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January 27, 2021

Geographic Direct Contracting Model (“Geo”)

Written by Daniel Hirsch, PT, DPT, CHA, OHCC


Article Summary

As the healthcare industry evolves, it is important to continue to adapt along with it.  An excellent opportunity for such is The Geographic Direct Contracting Model (also known as the “Model” or “Geo”).  The Centers for Medicare & Medicaid Services (CMS) Innovation Center is currently testing this new payment and care delivery model.  It will assess whether a geographic-based approach to care delivery and value-based care can improve health.  In addition, this new payment system seeks to find if it can help reduce cost for Medicare beneficiaries across an entire geographic region.  This article allows further details in full account. 

Who is Eligible to be a Geo Preferred Provider?
  • Any Medicare-enrolled provider or supplier
  • An individual or entity that bills with a TIN for Medicare services
  • Those not excluded from participating in Medicare or Medicaid
  • Those identified on a DCE’s list of Geo preferred providers
  • Those who have a written agreement to participate in the program
Important Dates:
  • Applications start 1/1/2021 for the first period which runs between 1/1/22 - 12/31/24
  • Applications due by 4/2/21
  • Applications start 1/1/2024 for the second period which runs between 1/1/25 - 12/31/27
  • A 6 year overall program

Considered Locations (15 Regions):

Atlanta, Dallas, Denver, Detroit, Houston, Los Angeles, Miami, Minneapolis, Orlando, Phoenix, Philadelphia, Pittsburgh, Riverside, San Diego, Tampa

Goals of this Geo program:

Direct Contracting Entities (DCEs) will build integrated relationships with healthcare providers and community organizations in regions to better coordinate care and address the clinical and social needs of Medicare beneficiaries. The DCEs will be responsible for the total FFS cost of care and will control delivery for value-based payments (basically ACO’s). Health systems, providers and plans will all be grouped together in this program. “Improve quality of care and lower cost for Medicare beneficiaries”.


This program requires DCEs to take financial risk for a portion of all Medicare FFS beneficiaries residing in a geographic area rather than only the Medicare FFS beneficiaries seeing particular providers.

Beneficiaries Must:
  • Be enrolled in Medicare part A and B
  • Not be enrolled in a Medicare Advantage/Managed Plan
  • Have Medicare a primary payer
  • Reside in the US
  • Have an address in one of the regions included in this program

Possible Advantages for these Beneficiaries:
  • May be allowed lower out-of-pocket costs by reducing co-payments for Part A or Part B services or offering a Part B premium subsidy
  • Vouchers for over-the-counter medications recommended by a health care provider
  • Prepaid, non-transferable vouchers that are redeemable for transportation services to and from an appointment with a health care provider
  • Items and services to support management of a chronic disease or condition, such as home air-filtering systems or bedroom air-conditioning for asthmatic patients, and home improvements such as railing installation or other home modifications to prevent re-injury
  • Wellness program memberships, seminars, and classes
  • Electronic systems that alert family caregivers when a family member with dementia wanders away from home or gets up from a chair or bed
  • Vouchers for those with chronic diseases to access chronic disease self-management, pain management and falls prevention programs
  • Vouchers for those with malnutrition to access meal programs
  • Phone applications, calendars or other methods for reminding patients to take their medications and promote patient adherence to treatment regimens
  • Vouchers for vision and dental care services
  • Up to $75 in gift cards annually for adhering to disease management programs
  • Streamlined access to a skilled nursing facility by waiving Medicare’s 3-Day SNF Rule
  • Home visits for beneficiaries following a discharge from an inpatient hospital, psychiatric facility, inpatient rehabilitation facility, long-term care hospital, or skilled nursing facility;
  • Home visits for care management
  • Increased access to home health care by waiving the homebound requirement for access to home health services in Medicare
  • Asynchronous telehealth services for certain conditions
  • Access to curative care while receiving the hospice benefit

How to apply as a Participant:

Step 1:

Applicants will be judged against a rubric on nine domains: (1) organizational structure and experience; (2) leadership and management; (3) financial plan and risk-sharing experience; (4) patient-centeredness and beneficiary engagement; (5) quality and clinical process improvement; (6) network management; (7) care management; (8) compliance; and (9) IT systems. All applicants who meet a pre-determined scoring threshold on this rubric will then move to the second step of selection.

Step 2:

Participants will be selected based on their proposed discounts (you propose a discounted fee for the 3-year period). CMS will select applicants with the highest average discount. Each DCE will be assigned a minimum of 30,000 beneficiaries.

There will be two voluntary capitation payment mechanisms available to DCEs and Geo Preferred Providers:

Total Capitation: DCEs and Geo Preferred Providers will opt into reducing Geo Preferred Providers’ fee-for-service billing paid by MACs by 100%.  In turn, DCEs will receive a monthly capitated payment equal to the projected reduction in fee-for-service billings and be responsible for all downstream payments to Geo Preferred Providers.  Geo Preferred Providers will still be required to submit claims to MACs but those claims will treated as no-pay claims.

Partial Capitation: Partial capitation will work the same as Total Capitation but Geo Preferred Providers’ fee-for-service billing will be reduced by MACs by between 1% and 50%.  In turn, DCEs will receive a monthly capitated payment equal to the projected reduction in fee-for-service payments.  DCEs may make additional downstream payments to Geo Preferred Providers as agreed upon between the DCE and DC Preferred Providers.


CMS Newsroom- fact sheet 'Geographic Direct Contracting Model (“Geo”)'. December 3, 2020


*Daniel is the Director of Compliance and Internal Audit for a large multi-state outpatient therapy provider. He has over 10 years of experience in risk management and has created comprehensive compliance programs as well as an App called PT Pocket Coder, which is unique App that it is a one-stop shop for all compliance related needs for therapy billing, coding and documentation (available on both Apple and Google store).


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