Maintaining Progress toward Accountable Care and Payment Reform in an Unprecedented Pandemic

April 17, 2020

Maintaining Progress toward Accountable Care and Payment Reform in an Unprecedented Pandemic

The current coronavirus (COVID-19) pandemic is an unprecedented global public health emergency. Hospitals and health systems will need to adapt the way they deliver care to ensure adequate testing, surveillance, and treatment. In the short-term, many health systems have already postponed or cancelled elective and non-urgent procedures and are encouraging the use of telehealth whenever possible. On the other hand, hospitals are increasing their expenditures as they approach surge capacity to treat COVID-19 patients. Practices nationwide are seeking personal protective equipment and shifting workflows. These changes have large financial implications that vary tremendously across geographies and settings, creating substantial financial fear and anxiety for health systems and clinician groups. It’s still unclear what impacts these changes will have in the long-term, and how health systems can best adjust to uncertainties brought on by the pandemic.

COVID-19 will also have particular effects for practices in value-based arrangements. Clinicians participating in payment reforms currently face significant uncertainty, as it remains unclear how benchmarking, risk adjustment or other payment model components will be modified to account for the pandemic. Some changes in expenditures count against value-based cost performance metrics in positive and negative directions, and other costs like building may not reimbursable and are not captured in cost performance metrics. However, the structure of value-based payment arrangements and investments made by these organizations to-date improve preparedness for the pandemic, by virtue of enhanced infrastructure building, readiness for telehealth services, mobilizing care coordination practices, and flexibility to shift care delivery and workflows.

Leveraging these capabilities and investments, especially relative to the alternative of fee-for-service, is in the interest of national public health. Therefore, it is critical for the COVID-19 pandemic to not reverse the progress made towards value-based payment. For the nation’s largest payment reform program, Accountable Care Organizations (ACOs), the June 30th deadline for the decision to stay in or leave the program is fast approaching. In our two-part post on ACOs in the Health Affairs Blog, we examine the impact, and policy implications for ACOs due to the coronavirus; and the immediate issues and short-term actions that payers can take to adapt their ACO programs to the crisis and more strongly support ACOs.

Part 1: Utilization and Financial Impact

The first Health Affairs Blog post estimates different mechanisms of coronavirus-related financial impact on ACOs, incorporating changes in utilization and upfront capital. We found that the COVID-19 pandemic could have a significant negative financial impact on ACOs overall, due to increased utilization and expenditures from COVID-19 cases; increased infrastructure and preparation costs; and reduced revenue from cancelled primary care, elective, and other non-essential services. However, not all ACOs will be affected equally, and any given ACO’s shared savings and losses will depend on the degree to which the utilization increase from COVID-19 is offset by the decrease in elective procedures and primary care visits, and vice versa. The recently passed stimulus – the Coronavirus Aid, Relief, and Economic Security (CARES) Act – provides some immediate relief through $100 billion for hospitals, loans for small and large corporations, and an accelerated payment option for Medicare claims. The stimulus alone is not enough, though – ACOs are expressing substantial financial anxiety about the situation and further actions from payers are needed to help participants adapt to the COVID-19 crisis (which we explore in Part 2, below).

Part 2: Immediate Issues and Short-Term Actions

The second Health Affairs Blog post part of the blog identifies immediate steps and short-term actions that payers can take to help their ACO participants adapt to the COVID-19 crisis in the coming weeks and months. In the Medicare Shared Savings Program (MSSP), the nation’s largest ACO program, participants must decide by June 30th whether they want to drop out of the program or remain accountable for losses for the year. While many organizations are calling for 2020 to be a financial wash involving no losses, there are other practical opportunities to strongly support and reassure ACOs in the short-term so that their ability to more quickly respond to pandemics is bolstered. First, payers should immediately communicate to ACOs a message of general reassurance and committed partnership to fixing key issues, even if exact impacts or nuanced fixes are unknown at this time. Secondly, payers should continue to enhance and clarify telehealth options, building off pre-existing flexibilities and infrastructure for ACOs, federally-qualified health centers, and rural health centers. Finally, CMS should continue to utilize 1135 waiver mechanisms and invoke additional waiver powers, such as temporarily eliminating self-referral sanctions and certain ACO-specific reporting requirements. Given the importance of payment reform programs, enacting strategies to preserve them is in the interest of national public health and health services.