Direct Contracting Entity and Its Importance

1. Direct Contracting Entity and Its Importance A Direct Contracting Entity (DCE) is a program funded by the Medicare Agency for completing specific functions in Medicare programs. DCEs are independent programmatic entities created to help give beneficiaries better access to care and more control over their healthcare dollars. They are essentially “middle-men” between suppliers of care, such as hospitals and other health care providers, and insurance companies. In doing so, they allow beneficiaries immediate access to services they need while keeping costs down through the use of their negotiated fee schedules. A beneficiary using a DCE must either pay a copay, meet an income financial requirement, or have a Medicare Advantage plan that pays in full for these services. It is important that providers understand how these different entities function; how they interact with each other and with your practice; and how they can impact the bottom line. Whole hospital systems and other providers will find it a useful way to think about how risk adjustment works both for themselves and their partners. Risk adjustment is a complex topic, with many moving parts, but we can simplify things by talking about the the factors CMS uses to adjust the risk scores of patients. Getting the risk score right is the most important part of making sure that payments to your organization are accurate each month. Direct contracting is a key way to reduce government's risk, and it should be used more today. Despite its potential benefits and a number of advances in Direct contracting, the private sector has not yet fully embraced the concept. Many organizations are still required to perform a certain amount of work before being allowed to use the benefit. To date, less than 10% of government contractors have been authorized to use Direct contracting entities. Direct contracting is rapidly becoming another way for Medicare beneficiaries to get their health care at a reasonable cost. As more beneficiaries become educated on direct contracting and its benefits, there could be a rise in the number of patients choosing this option. Knowing how your direct contractor fits into the Medicare system can help you decide if it is right for you and navigate the system easily, helping you receive high quality of living and medical care. Direct contracting with the Medicare program is not for all practices, but it offers an attractive alternative for those that are willing and able to participate. It offers a way forward as we move through the transition from fee-for-service payment. In the absence of Direct contracting entities, we can only expect that payments per episode will decrease due to the declining fee-for-service payments. This will result in a significant change in the economic structure of the health care system. In many ways, direct contracting is a new way of doing business for the Department of Defense. However, there are risks that must be addressed during implementation if DCEs are to become a reality. Those include the current immature nature of DCM tools, the need for specific training and experience in areas such as financial analysis and contract oversight and management, and the need to educate potential contractors on the government market landscape, including small business procurement.