Prior to the COVID-19 pandemic, the transition to value-based reimbursement via alternative payment models (APMs) was a top priority of the U.S. Department of Health and Human Services (HHS) and its Centers for Medicare and Medicaid Services (CMS).
To that end, in 2018 CMS finalized its Pathways to Success accountable care organization (ACO) program reforms. In 2019, it announced the Primary Cares Initiative to accelerate primary care payment redesign. Altogether, over the past three years CMS has announced more than a dozen opportunities for providers to participate in payment models that allow them to assume accountability for the cost and quality of patient care.
As of January 2020, some of these models were in the active participation stage while others were scheduled to open application periods this summer for January 2021 start dates. Then, COVID-19 hit.
Almost overnight, healthcare providers faced sudden and sharp drops in the number of office visits, delayed elective surgeries, and increased costs for Personal Protective Equipment (PPE). As a result, many of today’s value-based payment models that have a risk component but are still grounded in fee-for-service were turned upside down. Stated simply: these models were never designed to withstand such a steep decline in revenue-producing office visits paired with a massive increase in costly patient hospitalizations.
In April, a National Association of ACOs survey found that 56 percent of ACOs taking on downside risk in the Medicare Shared Savings Program were likely to leave the program due to concerns about having to repay losses because of COVID-19. Meanwhile, physician groups, hospitals, and health systems participating in CMS’s value-based payment models asked the agency for regulatory and financial relief from program requirements.
In an April 30 regulation, CMS addressed the concerns of its Shared Savings ACO program participants by instituting a series of changes for the program. Then, last week CMS Administrator Seema Verma detailed the agency’s broader response to these concerns in a Health Affairs editorial article titled, “New CMS Payment Model Flexibilities For COVID-19.”
In the article, Verma states, “When it comes to a pandemic of the proportion we’re now experiencing, as part of ensuring that value-based payments are sustainable, the models must be adjustable to address the uniqueness of the current situation. That’s why, in response to COVID-19, CMS is providing new flexibilities and adjustments to current and future CMMI models to address the emergency.”
In a CMS fact sheet accompanying Verma’s article, the agency detailed policy changes impacting more than a dozen payment models, including:
- Bundled Payments for Care Improvement Advanced
- Comprehensive Care for Joint Replacement
- Direct Contracting
- Kidney Care Choices
- Medicare ACO Track 1+
- Next Generation ACO
- Oncology Care
- Primary Care First
For some models, the changes adjust or relax quality reporting requirements. For others, they adjust key cost benchmarks and financial reconciliation policies. Others simply offered the option to opt out of any potential shared losses or savings for the entire 2020 performance year.
Participation terms were also extended and/or delayed. The Next Generation ACO model, which was set to end in December, was extended another year through December 2021. Meanwhile, the Direct Contracting Model (part of the high-profile Primary Cares Initiative) will now begin April 1, 2021, three months after the previous January 1, 2021 start date.
Industry stakeholders and physicians in these models largely cheered these moves, which should help support continued participation in these APMs during and after the pandemic. But beyond impacting overall participation numbers or the relative success of any one value-based payment model, Verma’s article also stresses how the pandemic has shined a bright light on the flaws of the fee-for-service payment system. Verma noted, “By accepting value-based or capitated payments, providers are better able to weather fluctuations in utilization, and they can focus on keeping patients healthy rather than trying to increase the volume of services to ensure reimbursement.”
With this in mind, providers should consider that even if these changes slow or delay the move towards alternative payment models, in the minds of CMS leaders, the pandemic has already justified and accelerated a more aggressive move away from fee-for-service.