ACOs Concerned Coronavirus to Impact Shared Savings, Losses

Accountable care organizations (ACOs) in the Medicare Shared Savings Program and other shared risk models are worried the novel coronavirus pandemic could leave them responsible for shared losses beyond their control.

The National Association of ACOs (NAACOS) recently voiced these concerns in an email to CMS Administrator Seema Verma. In the email obtained by RevCycleIntelligence, NAACOS president and CEO Clif Gaus, ScD, urged CMS to provide flexibilities for ACOs in shared risk models to mitigate potential financial losses stemming from the virus’ outbreak in the US.

“The cost to the healthcare system to deal with a pandemic like this is unknown and unprecedented in our generation,” Gaus wrote in the email. “This significant strain on the healthcare system will likely result in a spending spike.”

“While ACOs are focused on treating patients, we are reaching out to you on their behalf to ensure COVID-19 does not derail the ACO and value movement, which could easily happen if steps aren’t taken by CMS to ensure ACOs aren’t held accountable for the costs associated with the pandemic.”

ACOs in shared risk models, which include Medicare's flagship ACO program the Shared Savings Program, as well as the Next Generation ACO Model and the upcoming Direct Contracting initiative, are responsible for total costs of care and can share in financial savings. However, if total costs of care exceed an agreed-upon spending benchmark, ACOs assuming downside risk in the models must repay CMS all or a portion of the financial losses.

The novel coronavirus pandemic could significantly impact an ACO’s ability to earn shared savings and repay potential shared losses, NAACOS told CMS.

“ACOs are the front lines of care for tens of millions of patients across all ages and for all health insurers. They are providing high quality care for patients presenting with the virus and are similarly feeling the strain of this challenge,” Gaus stressed. “However, challenges such as lack of workforce and high volume of patients will surely put a strain on the clinical system as well as ACO finances.”

The potential strain on ACO finances could prompt many of these organizations to exit shared risk models, such as the Medicare Shared Savings Program, Gaus added.

“As you may know, the 2020 MSSP class has a record number of ACOs in shared risk tracks,” he explained. “MSSP policy requires ACOs that stay in the program past June 30 to be accountable for losses and many ACOs are considering dropping out in advance of that deadline given the current situation and unknown trajectory.”

“There is serious risk to the growth and maintenance of ACOs, which now cover 20 percent of Medicare beneficiaries and are the homes for nearly 500,000 clinicians.”

CMS does have a policy to mitigate financial losses during “extreme and uncontrollable” circumstances. The agency previously enacted the policy during Hurricanes Irma and Harvey in 2018 when ACOs were unable to report quality data to CMS.

According to Next Generation ACO contracts, CMS also had the ability to retroactively adjust benchmarks “exogenous factors, such as a natural disaster, epidemiological event, legislative change and/or other similarly unforeseen circumstance during the Performance Year.”

NAACOS is urging CMS to modify the policy to account for expenditures stemming from the novel coronavirus outbreak in the US. The association also asked CMS to hold harmless ACOs in shared risk models for the 2020 performance year.

The association also stated that the novel coronavirus pandemic could also significantly impact participation in a new shared risk model from the CMS Innovation Center: Direct Contracting.

CMS announced the Direct Contracting initiative last year. The initiative will allow a broad range of physician practices and other organizations to coordinate care as a Direct Contracting Entity and assume risk through capitated payments for the expenditures of Medicare beneficiaries attributed to the group.

The initiative is an appealing option for ACOs in the Next Generation Model, which is set to sunset this year. An initial implementation period is slated to start in July to test the new shared risk model. But the potential costs stemming from the coronavirus pandemic could deter participation in the model, as well as other value-based arrangements, NAACOS stated.

The association called on CMS to provide flexibility with upcoming program deadlines by extending the March 31 quality reporting deadline and the application deadlines for the Medicare Shared Savings Program and Direct Contracting initiative for performance year 2021.

NAACOS also asked for CMS to commit to having a Direct Contracting application cycle for performance year 2022.

 “Immediate assurances to the nation’s ACOs and care providers that CMS and the Administration will protect their viability is paramount,” Gaus stated.