BDC Advisors Issues New Working Paper on Impact of CMMI's New Direct Contracting Program on Physician Groups and Health Systems


MIAMI, Feb. 17, 2020 /PRNewswire/ -- BDC Advisors, a healthcare strategy consulting firm, today issued a new working paper: "The Impact of CMMI's Direct Contracting Program." The working paper provides an overview and assessment for senior health system executives, physician leaders, and Boards of Trustees of the likely impact that the Center for Medicare and Medicaid Innovation's (CMMI) new Direct Contracting Program will have on the competitive landscape, and on health system and physician stakeholders.

The new Direct Contracting Program seeks to improve upon the Next Generation ACO program and integrate useful elements of the Medicare Advantage Program by providing three new voluntary, alternative payments models for Direct Contracting Entities (DCEs) to select from, with higher levels of risk and reward than traditional ACOs. The Direct Contracting Program is designed to provide financial flexibility through capitated payments, increase Medicare beneficiary engagement, and attract new risk sharing players to the Medicare fee-for-service market. The lead author, Kevin Sears, MHA, Director and leader of BDC's Payer/Provider Innovation consulting practice, is a nationally known managed care and population health expert. Chris Sukenik, MBA, the co-author, is a Principal in the firm.

The authors conclude that the impact of the new program on a participant will vary depending on an organization's position in the healthcare value chain and its posture towards total cost of care efforts. For physician organizations, the focus of the Direct Contracting Program may be game-changing, allowing them the resources needed to grow their Medicare fee-for-service business. For most large health systems, the impact will be more modest.

In their discussion, Sears and Sukenik identify six key impacts of the Direct Contacting Program that senior management and Boards of Trustees should consider in their planning. These include: greater flexibility for DCEs to execute value-based contracts with preferred providers; attracting Medicare Advantage providers to the Medicare FFS market; the impact of advanced capitation payments on physician groups; greater flexibility in reporting requirements; and an aggregate reduction in Medicare utilization rates which will pressure hospital margins and intensify competition for Medicare market share.

The authors point out that since performance year 1 for DCEs is right around the corner, understanding the impact that the Direct Contracting Program will have on an organization's competitive landscape--including referral patterns and negotiations with DCEs in the program--will be important for an organization regardless of their decision to participate directly.

BDC Advisors, LLC is a national healthcare strategy consulting firm that transforms and grows healthcare organizations. Established in 1990, the firm's services include health enterprise strategy, payer/provider innovation, physician enterprise strategy, organization design and development, and population health management. For additional information or questions please contact Kevin Sears via email at or by phone at 267-207-5203.       


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