CMS Offers ACOs Regulatory Relief in Response to the COVID-19 Pandemic

On April 30, the Centers for Medicare and Medicaid Services (CMS) released a 279-page interim final rule that makes several important regulatory changes in response to the COVID-19 emergency.  Following a “first round” of major regulatory changes issued in March, CMS said this rule marks the “second round of sweeping changes to support (the) U.S. healthcare system during (the) COVID-19 pandemic.” 

The rule makes several key changes in response to the Coronavirus Aid, Relief, and Economic Security (CARES) Act and others at the request of healthcare providers. Key amongst those changes are those to the Medicare Shared Savings accountable care organization (ACO) Program (MSSP).  

Medicare’s largest ACO program, the MSSP currently has 517 participants that serve over 11 million beneficiaries.  Thirty-seven percent of those ACOs are participating in two-sided risk models.

Since the start of the pandemic, ACOs across the country have been asking CMS for relief from several of the program’s requirements, arguing it was never designed for these circumstances.  In response, CMS has made the following changes:

• Mitigation of shared losses.  The U.S. Department of Health and Human Services (HHS) declaration of a public health emergency in January triggered the MSSP’s Extreme and Uncontrollable Circumstances Policy, which will apply for the duration of the national emergency. As a result, shared losses from any time during the emergency will be erased for any ACO participating in a two-sided risk model. For example, if the emergency lasts through June, any shared losses an ACO incurs for performance year 2020 will be reduced by 50 percent.  Furthermore, if the emergency covers the full year (January through December 2020), no ACO will owe shared losses for the year.

• Removal of COVID-19 patients from cost calculations.  In an effort to ensure ACOs are neither rewarded nor penalized for the relative spread of COVID-19 in their assigned beneficiary populations, CMS will disregard from ACO financial calculations all costs associated with COVID-19 inpatient treatment. This will apply to the determination of both performance year and benchmark year expenditures to ensure that COVID-19 costs do not trigger outlier benchmarks. Part A and B patient costs will be included for the entire month in which an inpatient stay begins, all months during the inpatient stay, and the month following discharge.

• Option for some ACOs to extend their participation agreements.  CMS will forgo an application cycle this year for a January 2021 program start and instead offer ACOs with participation agreements ending in December 2020 the option to voluntary extend their agreements for another year. This change would apply to ACOs that started a three-year term in the program in January 2018 and were facing a decision as to whether to renew participation in the program under one of the new Pathways to Success risk tracks. 

• Option for BASIC track ACOs to remain in the same level of risk in 2021.  BASIC track ACOs participating in the glide path can now elect to defer advancing to the next level of risk for 2021. However, ACOs electing this option will be automatically advanced in 2022 to the level at which they would have otherwise participated under automatic advancement if they hadn’t elected this option for 2021.

From CMS’s perspective, these changes will encourage ACOs to remain in the program and make sure that ACOs are treated fairly regardless of the extent to which their patient populations are affected by COVID-19.  

Many providers groups and ACOs agreed. In a statement, the National Association of ACOs said, “the rule is a fair way to handle ACO performance during a global public health pandemic.”  At the same time, the association said that it “remains concerned about the uncertainty of the length of the public health emergency and believes COVID-related costs should be removed from the entire performance year.”  

Ultimately, the impact of these regulatory changes on the ACO program will depend on the pandemic and the length of the national emergency declaration. But for now, this rule should ease the concerns of many ACOs during this period of extreme uncertainty.