Report: The Future of ACOs After COVID-19

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Key Insights:

  • Providers in alternative payment models (APMs) used population health strategies to slow the COVID-19 pandemic, showing the need for accountable care organizations (ACOs) in critical situations.
  • The Centers for Medicare and Medicaid Services (CMS) has declared that COVID-19 expenditures will not be counted against existing ACOs’ performance metrics.
  • For future ACOs: CMS has not designated a 2021 enrollment period for new ACOs or Next Generation ACOs.

Study: COVID-19 is One of Many Reasons We Need ACOs

ACOs bridge the critical gap between providers and data. Prior to COVID-19, ACOs decreased Medicare expenditures by $3.53 billion from 2013 to 2017 and decreased hospital readmissions faster than non-ACOs. Additionally, ACOs serve significant patient populations: the National Association of ACOs (NAACOS) reports that “as of January 2020, about 550 Medicare Shared Savings Program (MSSP) and Next Generation ACOs cared for more than 12.3 million beneficiaries.”

During the COVID-19 pandemic, providers participating in ACOs used population health analytics to 1) identify and reach out to high-risk patients; 2) assess and adopt telehealth for remote monitoring and managing ongoing care coordination; and 3) screen their patients for social issues that could place them at risk of contracting the virus. ACO participants have the benefit of longer, more meaningful patient encounters that help providers engage their patients in managing their health.

CMS’ New Rule

The Novel Coronavirus 2019 (COVID-19) has put a significant strain on existing ACOs. According to a NAACOS report, 56 percent of ACOs expressed that they were “likely to leave the MSSP in response to concerns about having to potentially repay losses in 2020 because of COVID-19.”  

To incentivize ACOs to remain in the program, CMS released an interim rule report stating it will “[amend] the Shared Savings Program regulations in order to address the impact of the COVID-19 pandemic.” The new rule will allow existing ACOs in the Pathways to Success program stay on their current track in 2021, eliminate COVID-19 expenditures from ACO performance assessments, and expand the definition of primary care to include telehealth services. In addition, according to the rule, applications for new ACOs will not be accepted in 2021.

Future of Next Generation ACOs and Direct Contracting Model Still Uncertain

While CMS has outlined provisions for its ACOs, it remains unclear whether or not the CMS direct contracting program and Next Generation ACOs will proceed. CMS’ Next Generation ACO Model is optimal for ACOs experienced with care coordination for multiple patient populations to take on more downside risk. 

In December 2019, CMS announced its Direct Contracting Model. CMS expects this model will be optimal for “NGACO participants, as well as organizations that have experience with risk-based contracts in MA, but have not to date participated in Medicare Fee-For-Service (FFS) or CMS Innovation Center models.” According to CMS, the “options available under Direct Contracting are expected to increase beneficiaries’ access to innovative, affordable care while maintaining all original Medicare benefits.” However, CMS has chosen to delay launching this model due to the financial uncertainty surrounding COVID-19.

Providers who are considering joining an ACO after COVID-19 must fully understand downside risk and its implications for their practices. Additionally, providers must be willing to assess their patient base, ensure their practice has a solid foundation with effective workflows and consider partnering with an organization that can help them navigate changes in health policy.

Important Takeaways for Providers

Although the ACO model was not designed for the unprecedented COVID-19 global pandemic, CMS is taking measures to reduce the pandemic’s impact on existing programs. While policymakers navigate future changes, providers must be informed about these trends to optimize their practice in the constantly changing healthcare landscape.

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