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Premier Recommends Modifications to Medicare Direct Contracting Model

By Blair Childs, Senior Vice President of Public Affairs

Last month, we learned that the Next Generation Accountable Care Organizations (NGACOs) reduced Medicare spending by $242 million in in 2018, achieving nearly $221 million in net shared savings. NGACOs that are organized in Premier’s data-driven collaborative realized nearly 30 percent of these savings, reducing total spending by more than $70 million and earning in excess of $63 million in shared savings. The NGACO model requires participants to take the greatest level of financial risk of any ACO model. The NGACO model, however, is scheduled to sunset at the end of this year. Premier does not want the successes achieved in the program to be lost. Today, we’re calling on the Centers for Medicare & Medicaid Services (CMS) to build on these successes by either extending the NGACO program or better adapting the new Direct Contracting Model to provide a stepwise progression between models for NGACOs. In recommendations to CMS, Premier is urging that the Direct Contracting model be modified to:

  • Increase the potential for shared savings so that ACOs taking on the highest level of downside risk in the Medicare program can receive shared savings comparable to other ACOs while testing primary care capitation.
  • Set more reasonable discounts, taking into account how providing care on a significantly reduced budget will make participation challenging, particularly for providers with historically low spending.
  • Create a level playing field between new entrants and entities experienced in downside risk arrangements by using the same benchmarking methodologies for all participants.
  • Provide full model details so that potential participants can determine the viability of operating in the model.

With these changes, the Direct Contracting Model could be the next step for NGACOs that are putting their shoulder to the wheel to improve care for their patients and lower overall healthcare spending.

About Premier, Inc.

Premier Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of more than 4,000 U.S. hospitals and health systems and approximately 175,000 other providers and organizations to transform healthcare. With integrated data and analytics, collaboratives, supply chain solutions, and consulting and other services, Premier enables better care and outcomes at a lower cost. Premier plays a critical role in the rapidly evolving healthcare industry, collaborating with members to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. Headquartered in Charlotte, N.C., Premier is passionate about transforming American healthcare. Please visit Premier’s news and investor sites on www.premierinc.com; as well as Twitter, Facebook, LinkedIn, YouTube, Instagram and Premier’s blog for more information about the company.


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