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Coronavirus and ACO Financial Performance: How Will CMS Respond?

Coronavirus And Aco Financial Performance How Will Cms Respond Web

With the over-60 population identified as being at risk for serious effects from COVID-19, accountable care organizations (ACOs) are likely to be hit with increased utilization and unanticipated claim expenses. While it is unclear how CMS will respond to financial losses for ACOs with downside risk, we can find clues by looking at previous CMS responses to extreme and uncontrollable events such as Hurricanes Harvey, Irma, Maria and the California wildfires in 2017.

CMS Precedence for Extreme and Uncontrollable Events

The final rule for the Medicare Shared Savings Program—Pathways to Success—was published along with the Extreme and Uncontrollable Circumstances Policies for Performance Year 2017 on December 31, 2018. These policies allowed for making adjustments in calculating an ACO’s shared loss.

They followed rules published in November 2017 and November 2018 that addressed the impact that extreme and uncontrollable circumstances can have on organizations reporting under the CMS Quality Payment Programs.

While the impetus for these rules was responding to major disasters, the policies can also be triggered (subject to case-by-case review) by public health emergencies. As CMS explained:

“We also generally intend to align the automatic extreme and uncontrollable circumstance policy with the ECE policies (extreme circumstances exceptions) for other Medicare programs such that events that trigger ECE policies would also trigger the extreme and uncontrollable circumstance policy.”

The ECE policies currently address quality and value-based programs, including:

  • Hospital IQR Program
  • Hospital OQR Program
  • IPFQR Program
  • ASCQR Program
  • PCHQR Program
  • Hospital VBP Program
  • HAC Reduction Program
  • Hospital Readmissions Reduction Program

CMS has set precedence for mitigating the financial impacts of circumstances beyond the control of providers. While the impacts of COVID-19 on ACOs are not yet known, ECG’s expectation is that CMS will address the anticipated financial impacts to ACOs before the current Direct Contracting Entity application period ends and in advance of the CY 2021 Pathways to Success/Medicare Shared Savings application period. Otherwise, the financial uncertainty may cause existing ACOs to terminate, and entities considering applying may decide against it.

In the meantime, providers should be sure to document all COVID-19 care following the coding guidelines published on February 20, 2020. This will help quantify the utilization and financial impact specific to COVID-19.