CVS Health is on a mission to cut costs, and the insurer is turning toward its value-based care businesses as a solution, Fierce Healthcare has exclusively learned.
In a WARN Act layoff filing in Massachusetts, the company told the state it’s shutting down its Accountable Care Organization Realizing Equity, Access and Community Health (ACO REACH) business, impacting 183 employees reporting to that location nationwide.
“CVS Health routinely reviews its portfolio to ensure its assets are aligned with long-term strategic priorities and perform as expected,” said a spokesperson. ”Despite this decision, CVS Health remains committed to value-based care and will continue advancing solutions through other parts of the company, including the healthcare delivery business. Oak Street Health, part of health care delivery like CVS Accountable Care, is continuing its successful participation in the ACO REACH pilot program, and Aetna has a number of ACO contracts with providers in its network.”
March 4, the company announced value-based care company Wellvana is acquiring CVS Health’s Medicare Shared Savings Program (MSSP) business under the CVS Accountable Care umbrella for an undisclosed sum. Wellvana now supports providers in 40 states and serves more than 1 million Medicare patients, according to a news release.
“We made this decision to further advance MSSP by partnering with a value-based care leader with the right strategic focus and investment commitment in this space,” said Sree Chaguturu, M.D., president of healthcare delivery, in a statement. “We are incredibly proud of our CVS Health colleagues who have supported the MSSP business over the years and are committed to a smooth transition so they can continue their work and maintain services to clients, providers and patients.”
“The complementary expertise and scale of CVS Health’s MSSP business supercharges our impact and accelerates our drive to make patients the ultimate beneficiaries of more valuable care,” said Wellvana CEO and President Kyle Wailes.
The ACO REACH pilot program will be terminated by CVS at the end of the month. The national program, through the Centers for Medicare & Medicaid Services (CMS) Innovation Center, is scheduled to expire at the end of 2026.
As recent as April, CVS embraced the ACO REACH program. The company partnered with inVio Health Network in South Carolina to create a new ACO through the program, the first and only ACO REACH partnership from CVS in the state. The partnership was operational starting in January 2024, and leadership said it was a good way to provide better care for chronic conditions and improve health equity outcomes.
"We recognize and appreciate our ACO REACH provider partners for their engagement with us in this pilot program since 2023 as well as our dedicated colleagues who supported the business and our provider partners and their beneficiaries," said the CVS spokesperson. "We have a comprehensive transition plan in place to also support ACO REACH participating providers and beneficiaries and are communicating and supporting our impacted CVS Health colleagues."
CVS served more than 1 million members through ACO REACH and MSSP by the end of 2024, a recent 10-K filing (PDF) detailed.
CVS isn't the first insurer to distance itself from the ACO REACH program.
Clover Health announced it would exit the program in December 2023 because the business was not financially performing as hoped. Alignment Healthcare subsequently said it would focus more attention on Medicare Advantage (MA) and eliminate downside risk in ACO REACH. Centene’s Collaborative Health Systems ACO bounced out of six states, and the embattled NeueHealth, formerly known as Bright Health, also left the program. Cityblock Health withdrew from the program as well, Modern Healthcare reported.
ACO REACH participants earned CMS nearly $700 million in net savings and almost $1 billion in net savings for accountable care organizations in performance year 2023, an improvement over 2022.
MSSP ACOs saved Medicare $2.1 billion in 2023, the largest yearly savings in the program’s history and the seventh consecutive year of success.
CVS struggled in 2024, as reflected by a spree of layoff notices. The company reportedly considered breaking up its retail and insurance arm, Aetna, in October. Leadership said the company needed to lay off 2,900 workers, mostly in corporate positions, amounting to 1% of its workforce, to find $2 billion in savings.
Elevated utilization in MA and a more challenging regulatory macroenvironment gave Aetna troubles last year. CEO Karen Lynch resigned and was replaced by David Joyner. Aetna head Brian Kane was fired after assuming the position for less than a year and was replaced by former UnitedHealthcare CEO Steve Nelson.
CVS Health’s stock is down more than 11% year over year.