CMS Has Invoked Its “Extreme and Uncontrollable Circumstances” Policy to Offer ACOs Some Degree of Relief During the COVID-19 Crisis – But What About Your Commercial Shared Savings Contracts?

In a March 30th, 2020 proposed Interim Final Rule (“IFR”), CMS declared that it would be applying (and, later, expanding the scope of) its “extreme and uncontrollable circumstances” regulation, 42 C.F.R. 425.502(f), to “mitigate any impact on quality performance and the resultant effect on financial reconciliation due to” the COVID-19 crisis, which was recognized as an “emergency circumstance outside of . . . [Accountable Care Organizations’ (“ACO”)] control.” See https://www.cms.gov/files/document/covid-final-ifc.pdf. In so doing, CMS stated that it would be extending data submission deadlines for Performance Year 2019 by 30 days to April 30, 2020. Id.

More critically, CMS stated that, for those ACOs who are unable to meet the extended submission deadline, the agency would, in accordance with § 425.502(f)(2)(i), set their minimum quality performance scores to the “mean quality performance score for all Shared Savings Program ACOs for” 2019, and, for those ACOs who were able to submit by the extended deadline, CMS would assign the higher of the “mean quality performance score for all Shared Savings Program ACOs” for performance year 2019 or the ACOs’ “own quality score” for that period, per § 425.502(f)(2)(ii). CMS went on to concede that, given the enormity of the crisis, it would need to “consider[] whether the [foregoing provisions] . . . will continue to be appropriate for PY 2020 and beyond.”

The question of how ACOs are supposed to handle COVID’s warping of cost and quality metrics within the confines of commercial shared savings contracts – for both performance year 2019 and 2020 – is not an easy one. For those ACOs with patient populations hit hard by the pandemic, cost benchmarks will be (and likely already have been) blown, and quality measure data will suffer substantially. But commercial payers feeling the financial sting of the crisis, unlike CMS, will not be so keen to offer providers relief by renegotiating more favorable terms under a shared savings agreement. That said, there are time-tested legal doctrines within the common law, such as “good faith and fair dealing” and “force majeure,” that may be applicable given current circumstances and, with the help of competent healthcare counsel, brought to bear as leverage in talks with commercial payers.

How Frier Levitt Can Help

Contact Frier Levitt today to discuss the options your ACO has to mitigate the impact the crisis has taken on your commercial shared savings agreement. Jonathan Levitt, Esq., Daniel Frier, Esq., and Jason Silberberg, Esq. currently head Frier Levitt’s Value Based Care Group, each of whom have extensive experience negotiating and/or litigating shared savings and other value based care agreements.  

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