As the coronavirus impacts millions of Americans, both those infected as well as those forced to stay home, there's concern the pandemic could slow a decades-long march toward value-based care.
Clinicians in value-based payment arrangements face higher levels of financial risk than their fee-for-service counterparts. With healthcare providers now struggling to manage the influx of emergency patients and loss of some revenue streams, some analysts think hospitals and doctors will likely focus more on recouping revenue in the short-term than putting more dollars at risk.
These concerns come as large health systems and independent physician offices are diverting funds to shore up resources like personal protective equipment and ventilators to prepare for an expected influx of COVID-19 patients, or to cope with those already there. Revenues, meanwhile, are declining as providers halt non-essential visits, including lucrative elective procedures like joint replacements.
Already, the coronavirus is leading providers to consider exiting the models.
A survey published this week of more than 220 accountable care organizations nationwide found almost 60% are likely to drop out of their risk-based model to avoid financial losses. Some 77% are "very concerned" about the coronavirus' impact on their 2020 performance.
"The value-based movement is at a critical juncture," wrote Clif Gaus, CEO of the National Association of ACOs CEO, in a letter last month to Seema Verma, head of Centers for Medicare & Medicaid Services.
Fee-for-service still plays a large role, but it's been on the downswing. One in three healthcare payments currently flows through some sort of alternative payment model, and that has been projected to grow.
Among the four main types of value-based arrangements — shared risk, global capitation, bundled care and shared savings — most require an upfront financial commitment. And providers are unlikely to put more capital at risk given the current economic situation, analysts told Healthcare Dive, focusing instead on increasing capacity to make up for the losses they sustain during the outbreak.
Doctor's offices and hospitals will reschedule delayed procedures and could operate on weekends to recapture revenue before they're likely to consider taking on more risk through value-based arrangements.
"Even if you're not in the hotspots, you are preparing right now. This puts on hold a lot of the initiatives that have been on the value-based side of things," Jefferies analyst Brian Tanquilut told Healthcare Dive. "I don't think the value-based discussion goes away, but I think it will take a recovery of the hospital system before it can go there."
Pleas for loss waivers
The National Association of ACOs told CMS in mid-March that ACOs in Medicare's flagship ACO program, along with other shared-risk models, could face losses beyond their control because of the pandemic.
CMS did pause some reporting requirements for value-based initiatives late last month. The agency pushed back the deadline for groups participating in the Medicare ACO program, Merit-based Incentive Payment System and the Hospital Readmissions Reduction Program to report quality data, or waived reporting entirely for the fourth quarter of 2019. The relaxation was framed as a way to help value-based organizations free up time and resources amid the pandemic.
But provider groups including NAACOS and the American Hospital Association have lobbied aggressively for the Trump administration to forgive all ACO losses for 2020. CMS is reviewing their request.
Normal rules have been put aside, experts say, and it's difficult to plan for the future when providers are handling a surge in COVID-19 cases now.
"This is not about managing a population. This is about doing everything you can to keep these people alive," Dean Ungar, vice president of Moody's Investor Service, told Healthcare Dive. "Coronavirus is really a five-alarm fire. But if your building's on fire, that doesn't really tell you how to maintain your business in normal circumstances."
Some argue the financial challenges brought on by the pandemic will make clearer the problems with the traditional fee-for-service model, potentially nudging providers toward value-based arrangements in the future.
"If all of your revenue is based on patients walking in the door, when they can't walk in the door anymore, you're kind of up the creek without a paddle," Dan Bowles, a senior vice president at the accountable care organization Aledade, told Healthcare Dive. "You need to find a way to create non-visit-based revenue."
The pandemic could, then, push practices to uncouple revenue from patient volume. The broader trends in medical costs, meanwhile, are likely to make any pause in the shift to value-based care temporary.
"Maybe some providers are going to see it in a different light when their business kind of dries up — see that there's a benefit to it," Ungar said. "Ultimately, it's a trend of where things are going, but it's a big ship and it's moving slowly."