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Provider Groups Relieved; No Penalties for Covid-19 Care Costs

May 1, 2020, 8:13 PM

Groups of doctors and hospitals that provide coordinated care through traditional Medicare are relieved that new federal rules won’t penalize them for increased care costs related to the Covid-19 pandemic.

The Centers for Medicare & Medicaid Services announced, in an interim final rule issued Thursday, that Covid-19-related care costs during the pandemic health emergency will not count toward spending thresholds for accountable care organizations, or ACOs. The policy is retroactive to Jan. 1, 2020.

The 517 provider groups known as ACOs are helping to shift traditional Medicare plans’ move from a fee-for-service payment model to value-based care, in which provider reimbursement is based on patient outcomes rather than the amount of services provided.

When ACOs improve beneficiary health and lower costs for the Medicare program, they share in the savings. But 192 of the organizations are taking “downside” financial risk for cost increases, meaning they could lose revenue and be required to reimburse Medicare if their cost of care exceeds agreed-upon thresholds.

The change will help ease the concerns of many ACOs, who last month said they might leave the program because of the “catastrophic effects of the COVID-19 pandemic,” Clif Gaus, president of the National Association of Accountable Care Organizations, said in a statement.

Forgiving the Covid-related costs “will help sustain participation in the program for 2020,” Gaus said. “Greater ACO participation leads to Medicare savings and high-quality care, so today’s changes are very much welcomed.”

The association asked for the policy change in March as more Medicare beneficiaries became infected with the coronavirus. The group warned that without it, many ACOs would leave the Medicare Shared Savings Program—traditional Medicare’s leading value-based care initiative.

However, the association remains concerned that the policy extends until only during the health emergency rather than the entire calendar year. The group “believes COVID-related costs should be removed from the entire performance year,” Gaus said.

To contact the reporter on this story: Tony Pugh in Washington at tpugh@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Melissa B. Robinson at mrobinson@bloomberglaw.com

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