The impact of the COVID-19 pandemic on accountable care organizations (ACOs) has yet to be determined, but according to the National Association of ACOs (NAACOS) and based on preliminary analysis from NAACOS member Physicians of Southwest Washington and MultiCare Connected Care in Olympia, Washington, there is a pending issue in the ACO REACH Model connected to the COVID-19 pandemic years.
The ACO REACH Model is comprised of 132 ACOs and is responsible for care for more than 2.1 million beneficiaries and tests new policies around different topics, including health equity incentives and primary care capitation. According to the preliminary analysis and NAACOS, years impacted by the COVID-19 pandemic are likely to create regional variation that might impact the success of ACOs.
As NAACOS notes, the problem is that the Centers for Medicare and Medicaid Services (CMS) will factor years impacted by the COVID-19 pandemic into REACH ACOs’ financial benchmarks. This is a problem because it may create unfair performance standards for ACOs based on data anomalies. For example, the pandemic caused a lot of preventive and routine care to be missed in 2020. Additionally, elective surgeries were often delayed. Unfortunately, not all of those visits were made up in 2021. Making matters more complicated, there were variations in spending across the country as some regions lifted the stay-at-home orders quicker and made different decisions on whether elective procedures should be delayed.
It’s not just the preliminary analysis and NAACOS that are concerned, however, according to a survey of NAACOS members, 77% were very concerned about the impact of COVID-19 on their ACO’s 2020 performance while 17% were somewhat concerned.
The Concern, Explained
The ACO REACH Model benchmarks are included in the “rate book.” The rate book is based on three years’ worth of data, meaning that in 2023, it will include two pandemic-stricken years (2020 and 2021, plus data from pre-pandemic 2019). On the other hand, the Medicare Advantage rate book takes data from five years (in 2023, it will be 2016, 2017, 2018, 2019, and 2020), meaning it will only include one year of pandemic data in 2023. The impact of COVID will also likely be mitigated in that data in the future as it is averaged over five years instead of three. REACH benchmarks in 2023 are based 60% on the historical spending of the ACO’s assigned patients and 40% on the expenditures for the counties that the ACO draws patients from.
What Does This Mean?
As NAACOS notes, this means that an average-risk beneficiary in Maine might receive a 1% reduction in its regional rate using the 2023 rate book compared to the 2022 rate book, while an average-risk beneficiary in Washington D.C. would receive an 11% increase in its regional rate using the 2023 rate book when compared to the 2022 rate book.
NAACOS cites Puerto Rico (2% decrease) and Maine (1% decrease) as the two regions with the smallest year over year change while D.C. (11% increase), New York (7% increase), and California (6% increase) would see the largest increases. The national average for the same time period is a 4% increase.
NAACOS argues that the REACH rate book will “create arbitrary winners and losers based on vast regional variation in Medicare spending that was exacerbated by the pandemic.” They further note that this is a problem when you consider that health care expenditures likely varied from region to region in 2020 and 2021 because of COVID restrictions and “cultural norms,” not structural changes in the way care is delivered in the marketplace.
What Can CMS Do?
NAACOS concludes that CMS should consider ways to mitigate potential negative impacts, including limiting losses for entities with negative rate book impacts using COVID year data, use a rate book corridor and limit the percentage by which trends can increase or decrease, and expand the number of years in the calculation (such as using 5 years the way MA plans do) or include only one COVID year in each annual calculation.
Finally, NAACOS asks CMS to release the rate book in advance so that stakeholders can submit feedback through comments prior to the finalization.