As the coronavirus sickens tens of thousands of Americans while pressuring the bottom lines of medical providers, analysts worry the pandemic could also hit pause on the decades-long march toward value-based care, as hospitals and doctors look to recoup revenue in the short-term instead of putting more dollars at risk.
Massive health systems and independent physician offices alike are diverting funds to shore up resources like personal protective equipment, ventilators and staff to prepare for an expected influx of COVID-19 patients or to cope with those already there. Expenses are skyrocketing as providers halt non-essential visits including lucrative elective procedures like joint replacements, winnowing down a major source of revenue.
Clinicians in value-based payment arrangements face higher levels of financial risk than their fee-for-service counterparts. Money spent preparing for the coronavirus and treating COVID-19 patients will be a sunk cost and they could be dinged financially again at the end of the year when their spending and performance is evaluated.
Already, the coronavirus is leading providers to think about 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 National Association of ACOs CEO Clif Gaus in a letter to CMS Administrator Seema Verma last month.
Fee-for-service still dominates — roughly 40% of healthcare payments made in 2018 were under fee-for-service, according to the Health Care Payment Learning & Action Network (LAN) — 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, instead focusing on making up the losses they sustained during the outbreak by ramping up capacity.
Doctor's offices and hospitals will reschedule delayed procedures and even operate on weekends to recapture as much revenue as possible before they're likely to consider taking on more risk.
"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 senior healthcare 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 the Shared Savings Program, along with other shared risk models like the Next Generation ACO model and the upcoming Direct Contracting initiative, 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.
But all normal rules have gone out the window, experts say, and it's almost impossible to move the needle toward value in the future when providers are facing a tsunami of patients 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 Investors 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, however, are more optimistic that the unique financial challenges brought on by the pandemic highlight the problems with the traditional fee-for-service model and could even nudge providers toward value-based arrangements down the line.
"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, SVP of growth and network operations at accountable care organization Aledade told Healthcare Dive. "You need to find a way to create non-visit-based revenue."
Some hope the pandemic could help the value-based movement in the long term as practices look for ways to uncouple revenue from patient volume. And, as medical costs continue to rise, accounting for 19% of the country's GDP, any pause in the shift to value-based care due to the coronavirus is likely to be a short detour, not a complete derailment.
"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."
And value-based care arrangements were built predominantly for the populations being hit hardest by the coronavirus: those with serious underlying medical conditions like chronic lung disease or severe obesity.
If those vulnerable patients were being treated in value-based arrangements, it's possible more COVID-19 cases could have been caught earlier before they became life-threatening, Moody's analyst Stefan Kahandaliyanage told Healthcare Dive. That could renew industry's focus on managing the health of those most at-risk from novel infectious diseases in the future.
"Costs are very high and there's been a pandemic," Kahandaliyanage said. "Let's get more healthy before the next pandemic comes."