Accountable care organizations that participate in the Medicare Shared Savings Program are concerned they will be on the hook for penalties and won't receive shared savings this performance year because of the novel coronavirus.
The National Association of ACOs has been hearing from members worried the COVID-19 outbreak will drive up Medicare beneficiary spending this year, ultimately affecting the benchmark used to determine savings and losses in the program. The benchmark uses historical Medicare spending in addition to current performance year spending.
"It's mixing apples and oranges," said NAACOs Senior Vice President of Government Affairs Allison Brennan.
ACOs are accountable for Medicare beneficiaries who are particularly vulnerable to the coronavirus. The elderly and those with chronic conditions such as diabetes are most at-risk for serious side effects, according to the Centers for Disease Control and Prevention. As a result, ACOs can see spikes in expensive hospital stays and potential readmissions among their assigned Medicare beneficiaries. At the same time, spending will continue to be compared to previous years, which "is a big concern," Brennan said.
Healthcare consultants predict ACOs are going to be hit hard financially.
"There is no doubt in my mind this is going to blow their budgets out of the water," said Dr. William Faber, director of Guidehouse, a consultancy. "It's likely going to wipe out any shared savings that any of the at-risk ACOs will have this year."
The Medicare ACO program is designed under the premise that the cohort of beneficiaries is stable and participants can implement interventions that will make a difference in quality outcomes and costs. An unexpected pandemic like the coronavirus causes volatility and makes it harder for physicians to control healthcare spending among their beneficiaries, Faber said.
Some ACOs are more optimistic.
"We are expecting the financial part will work itself out even though it's highly uncertain right now," said Tim Gronniger, CEO of Caravan Health, a consultancy group that operates 12 ACOs.
The decline in elective procedures as a result of the coronavirus could help offset rises in expenditures, he said.
Caravan Health has been hearing from clients worried about how the coronavirus could impact their performance in the program. In response, the company plans to hold webinars over the next week or so educating members about the benchmark and how the CMS makes calculations.
The Medicare Shared Savings Program has policies in place to account for unexpected rises in Medicare beneficiary spending that have historically been used for natural disasters, a CMS spokesman said. The CMS can mitigate shared losses and calculate quality scores differently for ACOs affected with such issues. The agency implemented such policies for ACOs effected in performance year 2017 by Hurricanes Harvey, Irma and Maria as well as California wildfires.
Brennan said she while these policies have helped in the past, she doesn't think they'll be enough in response to the coronavirus because it will likely increase healthcare expenditures nationally.
"It helps but it doesn't go far enough in light of a nationwide pandemic that we are seeing today," she said.
The NAACOs has reached out to the CMS and hopes the agency will make special adjustments to the benchmark to account for the virus, Brennan said. The NAACOs is still determining what their recommendations to the CMS will be.
The CMS spokesman also said it's important to note healthcare providers in ACOs are part of the Medicare fee-for-service program, which has made special coverage considerations for coronavirus such as testing.
Evolent Health, which operates ACOs in the Medicare Shared Savings Program, is also looking for some clarity from the CMS on how it will respond to the coronavirus, said Ashley Ridlon, vice president of health policy.
She added it's a bit too early to predict how ACOs will be impacted financially "but certainly any risk-bearing entities with providers that are accepting financial accountability for a population of patients are thinking about potential impacts on expenditures if they have emergency room spikes, expensive intensive-care units stays."
The COVID-19 outbreak comes as more ACOs than ever before are in contracts with the CMS requiring them to pay back penalties based on their performance. Of the 517 ACOs currently in the program, 37% are in a downside risk model.
The CMS response to the coronavirus is critical to the future of risk-based programs, Brennan said. If ACOs are financially penalized because the coronavirus led to spikes in costs, it will turn others off from joining.
"We have to modify the program so they don't hold ACOs accountable for something as unusual as a worldwide pandemic," she said.
Faber at Guidehouse added physicians are already nervous to take on downside risk and the coronavirus is a clear example why. "If a bunch of ACOs have to pay back money for this, it can have a chilling effect on future ACO activity," he said.