New Medicare Payment Model Targets Better Care, Lower Costs

A new Medicare payment model will improve the quality of care and lower out-of-pocket costs for Medicare beneficiaries in select regions.

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The Centers for Medicare & Medicaid Services (CMS) introduced a new payment model designed to improve the quality of care for beneficiaries in multiple regions across the country. 

Participating providers in the Geographic Direct Contracting Model will assume responsibility for the health outcomes of the beneficiaries they serve, providing a direct incentive to improve care across entire regions. 

“The need to strengthen the Medicare program by moving to a system that aligns financial incentives to pay for keeping people healthy has long been a priority. This model allows participating entities to build integrated relationships with healthcare providers and invest in population health in a region to better coordinate care, improve quality and lower the cost of care for Medicare beneficiaries in a community.” - Seema Verma, CMS Administrator1

What is the Medicare Geographic Direct Contracting Model?

Geographic Direct Contracting Model participants will coordinate care and clinical management for Original Medicare (Medicare Part A and Part B) beneficiaries located within their respective region. Those efforts may include providing telemedicine and helping beneficiaries understand which local providers have a history of better results and lower costs, among other efforts.

Health care providers within each region will also better coordinate care by partnering with community groups and organizations with experience in risk-sharing arrangements and population health.

How does the new Medicare payment model affect beneficiaries?

Beneficiaries in the model regions will keep their existing Original Medicare benefits and may still see any Medicare-participating provider they wish, regardless of whether or not that provider is participating in the model.   

Health care providers participating in the payment model will have the opportunity to reduce cost-sharing for Medicare services and even offer a Medicare Part B premium subsidy. The lower out-of-pocket costs will allow providers to encourage beneficiaries to seek higher-value care. 

Participants for the payment model will be selected in June of 2021, and the new model will launch in January of 2022 for two consecutive runs of three years each. 

Learn more about Medicare costs in 2021.


1 CMS. (Dec. 3, 2020). CMS Announces New Model to Advance Regional Value-Based Care in Medicare [press release]. Retrieved from