ACOs seek flexibility from CMS to mitigate losses due to coronavirus

Coronavirus
Accountable care organizations are wondering whether the Centers for Medicare & Medicaid Services will employ a policy that mitigates their financial losses that may stem from the coronavirus outbreak. (Getty)

Accountable care organizations (ACOs) are seeking flexibility from the Trump administration on mitigating any financial losses that could arise from treating the burgeoning coronavirus outbreak. 

The concerns come as the coronavirus has spread to more than 1,200 people across the country and has healthcare facilities worried about being overwhelmed. ACOs are in a particularly difficult situation as they are on the hook for paying back Medicare if healthcare costs skyrocket.

ACOs participating in either the Medicare Shared Savings Program (MSSP) or the Next-Gen ACO program agree to take on some form of financial risk. If they meet spending targets, they get a share of the savings, but if that spending accelerates they must pay back the Centers for Medicare & Medicaid Services (CMS) for a share of the losses. 

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CMS does have a policy in place for “extreme and uncontrollable” circumstances that could impact the shared savings and losses.

Under the policy, CMS agrees to mitigate the amount of shared losses that an ACO has to pay back to Medicare. The amount is determined by looking at the duration of the circumstance and the percentage of an ACO’s beneficiaries are in the affected area.

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CMS also has a policy in place to account for how an unforeseen circumstance could affect an ACO’s quality score.

If an ACO can’t report quality then its quality score, which impacts whether the ACO saved or lost money, will be pegged to the mean score for all ACOs in the MSSP.

The policy has usually been applied for natural disasters like wildfires or hurricanes but never for a pandemic. But ACOs are worried about whether the policy goes far enough.

For one thing, the policy does not address ACOs that otherwise would have gotten shared savings without the outbreak.

“Many ACOs, especially those new to accountable care models and smaller and rural ACOs that don’t have reserves rely on those shared savings to invest in the care coordination programs, IT, infrastructure that is necessary to rely on high-quality care,” said Allison Brennan, senior vice president of government affairs for the National Association of ACOs.

It would also be helpful for the Center for Medicare & Medicaid Innovation (CMMI), which oversees ACOs, to outline some scenarios on what applying the policy would look like, said Ashley Ridlon, senior vice president of health policy at Evolent Health, a value-based care consulting and services company.

ACOs are also concerned about the calculation of the benchmark, which is what ACO healthcare expenditures are measured against. The financial benchmark is calculated based on the previous three years of medical spending.

If the medical spending spins out of control due to the coronavirus, then spending would go well beyond the benchmark.

The CMMI could only take action, though, if the national spending is affected.

But ACOs worry CMS and CMMI, which oversees the Next-Gen Program, will only take action if the benchmark is changed on a national basis.

“The way CMMI will look at this is only if the national trend comes exceptionally off projections,” said Donna Littlepage, senior vice president of accountable care strategies for Carilion Clinic, a Virginia-based healthcare system with seven hospitals and more than 200 physician practices. “If this happens in small pockets and not nationally then ACOs will be hit hard and there won’t be a fix.”

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However, if the benchmark is completely off the actual spending trend, then CMMI will have to step in, said Littlepage.

“It doesn’t do CMMI good to drive all ACOs into the red,” she added.

CMS said that it has the authority to retroactively modify the benchmark for ACOs in the Next-Gen program if the national spending trend is affected by the coronavirus or other factors such as a natural disaster. 

"We are monitoring events and will determine at a later date if we need to make any modifications to our benchmarking methodology," the agency said. 

CMS said it can also update the benchmark for the MSSP after a performance year to adjust for any national or regional trends regarding spending and healthcare utilization. 

The agency did not say if it will employ the "extreme and uncontrollable" circumstances policy. 

The application cycle for MSSP opens April 20. 

"We encourage ACOs to apply since applicants have multiple opportunities throughout the summer to update and revise their application," the agency said. 

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