According to an April 13, 2020 Press Release issued by the National Association of ACOs (“NAACOS”),  a recent NAACOS survey shows that 56% of the survey-participating at-risk accountable care organizations (“ACOs”) – i.e., ACOs participating in a Center for Medicare and Medicaid Innovation (“CMMI”) alternative payment model (“APM”) and assuming financial risk thereunder – said that they were likely to drop out of their APM because of their fear of having to cover massive losses resulting from the COVID-19 pandemic.  In addition, the survey revealed that, as a result of swings in unpredictability and spikes in expensive hospitalizations, 21% of at-risk ACOs were “very likely” to leave the Medicare ACO program, 14% said they were “likely,” and another 21% said they were “somewhat likely” to leave.  Almost 80% of responding at-risk ACOs said they were “very concerned” about their 2020 financial performance in general and how their financial performance compared to their applicable annual APM benchmarks.

In short, the survey results strongly suggest that the COVID-19 pandemic has been undermining the stability of the Medicare ACO program.  

As if in a direct response to the NAACOS survey results, the Centers for Medicare and Medicaid Services (“CMS”) has taken action to provide at-risk ACOs with various forms of relief under their respective APM programs in order to help such ACOs through the COVID-19 healthcare crisis.

As described in our May 1, 2020 blog article, “CMS Updates Waivers, Provides More Flexibility for Providers Responding to COVID-19,” such CMS actions include the issuance of an Interim Final Rule (the “Rule”) first released on April 28, 2020, and formally published in the Federal Register on May 8, 2020.  The Rule provides significant financial relief to those at-risk ACOs participating in the Medicare Shared Savings Program (“MSSP ACOs”).  According to the Rule, MSSP ACOs that are required to increase their financial risk over their current APM contract term may elect to maintain their current risk level for next year if they so choose.

In addition to the Rule, CMS Administrator Seema Verma announced in a June 3, 2020 blog article (the “Blog Article”) published in Health Affairs that CMS would be providing MSSP ACOs and other at-risk ACOs with greater APM flexibility in order to “address the uniqueness of the current situation.”  CMS outlined the ACO changes described in Administrator Verma’s Blog Article in a June 3, 2020 Summary (the “CMS Summary”)

According to Administrator Verma, “providers have been greatly affected as they strive to do the right thing by delaying elective surgeries; they have faced disruption in critical revenue streams, and simultaneously experienced increased costs for Personal Protective Equipment.”  Given the need for “transformation” as represented by the current APMs and other CMMI innovations – the need to “move our health care system from one that pays for volume to one that rewards providers for keeping patients healthy, improving health outcomes, and lowering costs” – Administrator Verma concluded that, the need for transformation is, “even greater as our country confronts not just the coronavirus but the possibility of future pandemics.”

The following is a review of the Blog Article, the CMS Summary, and the additional relief that CMS is providing to at-risk ACOs in response to the challenges of the COVID-19 pandemic.  Please note that a detailed description of each of the APMs currently in place is beyond the scope of this blog post.  Such APM information can best be accessed on the CMS website here.

FUNDAMENTAL PRINCIPLES

As described in the CMS Summary, CMS considered certain key principles to determine whether a proposed adjustment to an APM was appropriate for implementation.   Such key principles are:

  1. Utilize flexibilities that already exist in current model design;
  2. Continue sufficient financial incentives that encourage higher quality outcomes to participate in value based arrangements;
  3. Ensure equity and consistency across models;
  4. Align as much as possible with national value based and quality payment programs;
  5. Minimize risk to both model participants, the Medicaid program, and the Medicare Trust Funds:
  6. Minimize delays in new model implementation while providing additional opportunities for participation in new models:
  7. Minimize reporting burden; and
  8. Complements and builds off of new CMS COVID-19 PHE flexibilities as outlined in regulation and waivers.

COVID-19 RELATED ADJUSTMENTS

In applying the above principles, CMS has decided to make the following adjustments which include, but are not limited to, changes in financial methodologies, model timelines, and quality reporting:

A. Financial and Timeline Adjustments.

  1. Delay Start Date of Direct Contracting Model. CMS has decided to delay the start date for the new Direct Contracting model from January 1, 2020 to April 1, 2021.  As described, CMS will (i) adjust any quality benchmarks to reflect the new performance period, and (ii) start a new Direct Contracting application cycle during 2021 for a second cohort to launch on January 1, 2022.  The delay of the start date and the decision to undertake a second round of implementation appears to be in response to complaints levied by several ACO associations and stakeholders that CMS has not given enough details to ACOs on the Direct Contracting model.
  1. Extending Time Periods for Next Generation (“Next-Gen”) Model. Extending the Next-Gen ACO model through Dec. 2021.  The Next-Gen model calls on ACOs to take on more downside risk than in the MSSP model.  The model sunsets at the end of this year, and CMS had privately told participants that it wouldn’t be back.  For the 2020 performance year, CMS will reduce shared losses for Next-Gen ACOs during the months of the COVID-19 public health emergency.  The agency also canceled a quality audit for 2019 and caps the ACOs’ gross savings upside potential at 5%.
  1. Extending the Oncology Care Model. The Oncology Care Model (“OCM”) centers on value-based care payment arrangements in oncology practices.  The OCM was set to expire in June 2021.  However, as modified by CMS, the OCM will be extended for an additional year through June 2022.  In addition, OCM-participating oncology practices will now have the option to forgo upside and downside risk performance for any periods of time affected by COVID-19.  Practices that continue to participate in one- or two-sided risk will have any COVID-19 episodes removed from reconciliation for the performance periods.
  1. Delaying Primary Care First Model. CMS will be delaying the start date of the serious illness component of the Primary Care First model until April 1, 2021.  The Primary Care First-only component will still start on January 1, 2021.
  1. Removing Downside Risk of Comprehensive Care for Joint Replacement. CMS will be removing the downside risk for the Comprehensive Care for Joint Replacement model for any episodes from January 31, 2020 through the termination of the COVID-19 emergency period.  CMS is also extending the fifth performance year through March 2021.
  1. Risk Options for the Bundled Payments for Care Improvement – Advanced. As described in the CMS Summary, CMS will be giving participants in the Bundled Payments for Care Improvement – Advanced model an option to eliminate upside or downside risks.  Participants that choose to continue with two-sided risk will have COVID-19 episodes of care excluded.
  1. Extending the Comprehensive ESRD Care Model. CMS will extend the ESRD Care model through March 31, 2021.  CMS will also reduce 2020 downside risk by reducing shared losses by the proportion of months throughout the public health emergency period. – i.e., No. of Emergency Months/12.  CMS will also cap gross savings at 5% and remove the 2020 financial guarantee requirement.
  1. MSSP ACOs – Adjustments and Extensions. According to the CMS Summary, CMS has decided to remove episodes of care for the treatment of COVID-19 for the MSSP ACO Track 1+ Model.  CMS will also allow MSSP ACOs in Track 1+ a voluntary election to extend their MSSP agreements for one year through December 2021.
  1. Delay for Kidney Care Choices Model. CMS will be delaying the first performance period for the Kidney Care Choices to April 1, 2021.  CMS will also be allowing a second cohort of interested ACOs to submit applications in 2021 for a January 2022 launch.

B. Adjustments to Quality Reporting.

In addition to the modifications listed above, CMS is also adjusting quality assessments, such as deadlines for APM participant quality reporting and the manner in which measures may be reported, to account for the scale and potential costs of COVID-19.

Essentially, the flexibilities granted to Next-Gen ACOs (A.2 above) and MSSP Track 1+ ACOs (A.8 above) extend quality reporting deadlines while CMS continues to monitor COVID-19’s impact on 2020 quality reporting.  Such changes have been welcomed by the ACO community as a positive development for ACOs whose overall quality measures would have seen drastic declines due to the widespread shelter-in-place policies that have caused disruptions in chronic care management and preventive care screenings.

In addition, with the new Direct Contracting Model initiative (A.1 above), CMS will be adjusting any quality benchmarks to reflect the first cohort’s new performance period expected to start on April 1, 2021.

Without these adjustments, CMS may have faced the loss of participation in the existing APMs and a loss of interest on those APMs that were set to “go live” this year.  In this way, the adjustments are timely and are expected to significantly aid in the financial stability of ACOs moving forward amidst the operational challenges raised by COVID-19.  The CMS Innovation Center’s APM adjustments described here are not exhaustive, as the COVID-19 public health crisis continues to evolve.

This article is not an unequivocal statement of the law, but instead represents our best interpretation of where things currently stand.  This article does not address the potential impacts of the numerous other local, state and federal orders that have been issued in response to the COVID-19 pandemic, but which are not referenced in this article.

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