What will COVID-19 mean for value-based models?

Six months into the COVID-19 pandemic, its impact on medical practices is becoming clear: fewer in-person visits, more care provided via telehealth and, for many, lower revenue.

But even as doctors struggle with the day-to-day challenges of practicing under radically new circumstances, some health care policy makers, academics and payers are asking another question: What do the changes brought about by the pandemic mean for accountable care organizations (ACOs) and other value-based care models, under which doctors and practices are rewarded for keeping patients healthy while holding costs down?

The consensus among experts who spoke with Medical Economics® is that the pandemic will, in the long run, benefit ACOs and other value-based programs, as practices lessen their dependency on fee-for-service medicine as the sole source of their income.

“If you’re a small practice living on fee-for-service, and suddenly all your patients disappear, you realize how much risk you’re under, as opposed to those who have moved to some sort of capitation or bonus for quality arrangement covering at least part of their patient base,” says J.B. Silvers, Ph.D., a professor of health care finance at Case Western Reserve University’s Weatherhead School of Management in Cleveland, Ohio.

“What many thought was the less risky approach of just practicing fee-for-service turns out to be more risky when you have these unexpected ‘black swan’ events,” he says.

CMS addresses ACO worries

Early in the pandemic, as practices’ patient visits and incomes plummeted, value-based programs seemed anything but appealing, especially if they involved financial risk. A mid-April survey by the National Association of Accountable Care Organizations (NAACOS) found that 56% of ACOs in a two-sided risk program — i.e., one that requires sharing losses as well as gains — said they were “very likely,” “likely” or “somewhat likely” to leave the program due to fear of having to repay losses incurred as a result of treating patients with COVID-19.

Partly as a result of this sentiment, the Centers for Medicare & Medicaid Services (CMS) moved quickly to shore up its main value-based initiative, the Medicare Shared Savings Program (MSSP).

According to Silvers, CMS had little choice but to act quickly to ensure that ACOs remain in the MSSP program. “This [MSSP] is a big bet they’ve made, and if practices start to bail on them, the whole program goes down the tubes,” he says. “Having practices stay in it for the long run is really important, so they want to make it as stable and predictable as they can.”

Allison Brennan, MPP, senior vice president of government affairs for NAACOS, says the steps CMS has taken have helped allay members’ initial fears over the effects of the pandemic.

“The main reason they are taking these actions is to prevent ACOs from unfairly shouldering the burden of a pandemic over which they have no control, and so far it seems to be working,“ she says, adding that “we still have to wait and see what the net effect will be in some of the hardest-hit areas.”

How value-based programs are responding to pandemic

Despite their initial fears, practices in value-based programs appear to be better positioned to survive the COVID-19 crisis, says Keely Macmillan, M.S., senior vice president of policy and solutions management at consulting firm Archway Health, which helps practices shift to bundled payments and other types of value-based models.

“The providers who had put infrastructure in place to achieve success in these models, like care coordination, patient tracking and telehealth, are able to respond more quickly and continue providing high-quality care to patients in the midst of this health emergency,” she says.

That has proven true for CareMount, an ACO based in Mount Kisco, New York, with more than 600 providers in five counties and parts of New York City. It began participating in MSSP in 2013, and since 2018 it has been part of the Next Generation ACO program, where it shares in losses as well as cost savings. It also has performance-based contracts with many of its commercial payers.

Because of its long experience with value-based programs, CareMount understood the importance of population data in improving patient care, says Kevin Conroy, M.S., the group’s chief financial officer and chief population health officer. It had built an in-house data analytics department that performed functions such as alerting doctors when a Medicare patient was due for an annual wellness visit.

Once the severity of the pandemic became apparent, Conroy says, CareMount was able to use the data it had accumulated to quickly identify and contact its most vulnerable patients. “We already had a robust care coordination team, but we became more targeted with it,” he explains. “We looked at things like who was deferring care or missing a screening and who we needed to reach out to telephonically to make sure there’s no deterioration in their condition.”

CareMount also had a telehealth platform, Conroy says, although before the arrival of the pandemic it was rarely used. Beginning in mid-March, however, telehealth visits escalated rapidly, peaking at 1,500 per day, and they have been an important tool in enabling CareMount’s providers to stay in touch with patients and monitor their health.

In addition, Conroy says, CareMount is in the early stages of developing a home health program to augment telehealth visits. The goal is to send medical assistants to patients’ homes for tasks that can’t be done by phone, such as blood pressure screenings and checking on prescription adherence.

Conroy predicts that the pandemic will heighten the appeal of value-based care models such as ACOs. “Groups that are using value models are positioned to create a more predictable revenue flow,” he says.

Telehealth’s impact

Another effect of COVID-19 on value-based programs is the increase in telehealth visits. A Commonwealth Fund study released in mid-June found that while telehealth visits were down from their mid-April peak, they were still about 8% higher compared with four months earlier. Meanwhile, numerous surveys have shown high levels of patient satisfaction with telehealth and a desire to continue using it, even post-pandemic.

The growth has been fueled in part by CMS’s decisions to allow Medicare to pay for more types of telehealth visits and raise reimbursements to match what it pays for in-person visits, and Congress’s loosening of restrictions on how and where telehealth visits can take place. And while it’s not known if these changes will be permanent, they will likely remain in effect at least for the duration of the public health emergency, according to Travis Broome, MBA, MPH, senior vice president for policy and economics at Aledade, a consulting firm that helps practices form and join ACOs.

Broome notes that ACOs and other value-based programs are a good environment for testing whether more telehealth visits improve patients’ health, and, if so, under what circumstances. “Under these models, the providers are incentivized to find and do just the parts of telehealth that really add value, because they’re on the hook for the total cost of care,” he says. In other words, practices will incur financial penalties if telehealth leads to more visits without improved outcomes.

Mark Fendrick, M.D., director of the Value-Based Insurance Design Center at the University of Michigan and a professor of health management and policy at the university’s School of Public Health, echoes Broome’s prediction and thinks it will also extend to fee-for-service medicine.

“I’m certain that, across populations, patients seen virtually will have lower rates of unnecessary services than those seen in person,” he says, adding that too many primary care doctors routinely order electrocardiograms, blood work-ups and other tests at every patient visit.

“I’m hopeful [with telemedicine] that the volume of these low-value services will fall and free up funds to invest in the areas where we really need to be spending money,” he says.

The drop-off in
health care spending

Another significant question for practices in value-based models, especially those that are part of the MSSP, is the effect of the steep decline in health care spending due to patients delaying or foregoing care, both elective and necessary. Results of a study from the insurance and consulting firm Milliman, released in April, estimate that health care spending in 2020 will be down by at least $75 billion, and possibly as much as $575 billion, due to deferral or elimination of care related to COVID-19.

The spending drop-off has both short- and long-term implications for ACOs in the MSSP, according to Archway’s Macmillan. In the short term, it has caused CMS to adjust the formulas it uses to set spending benchmarks for some shared savings programs.

Looking ahead, Macmillan says, the big question for ACOs and other value-based programs concerns medically necessary care that has been deferred because of the pandemic. “A lot of patients with chronic conditions haven’t been well managed in the past few months because they’ve stayed home, which means their diseases may have progressed more quickly than normal,” she says. The result would be more severe acuity when these patients do finally venture out, leading to higher costs of care.

“CMS is going to have to figure out how to address that issue fairly, and I don’t think there’s enough data yet to measure the impact this [deferred care] has had,” Macmillan says. “But going forward they have to make sure their benchmarking methodologies reflect the circumstances of COVID-19.”

Fendrick says the changes in care delivery wrought by the pandemic could result in a wholesale rethinking of spending priorities. “Everyone agrees we have enough money in the health care system to take care of everyone, we’ve just been spending it in the wrong things and in the wrong places,” he says. “My hope is that payment reforms, combined with changes to benefit designs, will better align around high-value services and make it harder to use low-value services. I think that outcome would be a win-win.”