The Year That Was: In 2020, Tumult for ACOs, and a Year-End Holiday Gift Under the Tree

Dec. 23, 2020
Even as the shift from volume to value hit some rocky shoals in 2020, ACO and advanced medical group leaders remain determined to advocate for ACO and APM models, and to prove their worth, going into 2021

If any sector of U.S. healthcare has been buffeted by winds of change and by ongoing developments in 2020, it’s been the accountable care organization (ACO) sector. Facing a combination of policy, payment, and operational challenges, ACO leaders have moved ahead with grit and determination to show the value of care that is accountable—it’s in their name, after all—to the purchasers, payers, and consumers of healthcare; but 2020 has thrown more stumbling blocks in their way than could ever have been imagined on January 1 of this year.

But let’s make the end the beginning here: late in the evening on Monday, December 21, the U.S. Congress passed a combination of omnibus spending bill, to keep the federal government open and running, and a $900 billion COVID-19 relief package.

And that legislation included a provision that ACO leaders nationwide had sorely been hoping for. As I wrote on Dec. 21, the leaders of NAACOS, the Washington, D.C.-based National Association of ACOs, praised congressional leaders for including in their omnibus spending bill a provision to help ACOs during this difficult time. “The National Association of ACOs (NAACOS) praises the work of congressional offices that saved important value-based payment incentives by including a provision in a year-end spending and COVID-relief bill,” the NAACOS press release on that day stated. “The bill encourages continued participation in risk-bearing alternative payment models like accountable care organizations (ACOs) by freezing thresholds needed to secure a 5 percent bonus on annual Medicare payments.  To earn the incentives, providers must have a certain level of Medicare revenue through or patients receiving care through a risk-bearing alternative payment model. Those thresholds, which were set by Congress in 2015, increase every two years and jump to unrealistic levels in 2021. A survey earlier this year from NAACOS found that 96 percent of the 216 ACO respondents would not meet the 2021 thresholds based on their performance in 2020. Should this week’s bill be enacted, Congress will freeze 2020 thresholds for another two years.”

For those outside the ACO sphere, it might be difficult to understand how crucial this legislation was for the survival and thriving of ACOs, but for ACO leaders, it was huge. As Clif Gaus, Sc.D., NAACOS’s president and CEO, said in a statement contained in the Dec. 21 press release, "If healthcare providers cannot count on these incentives, which support their ability to assume risk and fund key patient and ACO initiatives, then far fewer would be willing to participate in risk-bearing alternative payment models. That is the opposite of what our health system needs, especially in the face of a global pandemic. This move will help preserve Medicare’s move to a payment system that’s based more on value and outcomes, rather than volume. Congress was correct to recognize this issue before those thresholds raise next year and to prove it is committed to Medicare’s value movement. NAACOS thanks the sponsors of the Value in Health Care Act (H.R. 7791), Reps. Peter Welch, Suzan DelBene and Darin LaHood, Senate Finance Committee Chairman Chuck Grassley, Congressmen Mike Burgess and Roger Marshall, along with Senators Sheldon Whitehouse and Rob Portman, for their work on this issue.”

That congressional action must have felt like a gift under the holiday tree, for ACO leaders, at the end of a year of challenges. Throughout 2020, NAACOS leaders in particular had been involved in running skirmishes with Seema Verma, Administrator of the Centers for Medicare and Medicaid Services (CMS). Verma had become increasingly vociferous—some might say strident—in her demands that providers move more quickly and fully into downside risk. The very creation of Pathways to Success created some level of controversy in how the issues were framed.

And a battle of narratives between Verma and ACO leaders burst into public view in mid-September, after Verma on Sep. 14 had published an article in Health Affairs, entitled “2019 Medicare Shared Savings Programs ACO Performance: Lower Costs And Promising Results Under ‘Pathways To Success,’” boasting of $1.9 billion in total net savings to Medicare in 2019, and praising the ACOS “that have performed well under the Pathways to Success program requirements.”

“A critical feature of value-based care is organizations taking on downside financial risk and accountability for the cost and quality of care their patients receive,” Verma emphasized in her Health Affairs article. And she crowed over the fact that, “After six years of operating the Medicare Shared Savings Program, in December 2018 the Trump Administration redesigned the program, issuing the ‘Pathways to Success’ final rule. The rule established new participation options and incentives to put ACOs on a quicker path to taking on real risk.” Verma stated that it is in that context that, “In 2019, 541 ACOs in the Medicare Shared Savings Program [MSSP] generated $1.19 billion in total net savings to Medicare, the largest annual savings for the program to date. This is also the third year in a row that the program has achieved net program savings. Consistent with prior years, ACOs with shared savings continued to reduce post-acute care spending, along with hospitalizations and emergency department visits.”

But the leaders of NAACOS had just completed a survey of their members identifying areas of concern, particularly around the Qualifying APM Participant (QP) thresholds under MACRA (the Medicare Access and CHIP Reauthorization Act of 2015). As stated in a press release posted to NAACOS’s website on Sep. 17, NAACOS leaders stated that, “In news that threatens Medicare’s move to value-based payment models, more than 90 percent of respondents to a recent survey from the National Association of Accountable Care Organizations said they are concerned they won’t meet thresholds to secure important incentive payments for participating in risk-based alternative payment models, which jump to unrealistic levels in 2021. That concern is validated by the survey’s data, which shows that 96 percent of the 216 ACO respondents would not meet the 2021 thresholds based on their performance in 2020.”

The press release went on to state that, “To fix this problem, Congress should update QP thresholds so they do not rise above 50 percent in 2021 to ensure providers can still qualify for value-based payment incentives. Additionally, Congress should permit the Secretary to raise the QP thresholds by no more than 5 percent per year to minimize provider burden. For performance years affected by the COVID-19 Public Health Emergency, Congress should permit the Department of Health and Human Services to disregard the QP thresholds and award the Advanced APM bonus to providers participating in qualifying models.” The legislation passed by Congress on Dec. 21 addressed that issue.

More broadly, following the November elections, Clif Gaus and David Pittman wrote an article in the Health Affairs Blog, speaking directly to whoever might be heading up the incoming Biden administration’s federal healthcare policy development, in their November 12 article entitled “Evaluation Of Medicare Alternative Payment Models: What the Data Show.” They wrote that, “As policymakers take stock of the new line-up in Washington, they will consider how best to implement health care payment reform. The evidence presented below suggests that accountable care organizations (ACOs) are the best path forward. We think the data in Medicare are clear: The success of total cost of care, population-health models such as Medicare ACOs far outpaces the performance of narrowly focused alternative payment models (APMs). As leaders of the National Association of ACOs, we believe policy makers need to recognize this disparity in Medicare and stop wasting time and energy trying to develop and fine-tune other medical home and episodic-based payment models.”

Gaus and Pittman noted that, “After a decade, we have enough knowledge to know we should focus on ACOs in our delivery system reform efforts, although we recognize that there may be other models worth exploring if they don’t interfere with total cost of care models. Furthermore, we have learned during this pandemic that total reliance on a fee-for-service payment model is dangerous. As providers learn to appreciate the value of capitated payments, ACOs provide a natural bridge from fee-for-service to capitated payments.” Among other elements in the discussion, the authors noted that “We now have eight years of experience with ACO and Center for Medicare and Medicaid Innovation (CMMI) models,” experience that shows that “Population-focused, total cost of care models, such as ACOs, incentivize all providers to work together to care for the whole patient and provide quality care throughout the continuum to address patients’ social needs, manage comorbidities, and coordinate medications.”

Underlying all the back-and-forth between ACO leaders nationwide and federal healthcare policy officials has been the stark reality of the fundamental tension between federal authorities’ trying to encourage providers forward into value, and the possibility that they might instead alienate large numbers of providers, who might flee the MSSP program as a result. Despite all the progress taking place between private health insurers and provider organizations, the MSSP program remains a standard-bearing program for ACO progress nationwide, and, should it crumble, that development would be a huge setback for the shift from volume to value across the U.S. healthcare system. There are no easy answers, and that fact will remain operative into 2021, as providers struggle with the severe financial impacts of the COVID-19 pandemic.

Interestingly, as a number of leaders of advanced multispecialty groups noted during the APG Colloquium 2020, held virtually last month, and sponsored by the Los Angeles-based America’s Physician Groups (APG), a national association of physician groups involved in risk contracting, having a fair amount of revenue in risk-based contracts turned out to be a lifesaver for some organizations during the pandemic. As Stacey Hrountas, CEO of the Sharp Rees-Stealy Medical Group in San Diego, put it, on a Nov. 17 panel, “Seventy percent of our revenue is prepaid, and, hallelujah, because it saved us during COVID!” Hrountas and others affirmed the advantages of risk-based contracting for the physician groups that have taken the plunge, during this very difficult time for providers nationwide.

More fundamentally, Don Crane, APG’s president and CEO, told me in an interview just prior to the opening of the APG Colloquium 2020, no matter what happens in the federal political and policy sphere, “We’ll continue to see continued, slow growth of the value movement. There is a clarion call right now to double down. And people realize that 85-90 percent of the spend in the United States is around chronic disease. The purchasers are getting more and more restive. And I think we should watch the behavior of the health plans. They are not a monolith, and are not moving forward at equal paces. Physician groups all over the country are having these conversations right now around their board tables, where they’re saying, we can’t stay in fee-for-service and be on the edge another 12 months from now,” Crane emphasized to me. “Even hospitals, even academic medical center leaders are saying, we need a new payment model. What is unknown is whether we see something big in terms of incentives from the U.S. Congress. Will they really incentivize the move to value or not? It’s been 10 years since the ACA, which created ACOs; and five years since MACRA [the Medicare Access and CHIP Authorization Act of 2015]. And the value movement is alive and well, but it’s a long way from fully succeeding. So let’s get going, Congress. The trust funds will be bankrupt by 2024; if you don’t move to a model that’s more cost-effective, you are going to go into bankruptcy as a country. So we’re going to continue to advocate for our model.” And that statement pretty much sums up how the most progressive provider leaders see the overall landscape: as one in which they will continue to push forward on all fronts—operational, clinical-transformational, and advocacy—to make value-based care delivery models a firm reality for the healthcare system in the next year and beyond.

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