Frequently Asked Questions (FAQ)

Direct Contracting and Direct Contracting Entities (DCEs) are a new concept, so we catalogued some of the most common questions that providers ask us.

Direct contracting is a value-based care program created by the government to test new ways for controlling the costs of care for Traditional Medicare patients while maintaining high quality. Primary Care Providers (PCPs) can receive stable monthly payments for managing the primary care needs of their traditional Medicare beneficiaries and share in the savings they help generate on those patients. 

The Direct Contracting model also provides for a number of incentives and Medicare rule waivers to reduce administrative workload, allow for more efficient care delivery and engender patient compliance without employing heavy-handed sticks.

A Direct Contracting Entity (DCE) is essentially an Accountable Care Organization (ACO) that is participating in the Direct Contracting model. In other words, it is a group of providers that want to participate in the model paired with an organization that invests in the success of those providers through products, analytics and services to help them manage their patient panels and efficiently provide for beneficiaries’ care needs.

Any provider who accepts — and is in good standing with — Medicare can join a DCE to participate in the program. This includes providers with closed panels.

Primary Care Providers with Traditional Medicare beneficiaries can become Participating Providers — their patients automatically join the DCE when they do and receive all of the benefits of being in the DCE. 

Other providers (e.g. specialists, ancillary facilities, suppliers, etc.) can become Preferred Providers, which indicates that the provider and the DCE are aligned to generate savings. DCE beneficiaries may receive incentives to go to a Preferred Provider – such as copay or coinsurance reduction.

There is no cost to Participating Providers, Preferred Providers or their beneficiaries to participate in a DCE.

Pearl is currently enrolling providers to start in Direct Contracting on January 1st, 2022.

Patients who become part of a DCE will retain their Traditional Medicare rights and benefits, and DCEs are required to inform them of this at the outset of the Performance Year. They can still see any providers who accept Medicare. DCEs cannot employ barriers to care or punitive measures commonly used by Medicare Advantage or commercial insurance (e.g. prior authorization or referral requirements). Depending on the DCE they join, beneficiaries will likely see benefit enhancements, including low or no copays for preferred providers, incentives for healthy behaviors, etc. 

When you join a DCE as a Participating Provider, Medicare will look at the history of your claims submissions for the last few years and determine the patients you have been providing care to and enroll them in the DCE. Your additional patients can sign a simple form choosing you as their PCP — Pearl will help with this — which will enroll them into the DCE as one of your patients at the start of the following quarter.

‘Aligning’ a patient to you — either automatically through claims history “attribution,” or manually through voluntary alignment — just means that you will receive credit for managing the care of that patient: the cost of their primary care services will be included in determining your monthly capitated payment and their total-cost-of-care in each year of the program will be part of the calculation to determine whether you benefit from having generated savings.

No, quite the opposite! HMOs are another form of controlling costs, but they often rely on narrow networks and high degrees of utilization-management that can be frustrating for patients. The DCE program maintains Medicare’s open access and never penalizes patients for the way they access care, but rewards them for listening to their doctor.

Participating Providers (i.e. PCPs) cannot participate in both a DCE and a Medicare ACO. However, CMMI recently announced that they are sunsetting the NextGen ACO program and have recommended that providers who were successful in that model consider Direct Contracting. Participating in a DCE has no effect on commercial ACO participation. 

Preferred Providers can participate in multiple CMMI value-based models. 

High performing ACO providers can often earn even more in a Direct Contracting Entity and benefit from the stability offered by the monthly, fixed primary care payment. Further, many ACO providers favor the flexibility and lessened administrative burden offered by the Direct Contracting model.

Pearl’s goal is to help providers find the right value-based care program for them.  Direct contracting might not fit your practice, but we want to make sure each PCP understands the program, what they can potentially earn, and has the support they need to be successful should they choose to participate. In order to facilitate that, Pearl can provide a provider or practice with an analysis of their historical performance (which you can request at the bottom of this page!) to help you understand how you would likely perform in Direct Contracting.

Should Direct Contracting make sense for you, Pearl will facilitate participation by coordinating with the government and providing your practice with the tools and analysis necessary to succeed in the program. Our arrangements are structured so that Pearl only succeeds when our partners are successful, ensuring alignment and an incentive for Pearl to help you every step of the way.

Providers can earn a significant amount of additional revenue through shared savings. Medicare establishes a total-cost-of-care target for Participating Providers, based on the costs associated with the historical claims for their Traditional Medicare patient panel, the disease burden of that panel, and the regional costs of services–this is called ‘the benchmark’. Providers whose costs are below their benchmark in a given performance year will receive a portion of the savings they helped generate.

Pearl offers a range of risk arrangements based on providers’ tolerance for risk exposure, including upside-only arrangements (where providers are not responsible for repaying Medicare for any losses they incur) and upside/downside arrangements (where providers receive a greater portion of the savings they generate, but must also pay a portion of losses). Pearl will work with you to determine the most appropriate risk track based on your historical performance, care model and comfort.

How much more could your practice earn with Pearl?

Try out Pearl’s Value-Based Care Advisor tool to find out how much your practice could earn with ACO REACH.


See what ACO REACH could mean for your practice, in practice.

Help us tailor a data-driven analysis for your practice by providing a few key details.

We’ll follow up with a report and give you the opportunity to schedule a no-obligation consultation with one of our experts.

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