The agency that runs Medicare wants to give private organizations a chance to try administering traditional Medicare coverage.
The agency, the Centers for Medicare and Medicaid Services (CMS), has announced a two-part test for a new Geographic Direct Contracting Model.
CMS said the Geo program will let private organizations, or “direct contracting entities,” administer traditional Medicare coverage for some enrollees. CMS wants the first direct contracting entities to begin testing the Geo approach in somewhere between four and 10 communities from Jan. 1, 2022, through Dec. 31, 2024. A second Geo test period would run from Jan. 1, 2025, through Dec. 31, 2027.
- Links to Geographic Direct Contracting Model program resources are available here.
- An article about how U.S. health care policy might change is available here.
Any “covered entity,” or organization that has to take charge of complying with Health Insurance Portability and Accountability Act (HIPAA) personal health information privacy and date security rules, could apply to be a direct contracting entity in the Geo program, CMS officials said in the Geo program announcement.
“Covered entities include most types of provider organizations as well as health plans,” officials said.
Typical Geo applicants are likely to be health plans, or provider-run organizations that have significant experience with managing medical cost risk, such as health care provider groups or health care systems that have participated in accountable care organizations, officials said.
How Traditional Medicare Works Now
Medicare is a federal program that provides health coverage for 63 million Americans who are at least 65 years old, receive Social Security Disability Insurance benefits or have kidney disease so severe that they have either had kidney transplants or are getting kidney dialysis.
Congress created the Medicare Part A hospitalization insurance program in 1965. Congress added the Medicare Part B program, which covers physician and outpatient services, in 1983.
Medicare managers already let private organizations provide an alternative to traditional Medicare coverage through the Medicare Advantage plan program. About 25 million people use Medicare Advantage coverage or related types of coverage.
The companies that run Medicare Advantage plans often use health care provider networks that are similar to the provider networks built into commercial health coverage for people under 65. A Medicare Advantage plan might send a doctor or hospital a flat fee per month per patient, or capitation payment, to cover the cost of routine care.
The new Geo program would be part of the traditional Medicare program, which CMS calls “Original Medicare,” rather than part of the Medicare Advantage program.
CMS uses private organizations, called Medicare Administrative Contractors, or MACs, to administer Original Medicare coverage.
One set of MACs oversees Original Medicare medical coverage. A second set oversees coverage for “durable medical equipment,” such as wheelchairs.
In Arizona, California and Washington state, for example, the MAC for Original Medicare medical coverage is Noridian Healthcare Solutions LLC, an arm of Blue Cross Blue Shield of North Dakota.
The Medicare MACs are invisible to most enrollees.
Managers of Original Medicare let almost any licensed physician who accepts Original Medicare reimbursement rules and other rules treat Medicare enrollees.
Outside of test programs and other special programs, Original Medicare usually pays doctors and hospitals fees for each service provided, rather than capitation payments, or payments for bundled care.
Critics of the fee-for-service approach say it’s complicated to administer and encourages providers to offer too much care.
Ordinary Original Medicare comes with complicated deductible, co-payment and coinsurance rules, and no annual out-of-pocket limit on what an enrollee must spend on out-of-pocket costs.
Geo Test Program
A Geo contractor would manage health coverage and health care for Original Medicare enrollees in one specific region, such as Atlanta.