The Centers for Medicare & Medicaid Services ("CMS") recently announced a new voluntary direct contracting model - the Geographic Direct Contracting Model (the "Model" or "Geo"), which will test whether a geographic-based approach to care delivery and value-based care can improve health outcomes and reduce costs for Medicare beneficiaries across a geographic region.

Along with the Global and Professional Direct Contracting Model options, which we previously discussed here, Geo is the third Direct Contracting Model announced by CMS. Unlike the first two models, Geo will require direct contracting entities ("DCEs") to bear 100 percent upside and downside risk for the total cost of care of Medicare fee-for-service ("FFS") beneficiaries in a defined target region. The Geo Model will be tested over a six-year period in defined target regions across the country. The initial rollout begins on January 1, 2022. An overview of the Model and key deadlines are discussed in further detail below.

Overview of Geo

At its core, direct contracting means that CMS would directly contract with Medicare providers and suppliers (e.g., physician group practices) who would be held accountable for the cost and quality of care of a defined beneficiary population. This model is similar to the Medicare Advantage managed care model without the health plan in the middle. Under Geo, physicians and other providers would participate in the Model as a DCE, which is a legal entity with its own Tax Identification Number. Geo aims to enable DCEs - which may include provider organizations such as health plans, health systems and sophisticated Accountable Care Organizations ("ACOs") - to coordinate care with health care providers and community organizations in their assigned region to address the health care needs of aligned beneficiaries. Unlike the Global and Professional Options, Geo requires DCEs to take financial risk for a portion of all Medicare FFS beneficiaries1 residing in a geographic area rather than only the Medicare FFS beneficiaries seeing particular providers. In order to allow DCEs to take on this broader level of risk, Geo provides DCEs with three primary tools:

  1. Preferred Providers. DCEs may enter into agreements with Medicare-enrolled providers or suppliers ("Geo Preferred Providers") to enable value-based payments to those providers to deliver certain enhanced Medicare benefits to beneficiaries, which may include (1) home visits for care management; (2) asynchronous telehealth services for certain conditions; and (3) access to curative care while receiving the hospital benefit. The Model will permit DCEs and Geo Preferred Providers to create arrangements that include total or partial capitation.
  2. Care Coordination & Clinical Management. Through Geo, DCEs will be able to use telemonitoring, telemedicine and care management to better support beneficiaries with serious and chronic health conditions. DCEs will also be permitted to provide certain engagement incentives in the form of in-kind items or services to beneficiaries, which may include:
    • Vouchers for: (1) over-the-counter medications recommended by a health care provider; (2) vision and dental care services; and (3) access to meal programs for beneficiaries with malnutrition.
    • Items and services to support the management of a chronic disease or condition, such as home air-filtering systems or bedroom air-conditioning for asthmatic patients.
    • Wellness program memberships, seminars and classes.
    • Phone applications, calendars or other methods for reminding patients to take their medications and promote patient adherence to treatment regimens.
  1. Program Integrity Tools. To reduce unnecessary services and costs, DCEs will be provided a variety of options for validating the medical necessity of services, supplies and sites of care to ensure appropriate care is furnished to beneficiaries.

Financial Methodology

At a high level, the Model's financial methodology is based on a DCE's performance against a region's Performance Year Benchmark. During the application phase, DCEs will bid a discount against the region's Performance Year Benchmark. DCEs will be responsible for 100 percent of savings or losses above or below the bid discount.

Key Dates

Geo will be tested over a period of six years and include two three-year performance periods. The first performance period will begin January 1, 2022, and end on December 31, 2024, and the second performance period will begin January 1, 2025, and end on December 31, 2027.

CMS kicked off the first performance period with a non-binding Letter of Interest ("LOI") to gauge interest in participating as a DCE. The LOI opened on December 3, 2020, and will close on December 21, 2020. This LOI includes a list of 15 geographic regions and asks organizations interested in participating to rank the regions they would be most interested in participating.

Organizations interested in applying to be a DCE for the first performance period must submit a LOI to CMS by 11:59 PM PT, December 21, 2020. CMS expects to release a Request for Applications for this performance period in January 2021 with a due date of April 2, 2021. Thereafter, DCEs will be announced by June 30, 2021, and will be required to submit their Geo Preferred Provider lists by September 1, 2021.

What Geographic Regions Are Included?

CMS will define a geographic-based region as a Core Based Statistical Area to participate in the Model. In the LOI, CMS identified the following 15 candidate regions: Atlanta, Dallas, Denver, Detroit, Houston, Los Angeles, Miami, Minneapolis, Orlando, Phoenix, Philadelphia, Pittsburgh, Riverside, San Diego and Tampa. Based on results of the LOI rankings, CMS will choose the final 4 to 10 regions to include in the Model for the first performance period.

Next Steps

  • Providers and suppliers interested in participating in the Geo model should review CMS's published materials available here.
  • Although the first performance period for this Model doesn't begin until January 1, 2022, entities with any interest in this program should submit a non-binding LOI to CMS by 11:59 PM PST on December 21, 2020, and submit an application in response to the Request for Applications once available in January 2021. A link to the LOI submission may be found here.


1. Beneficiaries to be included in the Model must meet each of the following criteria: (1) be enrolled in both Medicare Part A and Part B; (2) not be enrolled in a Medicare Advantage plan, Medicare-Medicaid Plan (“MMP”), cost plan, PACE organization or other Medicare managed care plan; (3) have Medicare as a primary payer; (4) be residents of the United States; and (5) have their address of record in a region included in the Model.

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