Over Half of At-Risk ACOs May Quit MSSP to Avoid COVID-19 Losses

More than half (56 percent) of accountable care organizations (ACOs) taking on downside risk through the Medicare Shared Savings Program (MSSP) are considering exiting the program due to concerns that COVID-19 could lead to massive financial losses, according to a new survey.

For more coronavirus updates, visit our resource page, updated twice daily by Xtelligent Healthcare Media.

The survey released Monday by the National Association of ACOs (NAACOS) underscores the financial challenges providers are currently up against while fighting the COVID-19 pandemic. The rapidly spreading novel coronavirus is upending normal utilization and care patterns, disrupting an ACO’s ability to execute effective population health management, and creating significant uncertainty about costs, NAACOS reported.

With over 40 percent of Medicare ACOs at risk for financial losses, concerns about how the pandemic will impact ACO performance and ultimately shared savings and losses are growing.

“When ACOs made a commitment to assume risk, they didn’t expect they’d be handling the risk of a global pandemic,” said Clif Gaus, ScD, NAACOS president and CEO. “Rather than be forced to pay enormous losses resulting from the pandemic, these groups of providers may sadly quit the program, which they can do without penalty by May 31.”

“Medicare’s decade-long effort to change how we pay for health care to better reward quality and outcomes may be lost unless Washington acts quickly to throw these providers a lifeline.”

The US currently has the most cases of COVID-19, with over 582,600 confirmed cases according to data from Johns Hopkins University at the time of publication. The number of recovered COVID-19 continues to rise, but so does the number of patients being hospitalized, which currently totals 95,505 cases.

The rising numbers are creating uncertainty among ACOs, which earn shared savings based on total spending.

About 77 percent of the 226 ACOs that completed the survey reported being “very concerned” and 17 percent reported being “somewhat concerned” about COVID-19’s impact on their organization’s 2020 performance.

A majority (90 percent) of the ACOs also said the pandemic will have a significant or very significant effect on their organization’s ability to earn shared savings.

Shared savings payments are often the only funding the organizations have to keep functioning as a value-based organization. More sophisticated ACOs that take on downside risk will also have to repay CMS all or some of the financial losses stemming from disrupted operations during the pandemic, NAACOS reported.

To avoid massive shared losses payments, many at-risk ACOs are weighing whether to quit the MSSP or Next Generation Model altogether.

Of the surveyed ACOs taking on downside risk, 21 percent said they were “very likely” to leave the Medicare ACO program, 14 percent said they were “likely,” and another 21 percent said they were “somewhat likely.”

CMS recently overhauled the MSSP to encourage more ACOs to take on downside financial risk. The agency believes that ACOs assuming financial risk for patient populations will result in greater savings to Medicare and more meaningful value-based care participation.

However, COVID-19 could derail the value-based care transition as ACOs anticipate higher-than-expected Medicare spending.

Over half (53 percent) of ACOs surveyed by NAACOS expect Medicare spending in 2020 to increase due to COVID-19, with most anticipating increases of over five percent. Another 37 percent said they did not know how COVID-19 would impact 2020 expenditures, which according to NAACOS illustrates the great uncertainty the organizations face.

A separate analysis from NAACOS estimated that COVID-19 could cost Medicare between $38.5 billion and $115.4 billion over the next year. This increase in overall Medicare spending could increase ACO expenditures for attributed Medicare beneficiaries between 6 and 18 percent.

“CMS has yet to adequately mitigate the costs and disruptions of the pandemic,” Gaus said. “ACOs are telling us that they will leave the program unless there is protection from the losses of the pandemic, and it would be a tragedy for millions of Medicare beneficiaries to lose the access to care coordination and quality improvement that ACOs offer.”

CMS has already enacted MSSP’s extreme and uncontrollable circumstances policy, which mitigates the amount of shared losses an ACO must repay CMS should it incur losses due to an extreme and uncontrollable situation like COVID-19.

But NAACOS and other leading healthcare organizations have called on CMS to hold harmless providers participating in ACO programs and other alternative payment models that impose penalties based on performance.

The extreme and uncontrollable circumstances policy does not adjust ACO benchmarks or expenditures for higher-than-expected spending due to COVID-19, the groups explained.

Adjusting 2020 spending and benchmarks for COVID-19 is impractical though, the Medicare Payment Advisory Commission (MedPAC) recently stated in an April 13 letter to CMS Administrator Seema Verma.

MedPAC advised CMS to throw away 2020 data when calculating ACO quality, bonuses, and penalties, as well as for assigning beneficiaries to ACOs. The agency should also extend the Next Generation ACO Model for another three years and delay the start of its new Direct Contracting Model, the advisory committee suggested.

UPDATE 04/15/2020: NAACOS released a statement on MedPAC's proposal to toss 2020 performance data when determining MSSP shared savings payments and penalties. The association stated:

The Medicare Payment Advisory Commission’s (MedPAC) recommendation to ignore shared savings in 2020 would devastate Medicare ACO programs. In 2018, Medicare paid ACOs back roughly $900 million of the $1.7 billion they saved. ACOs used that money to pay for quality improvement programs, care coordinators, health IT, analytics and other infrastructure. Without those funds, ACOs will no longer have resources to focus on improving quality and addressing chronic disease, which help improve patient care. The impact of the pandemic will play out differently from region to region and market to market. To gut the savings opportunity before the data are in is presumptuous at best.

There are several other policy options MedPAC should be considering, including holding at-risk ACOs harmless, allowing ACOs the option to forego less in shared savings in order to take less risk, allowing ACOs to change their risk track, or extending the dropout deadline to give more time to understand how COVID-19 will playout in coming months. Ten leading provider organizations’ suggestion of holding downside risk ACOs harmless would importantly provide a safety net for ACOs hit hardest by the ongoing pandemic. MedPAC wants to pretend the year never happened.

MedPAC has consistently underplayed the value ACOs bring to Medicare payment reform. ACOs have saved Medicare billions of dollars and have done more to lower spending in a decade than all other reform efforts to date. Let’s hope CMS doesn’t accept this advice that would have detrimental effects on Medicare’s overall shift to value.