The COVID-19 pandemic has created many uncertainties for providers and accountable care organizations (ACOs), which can seem overwhelming. Medicare Shared Savings Program (MSSP) ACOs are particularly concerned about the potential for 2020 results to decrease because of the virus. In this paper, Milliman actuaries discuss eight key considerations for MSSP and other risk-sharing arrangements as they assess the impact of COVID-19.
Milliman released a report today that projects the COVID-19 pandemic will reduce U.S. nationwide healthcare expenditures by at least $75 billion and by as much as $575 billion in 2020. The report, “Estimating the financial impact of COVID-19 on 2020 healthcare costs,” models 18 different scenarios with varying infection rates and durations of care deferral.
Key findings of the report include:
- If COVID-19 results in deferred care through the end of June, the net reduction of 2020 healthcare costs through June would be between $140 billion and $375 billion nationally. The net reduction at year-end would depend on pent-up demand as care resumed in the second half of the year.
- If COVID-19 results in deferred care through the end of the year, either because of a “second wave” or elongated first wave of infections, the net reduction of 2020 costs will be between $75 billion and $575 billion nationwide.
- While commercial insurance and Medicare are likely to see net decreases in costs, state Medicaid programs could experience a net cost increase as more people who have lost their jobs enroll in Medicaid.
- Milliman expects an increase in costs after the pandemic due to deferred care and pent-up demand for healthcare services, because a portion of deferred care will be rescheduled and individuals with ongoing healthcare needs will seek care.
- Almost all of the country faces a net decline in health expenditures, though most COVID-19 hot spots see less of a decline, because they are treating more COVID-19 patients. Some of the areas with the least decline include New York City, New Orleans, and Nassau and Suffolk counties on Long Island.
“While the testing and treatment of COVID-19
patients is increasing healthcare costs across the country, these expenses are
dwarfed by the cost reductions resulting from the deferral of nearly all
elective care and other care that can be delayed,” said Doug Norris, principal
and consulting actuary.
“Ultimately, the magnitude of cost reductions
will depend on how long care is deferred,” said Matt Kramer, consulting
actuary. “If there is a second wave of infections, or if the first wave is
elongated and lasts into the fall, some amount will be offset, but regardless
of the scenario, we expect COVID-19 will actually reduce U.S. healthcare
expenditures in 2020.”
“Deferral of care will have a significant short- to medium-termed effect on health expenditures, but some of that will boomerang back when patients can access care normally and proceed with services that were delayed,” said Charlie Mills, principal and consulting actuary.
To view the complete report, click here.
Milliman will host a public webinar to discuss the analysis and findings on April 29, 2020, at 11:00 a.m. EDT. Interested parties may register for the webinar here.
At the end of 2018, the Centers for Medicare and Medicaid
Services published the Pathways to Success final rule for the Medicare Shared
Savings Program (MSSP) giving accountable care organizations (ACOs) renewing
July 1, 2019, or later the option to select between prospective and
retrospective assignment of patients.
Under prospective assignment, beneficiaries are assigned to
an ACO based on services occurring prior to the performance year. Under
retrospective assignment, beneficiaries are assigned to an ACO based on
services occurring during the performance year. Averages for
assignment-eligible fee-for-service beneficiaries can help provide understanding
of how the two assignment methodologies affect results.
Retrospective and prospective assignment have significantly
different effects on the characteristics of the assigned populations for
beneficiaries assigned to primary care physicians and specialists. Prospective
and retrospective assignment will ultimately affect the population that is
assigned to the ACO because some beneficiaries who are assigned under
prospective assignment are not assigned under retrospective and vice versa. The
choice between these assignment methodologies can have subtle effects on the
ACO’s overall benchmark, risk score, and performance year costs.
In this brief, Milliman’s Sam Shellabarger, Charlie Mills, and Lance Anderson explore in more detail the potential effects of prospective and retrospective assignment on key ACO metrics under the MSSP.
The Medicare Shared Savings Program (MSSP) final rule includes changes to the financial benchmark methodology that measures the gross savings or losses of an accountable care organization (ACO) under the MSSP. Four key elements of the financial benchmark methodology changed: agreement period length, regional fee-for-service (FFS) adjustment, risk adjustment, and trend.
In this paper, Milliman’s Jill Herbold, Cory Gusland, Charlie Mills, and Matt Kramer discuss these changes and important implications for Medicare ACOs. Each of these changes in the MSSP’s financial benchmark methodology will have significant implications for most ACOs. Given the increase in the agreement period length from three to five years, it is critical that ACOs assess how the final rule will affect their financial benchmarks and related strategies.
On December 31, 2018, the Centers for Medicare and Medicaid Services (CMS) published the final rule for the 2019 Medicare Shared Savings Program (MSSP). This rule finalizes many of the “Pathways to Success” provisions detailed in the proposed rule published on August 8, 2018, with some modifications that may have a major impact on a number of accountable care organizations (ACOs). At its core, the final rule creates a structured timetable for inexperienced ACOs to transition to downside risk, gradually increasing the maximum risk exposure as those ACOs gain more experience with the MSSP.
Most of the final regulation is consistent with the proposed rule. But certain key details were revised from the original proposal based on industry feedback and a refinement of CMS’s policy goals. The key changes are:
1. Increase to shared savings rate under the BASIC track.
2. Less strict definition of low-revenue ACO.
3. Current Track 1+ ACOs can enter BASIC track, Level E.
4. New, low-revenue ACOs can spend up to three years in an upside-only arrangement.
5. Removal of cap on risk score reductions to performance benchmarks (3% cap on risk score increases remains).
6. Slower schedule for regional cost adjustment reductions.
7. Prospective assignment for the July to December 2019 performance period.
Taken together, these changes from the proposed rule offer some opportunities to ACOs that may have been hesitant to enter or continue in the MSSP while maintaining a clear focus on fiscal responsibility and payment for value.
In this paper, Milliman’s Noah Champagne, Charlie Mills, and Jason Karcher discuss the changes to the MSSP financial benchmark and settlement parameters from the proposed rule in August and the final rule published in December.
The Centers for Medicare and Medicaid Services (CMS) proposed rule on the Medicare Shared Savings Program (MSSP) will significantly change the program if enacted. The proposal, titled “Pathways to Success,” includes changes to the financial benchmark methodology that measures gross savings or losses under the MSSP for an accountable care organization (ACO). There are four key elements where changes have been proposed: agreement period length, regional fee-for-service (FFS) adjustment, risk adjustment, and trend.
In this paper, consultants Jill Herbold, Cory Gusland, and Charlie Mills discuss the proposed changes and important implications for Medicare ACOs. This paper is the second in a series of Milliman papers on the proposed rule.