Pearl Health’s mission is to help primary care physicians perform in value-based care with actionable data, insights, and tooling to deliver more proactive, efficient care for their patients.
When we founded Pearl in 2020, the Centers for Medicare and Medicaid Services (CMS) had an active policy agenda to release and test new value-based care models, most notably the Global and Professional Direct Contracting (GPDC) Model1 and the Geographic Direct Contracting (“Geo”) Model.2 The GPDC Model was subsequently replaced with the Realizing Equity Access and Community Health (REACH) Model and the Geo Model was canceled entirely.3
Now, as we prepare for a second Trump presidency, we wonder what CMS policy changes may be ahead and what impact these changes will have on healthcare costs, patient outcomes, and Medicare sustainability.
What does the new administration mean for the future of Value-Based Care?
There have been important differences between the value-based care models introduced during the first Trump administration and those implemented in the Biden administration. For example, the ACO REACH Model made changes to the previous GPDC Model to advance health equity, promote provider leadership & governance, and make ACO vetting and monitoring more rigorous.4 It also made the Global track slightly less profitable to Medicare (Medicare would receive the first 5% of benchmark, guaranteed, in GPDC, compared to the 3.5% REACH Global cap equivalent). The potential significance of policy distinctions across models notwithstanding, the concepts underpinning value-based care itself (e.g. expansion of provider participation in two-sided risk arrangements, emphasis on care coordination across providers and specialties, support of technology innovation for population health management) maintained bipartisan support under both administrations.
Despite decades of efforts to increase efficiency and curb steadily rising healthcare costs, expenditures continue to rise;5 primary care remains overburdened6, undervalued,7 and inefficiently used;8 and chronic conditions are rising in prevalence and severity.9 The Medicare Trust Fund is on the verge of bankruptcy10 and shifting demographics make it nearly impossible to keep operating the existing system as constructed. Faced with these unsustainable strains on the US healthcare system, the next administration is likely to continue experimenting with innovative payment models and risk-bearing paradigms to increase efficiency in Medicare spending and improve health outcomes, while seeking ways to avoid Trust Fund insolvency and the resultant increased cost burden Medicare beneficiaries would experience.
There has been much speculation about the incoming Trump administration’s broad healthcare policy agenda (fueled both by President-elect Trump’s own statements and by attention given to proposals from think tanks, policy institutes, and lobbyists).11 In particular, much attention has been paid to issues such as access to abortion services; vaccines; deregulation of AI; potential Medicaid work requirements and block grants; reintroduction of risk pools into the ACA marketplace; price transparency requirements; chronic disease prevention and management; expanded access to primary care and age-in-place services; and broad reversal of Biden-era policies.12
Certain expected key themes and priorities of the Trump administration’s likely policy agenda (e.g. chronic disease prevention and management, expanded access to primary care, reversal of certain Biden-era policies) tie directly to value-based care.
To understand potential policies that a second Trump administration may enact to advance value-based care, it may be illustrative to start by exploring the value-based care models that were announced during the last Trump administration and subsequently canceled or modified. In so doing, we explore what Medicare policy would look like today if we were to roll back the changes made during the Biden administration.
Downside Risk: the ‘Pathway to Success’
in the first Trump Administration
In a Health Affairs Forefront article published in September 2020,13 CMS Administrator Seema Verma touted the accomplishment of the Trump administration in issuing the “Pathways to Success” final rule,14 which established new participation options and incentives to allow ACOs to take on real downside risk.
“Over the last three years, under the Trump Administration, the Centers for Medicare & Medicaid Services (CMS) has been advancing innovative payment and service delivery models to help move our health care system from one that pays for volume to one that rewards providers for keeping patients healthy, improving health outcomes and lowering costs,” wrote Administrator Verma.
“A critical feature of value-based care is organizations taking on downside financial risk and accountability for the cost and quality of care their patients receive.”15
The following month, at HLTH’s virtual conference in October 2020, Administrator Verma shared her views that some value-based care payment models created under the Obama administration were “not producing the types of savings the taxpayers deserve” and that it was a “very poor return in investment.”16 The issue, she argued, was the need to have providers take downside risk. “I think it is important for providers to have skin in the game,” she said. “Just having upside risk doesn’t really produce the type of savings and quality measures that we want to see.”17
The Geo Model: the Value-Based ‘Tipping Point’?
In December 2020, CMS released details on the much-anticipated Geographic Direct Contracting (“Geo”) Model, calling it among the “largest bets on value-based care to date.”18 The Geo model was created and designed to test whether Direct Contracting Entities (DCEs) could improve care quality and lower costs for Medicare beneficiaries across an entire geographic region.19
This approach to risk bearing and population health management differed sharply from that of the GPDC Model, through which primary care providers and groups could enter into risk-bearing arrangements to coordinate care and manage costs only for their specific, aligned patient panels.
For CMS leadership that had emphasized the importance of providers taking downside risk in order for value-based care to succeed, Geo represented a strong push toward a theoretical ‘tipping point’: if the model helped two-sided risk arrangements to reach sufficient scale, it was thought, participating organizations and providers would finally be incentivized to coordinate care and drive broad adoption of value-based practices.20
“The need to strengthen the Medicare program by moving to a system that aligns financial incentives to pay for keeping people healthy has long been a priority,” said Administrator Verma. “This model allows participating entities to build integrated relationships with healthcare providers and invest in population health in a region to better coordinate care, improve quality, and lower the cost of care for Medicare beneficiaries in a community.”21
In the Geo Model, each approved DCE was required to have a minimum of 30,000 beneficiaries under management, giving organizations that already had Medicare lines of business an opportunity to grow rapidly and giving other potential entrants an onramp into Medicare markets with immediate scale. As CMS limited the number of approved DCEs per region, early participants were advantaged with market share defense; conversely, non-participation would present significant competitive risk.22
Given the broader level of risk in Geo, CMS also offered mechanisms to help DCEs achieve their goals for cost reduction and quality improvement, including access to a network of Preferred Providers and flexibility to offer a variety of supplemental benefits (e.g. vouchers for OTC medications, dental care services, transportation services) similar to those available to beneficiaries in Medicare Advantage.23 As health plans were eligible to apply to become DCEs, many viewed this as a potential opportunity to introduce beneficiaries to a managed care-like model that could help accelerate conversion to MA over the longer term.24
Open Questions About the Geo Model
The week after CMS unveiled the Geo Model, Elizabeth Fowler (who would subsequently join the Biden administration as Director of the Center for Medicare and Medicaid Innovation (CMMI)) co-authored the article “What Does the New “Geo” Model Mean for Medicare?” with colleagues Gretchen Jacobson and Melinda K. Abrams at The Commonwealth Fund.
The article stated that the Geo model would be “one of the most significant changes to the way Medicare beneficiaries receive health care since managed care was introduced into Medicare in the 1970s.” It also posed several open questions about the potential impact on Medicare spending; tracking beneficiaries’ use of services; availability of supplemental benefits; quality of care; people dually eligible for Medicare and Medicaid; provider networks; and future iterations of the model.25
The article concluded with a passage that would become prescient given Elizabeth Fowler’s move the next year to lead CMMI under the Biden administration: “The Geo model represents the most significant change to Medicare in decades; it incorporates many attributes that build on lessons learned from payment and delivery system reform.
While there is much to commend in the approach and the potential for expanded benefits and reduced spending, important questions remain to be answered by new leadership in the Biden administration.”26
As CMS leaders in the Biden administration sought to answer these questions, they also entertained feedback and contended with political pressure from stakeholders opposed to the Geo Model. Opponents expressed concerns over patient choice, health equity, provider oversight, and Medicare privatization.27 These concerns and stakeholder feedback ultimately led to the cancelation of Geo, the redesign of GPDC, and the rise of the ACO REACH Model.28
Is a value-based care model like Geo viable in the next Trump administration?
It is unknown how likely it is for a model like Geo to return in the next Trump administration. As we help our provider partners, physician groups, and health systems through scenario planning for future investments in value-based care, we must acknowledge the possibility that the policies of the incoming Trump administration may differ sharply from those of the Biden administration and even of the prior Trump administration.
However, if the value-based care priorities and policy approach pursued during Trump’s first administration are any indication of a similar model’s potential—and if a true unwinding of Biden era policies remains a high priority, as expressed on the campaign trail—a model like Geo is not so hard to imagine. Concerns over health equity, oversight, and privatization of Medicare seem less likely to carry as much political weight as they have in recent years.
As more details are released on the administration’s healthcare policy agenda and plans, we will continue to update our thinking on the future of value-based care and explore new potential topics and models worth thoughtful consideration.
Additional Reading:
- The Commonwealth Fund, “What Does the New “Geo” Model Mean for Medicare?” December 15, 2020.
- Milliman White Paper, “New Geographic Direct Contracting Model is a game changer,” February 2021.
- Sheppard Mullin, “CMS Announces New Geographic Direct Contracting Model: Letters of Interest Due by December 21, 2020,” December 8, 2020.
- HealthScape Advisors, “Geographic Direct Contracting: Background & Strategic Opportunity,” December 15, 2020.
- PwC, “President-elect Donald Trump’s healthcare agenda: deregulation, flexibility and choice, accessibility and national security,” November 6, 2024.
- STAT, “How a Donald Trump presidency would change health care, from Medicaid to chronic disease,” November 4, 2024.
- CMS, “Global and Professional Direct Contracting (GPDC) Model,” November 2024.
- CMS, “Geographic Direct Contracting Model,” November 2024.
- CMS, “CMS Redesigns Accountable Care Organization Model to Provide Better Care for People with Traditional Medicare,” February 24, 2022.
- CMS, “ACO REACH,” Accessed November 2024.
- Statista, “National per capita health expenditure in the United States from 1960 to 2022,” May 2024.
- University of Chicago, “Primary care doctors would need more than 24 hours in a day to provide recommended care,” August 2022
- PCPs are under-compensated, compared both to other verticals of the healthcare system (among the lowest ranked specialties by annual compensation) and to the value they bring to that system (the average PCP generally earns $266k, but influences ~$10M in downstream healthcare costs). Sources: Farzad Mostashari, Darshak Sanghavi, Mark McClellan, “Health Reform and Physician-Led Accountable Care: The Paradox of Primary Care Physician Leadership,” JAMA, May 2014. Medical Group Management Association (MGMA), “New MGMA research finds physician compensation on the rise,” Cision PR Newswire, May 2019.”
- Healthcare spending per capita in the US is about twice that of comparable countries; yet, US healthcare consumers engage in routine care less often. Higher (and more efficient) utilization of primary care services can decrease systemic costs overall by mitigating risks before chronic conditions develop or acute events occur. Sources: Peterson-KFF Health System Tracker, “Health consumption expenditures per capita, U.S. dollars, PPP adjusted, 2020 or nearest year.” OECD Health Statistics, “Number of doctor consultations per person (2017 or most recent available),” 2019.
- Wullianallur Raghupathi and Viju Raghupathi, “An Empirical Study of Chronic Diseases in the United States: A Visual Analytics Approach to Public Health,” 2018.
- Peter G. Peterson Foundation, “Budget Basics: Medicare,” November 2024.
- STAT, “How a Donald Trump presidency would change healthcare, from Medicaid to chronic disease,” November 4, 2024.
- PWC, “President-elect Donald Trump’s healthcare agenda: deregulation, flexibility and choice, accessibility and national security,” November 6, 2024.
- Health Affairs Forefront, “2019 Medicare Shared Savings Program ACO Performance: Lower Costs And Promising Results Under ‘Pathways to Success’,” September 14, 2020.
- CMS, “Final Rule Creates Pathways to Success for Medicare Shared Savings Program,” December 21, 2018.
- Health Affairs Forefront, “2019 Medicare Shared Savings Program ACO Performance: Lower Costs And Promising Results Under ‘Pathways to Success’,” September 14, 2020.
- Fierce Healthcare, “Verma says value-based care models haven’t made good return on investment,” October 13, 2020.
- Ibid.
- Healthcare Dive, “CMMI rolls out geographic model it calls among ‘largest bets on value-based care to date’” December 4, 2020.
- CMS, “Geographic Direct Contracting Model,” Accessed November 2020.
- HealthScape Advisors, “Geographic Direct Contracting: Background & Strategic Opportunity,” December 15, 2020.
- CMS Newsroom, “CMS Announces New Model to Advance Regional Value-Based Care in Medicare,” December 2020.
- HealthScape Advisors, “Geographic Direct Contracting: Background & Strategic Opportunity,” December 15, 2020.
- Ibid.
- Ibid.
- The Commonwealth Fund, “What Does the New “Geo” Model Mean for Medicare?” December 15, 2020.
- Ibid.
- Health Affairs, “Medicare Advantage, Direct Contracting, And The Medicare ‘Money Machine,’ Part 2: Building On The ACO Model,” September 30, 2021; LeadingAge, “Direct Contracting Model to be Replaced with ACO REACH,” March 10, 2022; Fierce Healthcare, “CMS overhauls Direct Contracting Model to include new requirements on governance, health equity in 2023,” February 24, 2022.
- Ibid.