Many ACOs May Exit Medicare Shared Savings Program Because of Pandemic

Ken Terry

April 16, 2020

The federal government's decade-long effort to create a better coordinated, value-based care delivery system is imperiled by the COVID-19 pandemic, a new survey by the National Association of Accountable Care Organizations (NAACOS) indicates.

NAACOS' survey found that 56% of ACOs that are at financial risk in the Medicare Shared Savings Program (MSSP) — the government's main vehicle to expand value-based care ― are likely to quit the program because they're concerned that the pandemic will worsen their 2020 performance.


Under the MSSP rules, ACOs that take two-sided risk and spend more than a predetermined amount must pay Medicare a portion of their losses.

These ACOs have until May 31 to give notice to the Centers for Medicare & Medicaid Services (CMS) of their intention to leave the MSSP or they will lose money.

More than 40% of the ACOs participating in the MSSP are taking two-sided risk, according to NAACOS. The rest of the 517 participants are in a basic track that allows them to share in savings but doesn't require them to pay anything back to Medicare if they spend more than their benchmark, according to CMS data.

Even if they don't incur losses, the MSSP ACOs might not generate any shared savings, which are their principal source of income, NAACOS' report noted. Seventy-seven percent of respondents to the NAACOS survey said they were very concerned about the impact of the COVID-19 crisis on their performance; 17% said they were somewhat concerned.

Specifically, 90% of the respondents said that the pandemic would have a significant effect on their ability to earn shared savings this year. This could have a direct impact on the earnings of many physicians. Nearly 500,000 clinicians belong to an ACO, making the MSSP the largest value-based payment model in Medicare, NAACOS said.

Owing to the upheaval in healthcare and the disruption in practice patterns caused by COVID-19, the report noted, it is nearly impossible for ACOs to forecast their costs and utilization of services. Sixty-five percent of the respondents said the pandemic will make it very difficult for them to accurately predict their ACO's 2020 performance. Most of the other ACO representatives foresaw some degree of difficulty in forecasting results.

Nevertheless, the majority of respondents said that the pandemic would increase their ACO's costs. Five percent of the respondents said costs would increase by 1% to 4%; 23% said costs would rise would be 5% to 10%; and 25% foresaw an increase of greater than 10%.

NAACOS put these numbers in context by comparing them with earlier MSSP results. For 2018, the most recent year for which ACO results are available, MSSP ACOs that earned shared savings had expenditures that were, on average, 4.8% lower than their benchmarks, NAACOs said. ACOs with shared losses spent on average 2.1% more than their benchmarks.

Asking for "Protection"

The NAACOS survey was conducted from April 3 – 8. All ACOs participating in the MSSP or the Next Generation ACO Model (a much smaller program) received surveys by e-mail. There were 304 responses from 226 ACOs across the country.

"When ACOs made a commitment to assume risk, they didn't expect they'd be handling the risk of a global pandemic. Rather than be forced to pay enormous losses resulting from the pandemic, these groups of providers may sadly quit the program, which they can do without penalty by May 31," NAACOS President and CEO Clif Gauss said in a news release. "Medicare's decade-long effort to change how we pay for health care to better reward quality and outcomes may be lost unless Washington acts quickly to throw these providers a lifeline."

NAACOS and nine other healthcare organizations last month asked CMS and Congress to suspend performance-related penalties for 2020 for providers participating in alternative payment models. Among the other groups that supported NAACOS' plea were the American Academy of Family Physicians, the American College of Physicians, the American Hospital Association, the American Medical Group Association, America's Essential Hospitals, the Association of American Medical Colleges, the Federation of American Hospitals, the Health Care Transformation Task Force, and the Medical Group Management Association.

"CMS has yet to adequately mitigate the costs and disruptions of the pandemic," Gaus said in the press statement. "ACOs are telling us that they will leave the program unless there is protection from the losses of the pandemic, and it would be a tragedy for millions of Medicare beneficiaries to lose the access to care coordination and quality improvement that ACOs offer."

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