an MA plan, how do we continue to bring these provider organizations along through direct contracting.
There's a lot of technical details that improve upon the ACO model in terms of benchmarking methodology and risk adjustment. There have been some criticisms of the way that ACOs held accountable for costs. Every single year that they would have to do better, and they were sort of competing against themselves, there's been some modifications to get away from that dynamic under this model. So I think there's been improvements and lessons learned here.
Additionally, there's these sort of supplemental benefits that are also available that allow much more flexibility in terms of what type of benefits you can give to patients to better engage them in their care, whether that's, you know, transportation vouchers or nutrition services. You have a lot more flexibility to address the patient as a whole, rather than just the medical, because I think what people are learning is that the medical and the social are very much tied together. You have more flexibility to really sort of think about cost holistically.
One of the things that's unique about direct contracting is that it's bringing payers into the fray as well. Under the ACOs, it was very much hospital based or physician organization based. What we're seeing that payers are aligning. There's a bit of a scramble right now in terms of payers trying to align with physicians who have experienced delivering care in this way, where they're looking patients across the care settings where they're used to managing risk. The reason why I think payers are so interested in aligning. I think it was great from a program design perspective that they are allowing payer-provider collaborations.
I think what patients oftentimes don't like is that it seems that the provider side and the health plan side are very siloed and that they're separate. Sometimes what we hear from patients is "there's a payer team that's reaching out to me" "there's a provider team that's reaching out to me" "I don't want to get five different calls from five different care coordination teams that never talked to one another."
I think with Direct Contracting we're going to see more alignment of payers and providers, because there's a financial incentive for both. That hopefully should break down even some of the silos that we see today. Those bright white lines of payer-provider, I think this continues to kind of blur that. I think that will be positive for the patient.