Published March 27, 2020
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The novel coronavirus (COVID-19) pandemic has the potential to inflate Medicare spending by up to $115 billion over the next year, according to a recent study released by the National Association of Accountable Care Organizations (NAACOS).1
The study analyzed inpatient admission rates for COVID-19 incidents, the potential spread of infection and the average cost for a 90-day hospital stay due to pneumonia, which is among the deadly complications of COVID-19.
The data included costs for hospitalization, rehabilitation, skilled nursing care, home health care and ambulatory services.
Accountable care organizations (ACOs) may bear the brunt of COVID-19 treatment costs.
An accountable care organization is a network of doctors and hospitals that share a financial and medical responsibility for providing coordinated care to patients. ACOs are created in an effort to limit unnecessary health care spending.
ACOs typically feature a primary care physician (PCP) who coordinates patient care with various specialists throughout the organization’s network. Some types of Medicare Advantage plans (Medicare Part C) operate as an ACO.
The ACO model encourages quality of care by reimbursing providers on a basis of patient outcome as opposed to the number of services rendered.
ACO’s must meet a benchmark spending target. If they stay under that benchmark, they receive a share of the cos savings. But if they exceed the benchmark spending, they must reimburse Medicare for the difference.
Doctors and hospitals in ACOs will most likely face unprecedented treatment costs due to the ongoing COVID-19 outbreak.
The Centers for Medicare & Medicaid Services (CMS) announced several measures of regulatory relief for ACOs and other value-based programs during the COVID-19 outbreak, including the extension of deadlines for quality-of-care reporting.
The NAACOS study authors noted a few caveats to their data:
The adoption of extreme social distancing measures could also potentially affect infection rates and treatment costs.