Clover Health President Andrew Toy is transitioning to the role of CEO.
Photo: Courtesy of Clover Health
Insurtech company Clover Health is reducing its participation in the federal government’s ACO REACH program.
“We have decided to significantly decrease the overall number of participating physicians,” Chairman Andrew Toy said during the third-quarter earnings call this week.
The move is made in part to improve the company’s medical cost ratio, which for the third quarter was 104.2% in the non-insurance segment. Also, there is still unpredictability in the new model, according to Toy. ACO REACH is not yet a legal program, so its rules may change and its fees may change, he said. Clover still intends to be one of its biggest participants.
“ACO Reach is an innovative program and its rules and referral rates continue to be adjusted by the CMMI (Center for Medicare and Medicaid Innovation), which results in some unpredictability,” said Toy, who is transitioning to the role of executive director. now occupied by Vivek Garipalli. “Given the program environment and learnings with our participants, we have modified our ACO to target an MCR (medical cost ratio) of less than 100% next year and have made adjustments to the number of physicians participating in the ACO program. REACH”.
This despite having many new entrants by 2023 that would have allowed for substantial growth of the show, he said.
“We believe this will reduce the total lives attributed and revenue managed by our ACO by as much as two-thirds,” Toy said. “We still expect this line of business to scale to approximately $1 billion in annual revenue. More importantly, we strongly believe these adjustments will result in a sustainable line of business with an MCR below 100%,” Toy said.
Physicians not admitted to the ACO in 2023 will be supported in their shift from fee-for-service to value-based care through existing programs like the Medicare Shared Savings Program, which is already mandatory with more defined rules, according to Toy.
BECAUSE IT IS IMPORTANT
Earlier this year, the Centers for Medicare & Medicaid Services announced that they had redesigned their Medicare Direct Contracting Model to an Accountable Care Organization model focused on health equity, ACO REACH. The ACO Realizing Equity, Access, and Community Health (REACH) model replaces the Global and Professional Direct Contracting (GPDC) model later this year.
But both models have been controversial because opponents believed they would lead to the privatization of Medicare. In February, Physicians for a National Health Program (PNHP), an organization of 25,000 physicians who support Medicare for All and oppose the privatization of Medicare, rejected the ACO REACH model, as did the GPDC.
“ACO REACH is direct contracting in disguise,” PNHP President Dr. Susan Rogers said at the time.
However, more than 200 health care organizations, including Banner Health, took a different view, asking Health and Human Services Secretary Xavier Becerra to uphold the global, professional Direct Contracting Model, calling it the leading model for responsible care.
In August, CMMI published financial specifications around the new REACH ACO model and elected 110 provisional members after 18 members reported withdrawing their applications. The ACO REACH model year begins on January 1, 2023 and will run through 2026.
Clover Health said that while the decision to scale back participation in the ACO program is expected to result in a reduction of non-insurance revenue by up to two-thirds, it will still represent $1 billion in revenue.
It is putting the emphasis on profitability through continuous improvements in MCR and Adjusted EBITDA performance.
“While there is some uncertainty due to the typical year-end seasonality in medical spending, as well as the continued risk of COVID surges, we are revising our insurance MCR guidance for 2022 to reflect our overall improved performance and momentum. positive,” Toy said. “We now expect a range of 93% to 94%, favorably updated from the previous range of 95% to 99%.”
Chief Financial Officer Scott Leffler said that going into 2023, Clover expects the insurance line to continue to grow at above-market rates, albeit somewhat moderately from recent years.
Clover Health has been growing its Medicare Advantage business. In July, it announced an expansion to 13 new counties in three states by 2023: Georgia, South Carolina and Tennessee.
Clover earned 3.5 stars in this year’s Medicare Advantage Star Ratings, which means additional revenue for the company.
New MA members typically represent a headwind for MCR, taking a year or two to comprehensively diagnose health conditions and provide them with care management, according to the company. This transition period for new members affects both MCR and star ratings.
THE BIGGEST TREND
The new ACO REACH model requires all participating ACOs to have a robust plan that outlines how they will meet the needs of people with traditional Medicare in underserved communities and make measurable changes to address health disparities. This includes increased access to enhanced benefits such as telehealth visits, home care after leaving the hospital, and help with copays, according to CMS.
REACH ACOs may include primary and specialty care physicians.
Twitter: @SusanJMorse
Email the writer: SMorse@himss.org