Value-based care contracts are adding a layer of complexity for provider organizations impacted by COVID-19. As part of these contracts, provider organizations often assume financial risk for commercial, Medicaid, or Medicare patients, in addition to responsibility for meeting quality benchmarks. Potential impacts of the pandemic on provider organizations engaged in value-based care arrangements include:

  • Cost of care exceeding established financial benchmarks in regions hit hard by COVID-19, resulting in either no shared-savings earned or financial losses to cover cost overages.
  • Missed benchmarks for quality measures, which could negate shared-savings payments that the provider organization may have earned otherwise.
  • Exacerbated medical conditions resulting from cancelled elective procedures or screenings and missed appointments that may lead to more expensive care, increasing the risk of costs exceeding benchmarks.
  • Shifting dynamics between provider organizations and their payer-partners, with value-based contracts evolving to best meet the needs of all involved parties, including patients.

There may be less financial impact for Medicare ACOs because the Centers for Medicare & Medicaid Services has unveiled updates to the Medicare Shared Savings Program as part of a broader guidance for COVID-19 response. CMS’ updated regulations include:

  • Adjusting the financial methodology for 2020 to neutralize impacts of treating COVID-19 patients on MSSPs.
  • Prorating the shared losses owed by ACOs in 2020 for the duration of the pandemic—up to full forgiveness.
  • Skipping the annual application process for 2021 for legacy MSSPs that are eligible to renew under the new program structure (Pathways to Success).
  • Maintaining current risk level for 2021 for MSSPs as opposed to the automatic adjustment that now occurs under Pathways to Success. Participants will move into the scheduled risk track in 2022.
  • Reporting quality scores is optional for the 2019 performance year, and there will be no punishment for lack of reporting.

The new regulations may help to mitigate financial losses and stem a potential mass exodus of MSSP ACOs this year. Other value-based care arrangements like commercial and Medicaid ACO contracts, bundled payment agreements, and direct employer contracts, could see greater impacts if measures are not put in place to curtail financial losses for providers. It will be up to the payers and provider organizations to negotiate any changes to the terms of current and future arrangements.

The impacts of COVID-19 on shared-risk initiatives will continue to be felt for several years. Provider organizations will need to weigh which arrangements they want to continue, and the impact on patients now and in the long run. For an industry pursing greater accountability, both financially and for quality of care, COVID-19 could pause forward momentum for a few years.

But ultimately the novel coronavirus may shed light on the need for value-based care and accountability. Vulnerable populations with serious chronic conditions like cardiovascular disease, diabetes, and high blood pressure require continued monitoring to maintain their health, but unmanaged conditions may increase risk of complications, as seen with COVID-19.

COVID-19 Brings Seismic Shifts to Future Healthcare Delivery

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