More on Accountable Care

More than half of ACOs likely to leave Medicare Shared Savings program

NAACOS and others want CMS to hold harmless providers participating in alternative payment models from performance-related penalties for 2020.

Susan Morse, Managing Editor

More than half, 56%, of healthcare organizations taking financial risk in a Medicare program said they are at least somewhat likely to drop out because of the financial pressure resulting from the COVID-19 pandemic, according to a new survey released by the National Association of Accountable Care Organizations.

While 30% of accountable care organizations in the Medicare Shared Savings Program said it was not likely they would drop out, 21% said they were very likely to leave and 14% said they were likely to drop out of the program. Another 21% of ACOs said they were somewhat likely to leave MSSP.

Almost 80% of ACOs said they were "very concerned" about their ACO performance this year.

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"CMS has yet to adequately mitigate the costs and disruptions of the pandemic," said Clif Gaus, NAACOS president and CEO. "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."

CMS gave some relief in a March 30 interim final rule that forgave losses equal to the percentage of months the public health emergency is in effect. For example, if the emergency lasts for four months, CMS would forgive a third of shared losses. 

On April 13, the Medicare Payment Advisory Commission MedPAC urged CMS Administrator Seema Verma not to use data from 2020 when evaluating ACOs, saying providers should be allowed to focus on COVID-19 rather than shared savings.

MedPAC essentially wants to ignore all shared savings if they occur in 2020, a move that is criticized as being as detrimental to the program as COVID losses. In 2018, Medicare paid ACOs roughly $900 million of the $1.7 billion they saved. Under MedPAC's suggestion, CMS would not pay back that $900 million and ACOs would be basically back in pure fee-for-service, the opposite of the value-based MSSP.

"ACOs should focus on their response to COVID-19 without concern for shared ACO savings or losses," MedPAC said. "The COVID-19 public health emergency has likely affected – and will continue to affect, at least through 2020 – Medicare spending in ways that are yet to be fully understood. This is particularly problematic for providers participating in ACOs, whose 2020 performance will be assessed using benchmarks established before the current emergency."

Because of the dramatic shifts in care delivery, attempting to adjust 2020 spending and benchmarks for COVID-19 would be impractical and could be inequitable, MedPAC said.


The NAACOS analysis estimates the ongoing COVID-19 pandemic could cost Medicare between $38.5 billion and $115.4 billion over the next year. The final number will depend on factors such as severity of disease and hospitalization rates.

Because roughly 20% of all Medicare beneficiaries are assigned to an ACO, potential new COVID-related costs for Medicare ACO beneficiaries could range from $7.7 billion to $23.1 billion, the analysis found. Since total spending for ACO beneficiaries was about $125 billion in 2018, ACOs could see an increase in spending between 6% and 18% because of COVID-19.

A quarter of survey respondents said they expect spending to increase by more than 10% as a result of the pandemic. Almost another quarter said they expect spending to increase between 5% and 10%. Only 10% said they expect spending to remain the same or fall because of the pandemic, and the remaining 37% of respondents selected "don't know," illustrating the great uncertainty they face, NAACOS said.

Providers are also seeing disruptions in chronic care management as routine, in-office visits are cancelled. Quality control staff are being diverted to handle COVID-19 response elsewhere. Elective procedures, which are being delayed now, are likely to be rescheduled for later in the year when the pandemic eases.


The analysis shows the pandemic will place a hardship on healthcare organizations that participate in payment models, like ACOs, that hold providers accountable for patients' healthcare spending.

In December 2018, CMS finalized a rule requiring ACOs to take on downside risk sooner, which means more ACOs today are being held at risk of facing penalties if spending rises above preset spending targets.

NAACOS surveyed the ACO community in an online poll of five questions between April 3 and 8. The survey went to all 2020 Medicare Shared Savings Program and Next Generation ACO model participants. There were 304 responses from 226 ACOs across the country. 

The Medicare Shared Savings Program, first piloted during the George W. Bush administration, fully launched in 2012, rewards ACOs, which are groups of doctors and hospitals that voluntarily come together to take responsibility for the costs and quality of a defined set of patients, for lowering spending and improving outcomes for patients.

The program has saved as much as $3.53 billion from 2013 to 2017, NAACOS said. Almost 20% of Medicare beneficiaries and nearly 500,000 clinicians practice in an ACO in 2020, making the Shared Savings Program the largest value-based payment model in Medicare.


"When ACOs made a commitment to assume risk, they didn't expect they'd be handling the risk of a global pandemic," said Clif Gaus, NAACOS president and CEO. "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. Medicare's decade-long effort to change how we pay for healthcare to better reward quality and outcomes may be lost unless Washington acts quickly to throw these providers a lifeline."

Consulting, analytics and group-purchasing organization Premier congratulated MedPAC on its recommendation to CMS, which it said is consistent with Premier's position, including the extension of the Next Generation ACO model, delaying the start of the Direct Contracting model and not using 2020 data in determining ACO performance.

Twitter: @SusanJMorse
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