The COVID-19 pandemic has only added to the already complicated healthcare policy and payment environment, and stakeholders that are participating in complex value-based payment models have been seeking different forms of regulatory relief from the government. In some ways, those wishes have been granted. For example, in the realm of telehealth, the Centers for Medicare & Medicaid Services (CMS) released a variety of regulatory updates aimed at improving telehealth, payment, workforce, outpatient services, and other aspects of the healthcare system. Indeed, throughout March and April, CMS moved quickly to remove payment- and licensing-related barriers to the expansion of telehealth.
On that same late April date, CMS also announced significant policy changes on the accountable care organization (ACO) front. The federal agency said it would be making adjustments to the financial methodology to account for COVID-19 costs so that ACOs will be treated equitably regardless of the extent to which their patient populations are affected by the pandemic. CMS will also be forgoing the annual application cycle for 2021 and giving ACOs whose participation is set to end this year the option to extend for another year. ACOs that are required to increase their financial risk over the course of their current agreement period in the program will have the option to maintain their current risk level for next year, instead of being advanced automatically to the next risk level, CMS explained.
Responding to these changes, the National Association of ACOs, or NAACOS, released a statement thanking CMS for listening to stakeholder concerns while also noting that the association was “disappointed to see there will be no application period in 2021 for new ACOs and hope CMS will be open to a partial 2021 performance year as the healthcare industry stabilizes.”
To discuss all these policy elements in the face of the epidemic, Rita Numerof, Ph.D., president of the global healthcare consulting firm Numerof & Associates, recently spoke with Managing Editor Rajiv Leventhal. From the firm’s inception—now into its third decade—Numerof has focused on developing new business models for companies in industries undergoing major market change. Below are excerpts of that interview.
How do you see the current ACO landscape, in the context of some of the concessions CMS has made versus what has been asked for?
What CMS is putting on the table as a way to help ACOs that are in the program today remain “whole” is a very reasonable approach. CMS, if we put this in context, is interested in facilitating a change to the business model in healthcare. I have been a critic of ACOs, but an advocate for accountability in care delivery and ensuring that a business model was in place that would establish accountability for outcomes with transparency in cost and quality, and that it would be for care delivered across the continuum. I still hold that view; we need a market-based model. Having said that, the current administration has been very focused on trying to change the model within the legal ability they have. So helping the currently enrolled ACOs to take pass in light of some of this unpredictable nature that they’re dealing with is understandable in the short-term, but it’s not the way to go long-term. This becomes an opportunity to step back , push the reset button, and do accountability for care properly.
What does that entail?
If you step back and take a look at the delivery of care, be it for diabetes care or heart disease, there should be a defined set of services delivered tied to outcomes that matter. The best approach is to enable care delivery organizations to have the freedom to deliver the care in the places that make the most sense using the technology that is increasingly available to us, and get paid based on outcomes that really matter. So it’s about getting way from the minutia, and from the line-by-line reimbursement. My concern is that given what we’re seeing with COVID-19 and the draconian measures being taken across the country where elective surgeries and other procedures and visits to physician offices were shut down, we flattened the curve, but prolonged the pain and the secondary effects; and the psychological and economic effects will be difficult for people to recover from.
In the process there have been some interesting silver linings that point to the model I am proposing. One of those is the role of telehealth. People have engaged creatively with physicians and other care providers to get services on the phone, via Zoom or whichever other platform, and the consumers have found these experienced positive for the most part. So CMS has increased the amount of payment for those telehealth visits, and have also removed some barriers to physicians being able to practice across state lines. These are steps in the right direction.
You could argue, and I have, that these common sense changes should be made permanent as opposed to going back to the bureaucracy that [was in place]. If I can treat someone effectively, and it assumes that telehealth is the right medium in this circumstance, tell me why you’d want to schedule an appointment two to three months out, take time away from your busy schedule, and sit in a waiting room, just for the doctor to see you for seven minutes or less. That raises questions about the delivery model, and I would argue that reimbursement shouldn’t depend on where the service is performed, but rather the service should be performed where it makes the most sense. And if doctors all moved more towards a capitation [payment system], for example, tied to outcomes that really matter over a period of time, they’d have the freedom to treat people where it makes the most sense. That’s really about accountability for care.
As patient care facilities get back to opening up for non-essential in-person visits, do you think the restrictions around telehealth that CMS has loosened will go back into place?
The debate will continue and the piecemeal approach concerns me. I think that only increasing the payment for telehealth is not the solution; it’s another little Band-Aid. The payers don’t want to pay more than they have to in certain situations, and if you look at it from a piecemeal perspective, they will continue to push back on it. If providers have to make more money by having the patients come in to see them—and of course telehealth should not be used all the time—it becomes a question of what is the right medium for what I am doing for that particular person in that particular instance? And providers push back, too, since they want patients to come into the office if the reimbursement for them is higher. But it may or may not be in the patient’s best interest. For [decades], people have ended up cutting corners because they were getting paid not to do anything. So the problem is connecting payment to outcomes over a longer period of time, and we are still fighting that.
March through June were financially devastating for healthcare organizations. From what you are hearing, how bad are things in terms of their financial sustainability?
They will continue to bleed from a few perspectives. You have the psychology at play here, where people are going to feel the need to be comfortable getting themselves back into the very healthcare delivery organizations that they were mandated to not come near. So turning around that fear on the part of Joe and Sally consumer will be really hard. Institutions lost all this revenue; their parking lots were empty, their ERs were empty, and their halls were empty. These organizations were furloughing thousands of workers, and that is devastating. The government took draconian measures, and I don’t think that was right. It’s like taking a blunt instrument and saying we are going to close ambulatory surgery centers because we don’t want hospitals to be overrun. And this was done out of fear, so now we’ll have to figure out what we do on the back side.