APG Direct Contracting Entities Helped Save Medicare $70M in 2021

November 28, 2022 - The Global and Professional Direct Contracting Model generated $70 million in net savings for the Medicare program in 2021, with several member organizations of America’s Physician Groups (APG) contributing to the savings.

Recently released CMS data found that 53 DCEs generated savings for Medicare and 38 DCEs earned $47 million in shared savings. All 53 DCEs received quality scores of 100 percent in areas such as patient satisfaction and unplanned admissions for patients with chronic conditions.

Several member organizations of America’s Physician Groups (APG) were among the DCEs that achieved savings in 2021, according to a press release sent to RevCycleIntelligence.

“APG is pleased and proud that so many of our member organizations are among the 53 DCEs that recorded savings for the Medicare program, earned shared savings payments, and achieved perfect quality scores according to the GPDC model metrics in the first performance year,” Susan Dentzer, president and chief executive officer of APG said. 

“This important early evidence reinforces the concept behind this model: that its strong financial incentives encourage physician practices to transform care delivery; better manage and engage patients; and achieve higher quality-of-care outcomes than are typical for Medicare patients in the traditional fee-for-service program.”

The APG member organizations that participated in the model included physician practices affiliated with agilon health, Castell Direct LLC, Collaborative Health Systems, Heritage Provider Network, One Medical with Iora, Sutter Health Foundation, and VillageMD.

APG members highlighted their ability to achieve positive results for patients and Medicare despite difficult circumstances.

“We are pleased that the Direct Contracting Entities were collectively able to show strong performance in the first year of the program, despite ongoing challenges from COVID and the steep investments required to activate such a large program,” Suzanne Hansen, One Medical’s Chief Medicare Program Officer, noted.

One Medical with Iora received a 4.93 percent net savings rate, which Hansen said speaks to their strong team and capabilities to support patients.

VillageMD Michigan also achieved a high net savings rate of 4.48 percent.

“The results show that our physicians who consistently provide high-quality, value-based care as their method of care delivery substantially reduce the cost to the Medicare system, which can reduce patients’ medical misery,” Clive Fields, MD, chief medical officer of VillageMD, said. “Next year’s program builds on the health equity components to close gaps in care for underserved communities.”

CMS announced that it would be replacing the Direct Contracting Model with the ACO Realizing Equity, Access, and Community Health (REACH) model in 2023.

The revised model aims to address health equity and prioritize provider-led participants. Participants will be held financially accountable for the total health and cost of care for fee-for-service Medicare patients who are attributed to them through claims or voluntary alignment.

Additional APG members have entered the ACO REACH model, which is set to begin January 1, 2023, APG noted.

The ACO REACH announcement came after CMS received mixed feedback on the Direct Contracting model from stakeholders.

Back in January 2022, a group of over 50 lawmakers urged the Biden administration to end Direct Contracting, insisting that the model was a privatization tactic that removed millions of seniors from traditional Medicare without their knowledge or consent.

At the same time, 14 former appointees under the Obama administration asked HHS and CMS to continue the model, stating that it helped further value-based payment models and encouraged ACOs to improve care coordination for Medicare beneficiaries.