Both CMS and healthcare providers are using COVID-19 as an excuse to cut back on their experiments in value-based care, a severe blow to those hoping the pandemic would catalyze badly needed payment reforms.
Provider reluctance to embrace reform was apparent before the pandemic hit. The Medicare Payment Advisory Commission’s latest report on accountable care organizations showed their ranks dwindling from a high of 561 in 2018 to 517 this year. The total number of beneficiaries enrolled in ACOs—about 11 million—has changed little over the past two years after six years of steady growth.
Why was ACO growth slowing before the pandemic? In August 2018, CMS Administrator Seema Verma unveiled new “Pathways to Success” rules, which shortened the time ACOs could be in shared-savings programs without taking on downside risk. They now begin absorbing losses after two years—not five—when their costs rise faster than a comparable panel of fee-for-service Medicare patients.
Health systems and major physician practices clearly weren’t interested in payment schemes where making money depended on reducing their top line revenue. CMS received just 41 new applications for its shared-savings programs for 2019. The number fell to 35 for 2020. By comparison, the agency received more than 100 new applicants per year on average in each of the prior seven years.
The number will drop to zero in 2021 because CMS inexplicably stopped processing applications. What’s the ration- ale? It’s not as if agency officials working from home are too busy taking care of patients to process the paperwork.
Moreover, Verma in May waived consideration of COVID-19 costs when calculating ACO savings and losses this year. The new emergency regulations also reduced the amount of downside risk. No doubt she was responding to an April survey by the National Association of ACOs that showed more than half the organizations in at-risk models planned to drop out of the program because of pandemic-related losses.
It remains to be seen if the relaxed requirements will maintain the current level of engagement. The pandemic-induced revenue collapse has revealed the dark truth behind the “one foot on the dock, one foot in the canoe” metaphor.
Most providers still have both feet firmly planted on the fee-for-service dock. Their ACOs remain little more than experiments—toy sailboats adrift in what now has become a turbulent sea.
There are notable exceptions, of course. Newly launched primary-care practices focusing on high-cost patients are betting that their comprehensive care coordination models can generate huge savings. Many are finding interested customers among Medicare Advantage insurers that assume full financial risk for their customers.
Most healthcare systems are slowly returning to business as usual as they adjust to the pandemic’s new normal. The companies that sell orthopedic and cardiovascular devices report double-digit sales gains in recent months after surgeries fell anywhere from 40% to 80% early in the pandemic.
A recent Commonwealth Fund report showed in-person outpatient visits have been running only 16% below normal since mid-July after falling 70% in the spring. Telehealth visits, which CMS now reimburses, have gone from barely measurable to over 7% of all visits, making up for nearly half the shortfall. The healthcare industry as a whole has recouped over 60% of the 1.6 million jobs lost early in the pandemic.
It’s not too late to reinvigorate value-based payment programs. CMS could offer full capitation payments to ACOs in exchange for forgiving loans made during the pandemic. It could offer transition grants to primary-care practices willing to take on full financial risk for their patients.
Failing to act will not end existing value-based reimbursement programs. But it will ensure they never become anything more than curiosities in a largely fee-for-service world.
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September 12, 2020 at 12:00PM
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Value-based care now at risk - Modern Healthcare
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