Healthcare Associations Ask for ACO Spending Target Flexibility

In a letter sent on Oct. 14 to the Centers for Medicare and Medicaid Services (CMS), 12 national healthcare associations and stakeholder organizations urged Medicare to better account for the COVID-19 pandemic in accountable care organizations’ (ACOs') financial targets. Specifically, the groups, led by the National Association of ACOs, are asking for an option to select pre-pandemic years on which to base benchmarks for their participation in the Medicare Shared Savings Program (MSSP), citing fairness in the way performance is measured in light of the global pandemic.

As a press release from the Washington, D.C.-based NAACOS—the National Association of ACOs—which helped to lead the action, noted, “ACOs’ financial targets are based primarily on ACO participants’ historic spending, which are 2019–2021 for an ACO starting or renewing an agreement in 2022. Because Medicare spending fell nationally by roughly 7 percent in 2020, many ACOs will be harmed by having future performance judged against a spending target based partly on 2020, which was such an abnormal year. In other words, benchmarks might be unrealistically low because they’re based on a year in which many patients avoided routine medical care.”

NAACOS’s press release went on to report that, “In an analysis conducted by the Institute for Accountable Care, 45 percent of ACOs entering a new contract in the Medicare Shared Savings Program (MSSP) would be harmed unless currently policy is changed. This includes more than 10 percent of those ACOs that are set to see their benchmarks rise by more than 3 percent because of the inclusion of pandemic-stricken years.”

The letter was co-signed by the American College of Physicians, America Hospital Association American Medical Association, AMGA, America’s Essential Hospitals, American’s Physician Groups, Association of American Medical College, Federation of American Hospitals, Health Care Transformation Taskforce, Medical Group Management Association, NAACOS, and the Premier health alliance.

The Oct. 14 letter was addressed to Chiquita Brooks-LaSure, CMS Administrator. It began, “Dear Administrator Brooks-LaSure: The undersigned organizations are committed to advancing value-based care and the role that Accountable Care Organizations (ACOs) play in that critical transformation of our health care system. We write to express our concern with how existing agency policies to set financial spending targets or benchmarks for ACOs are not fair for many because of the ongoing COVID-19 pandemic. The Centers for Medicare & Medicaid Services (CMS) has worked hard since early last year to give our health system and providers the tools needed to fully combat the ongoing pandemic. We greatly appreciate those efforts which have included modifications to value-based care programs, such as those for Medicare’s largest alternative payment model (APM), the Medicare Shared Savings Program (MSSP). However, further policy changes are needed to ensure the shift to value is not derailed by the highly unusual circumstances of the pandemic.”

The coalition wrote that “The country has seen and continues to experience tremendous variation in how the pandemic is affecting our healthcare system. Some parts of the country were devastated in 2020 yet have now resumed more in-office preventive visits and elective procedures. For other areas, it was the opposite with 2020 providing little change in utilization from previous years, and doctors and hospitals now being hit hard by the pandemic this year. The pandemic has also affected which patients are attributed to ACOs. Since attribution is based largely on primary care services, and utilization patterns have been greatly affected by the pandemic, ACO attribution has been significantly impacted by various aspects of the pandemic, such as patients delaying care. The result for some ACOs has been major differences in ACOs’ attributed populations and performance year expenditures. These are out of an ACO’s control and not necessarily reflected in the benchmarks for which ACOs are held accountable.”

What’s more, the letter went on, “Despite the accommodations CMS has given ACOs during the public health emergency, modifications to ACO benchmarks have not been adequately addressed. We urge CMS to allow ACOs the opportunity to elect pre-pandemic years for benchmarks for agreements beginning in performance year 2022. Simply put: The highly unusual circumstances of a global pandemic make it inappropriate to use 2020 as a benchmark year for certain ACOs.”

Further, the coalition wrote to Administrator Brooks-LaSure, “While ACOs recorded a very successful year overall in 2020, some were hurt by the pandemic because of MSSP’s benchmarking polices. CMS updates final benchmarks to account for actual spending in a performance year using a blended national-regional adjustment. While nationally Medicare spending fell by roughly 7 percent in 2020, some ACOs' local populations continued to have routine office visits and elective procedures as if it were 2019. As a result, many of those ACOs showed losses in 2020.”

Importantly, the associations said, “Analysis conducted by the Institute for Accountable Care earlier this year demonstrated this huge variation in spending between 2019 and 2020. For example, spending in the Boston area fell by more than 12 percent between 2019 and 2020, even when excluding COVID-related costs. Spending fell by more than 11 percent in New York City and Northern New Jersey and by more than 10 percent in Miami. However, spending in places like Idaho and West Texas only fell by a couple of percentage points between 2019 and 2020.”

Therefore, they wrote, “Absent any changes to the methodology, ACOs entering the MSSP in 2022 will have their benchmarks largely based on their historic spending from 2019-2021, which includes two pandemic years. ACOs renewing an agreement in MSSP will also have their benchmarks rebased in 2022 using the same pandemic-stricken years. For some, it would be more appropriate to use pre-pandemic years of 2017-2019 as a baseline and trend those forward, which would provide a more accurate, realistic representation of per patient spending averages than using highly variable, severely impacted pandemic years. Additionally, under current benchmarking policy, CMS’s regional adjustments don’t adequately reflect regional variations, especially for those ACOs who make up a large portion of their region. This issue has been called the "rural glitch" and diminishes the impact of the regional adjustment on ACOs. While often referred to as the rural glitch, this benchmarking flaw harms ACOs in any geography when they have spending lower than their region. Our organizations have repeatedly called on CMS to fix this benchmarking flaw by removing ACO-assigned beneficiaries from the regional reference population, which should be implemented as soon as possible. Specifically, to do that CMS should remove ACO beneficiaries from calculation of the regional risk-adjusted PMPY spending.”

"If this administration is serious about getting all patients into a clinical relationship with providers accountable for their outcomes, they need to create a fair, level playing field for how ACOs are held accountable," said Clif Gaus, Sc.D., NAACOS president and CEO, said in a statement contained in the NAACOs press release.

The NAACOS press release concluded with the statement, “ACOs continue to be the best alternative payment model to control Medicare spending and improve the quality of care. ACOs in MSSP generated $4.1 billion in gross savings in 2020 and $1.9 billion after accounting for shared savings payments, which are both program highs. MSSP ACOs also received an average quality score of 97.8 percent, a new program best.”

The entire text of the coalition’s letter to CMS can be found here.