Dive Brief:
- Clover Health is exiting a value-based payment program in traditional Medicare as the insurer and physician enablement company chases profitability.
- Clover has given the CMS notice that it will exit the ACO REACH program at the end of the 2023 performance year, the company said Friday.
- ACO REACH this year replaced the previous direct contracting arrangement, where accountable care organizations take on risk to care for Medicare seniors. Clover Health has had some of the worst performance in the program.
Dive Insight:
When Clover went public in early 2021, the Tennessee-based startup attributed 70% of its valuation to the direct contracting program.
But now, the 10-year-old company is leaving ACO REACH after disappointing results.
In its predecessor program, Medicare direct contracting, Clover had the worst performance of any entity from a dollars perspective for two years running, losing $30.4 million in 2021 and $51.7 million in 2022.
Clover struggled in the accountable care program because it wasn’t able to effectively manage care for its large pool of beneficiaries, experts said.
After 2021’s poor results, Clover scaled back how many doctors it had participating in the program by as much as two-thirds, but wasn’t able to improve its performance.
“When we entered the ACO REACH business in 2021, we felt that expanding our platform to Original Medicare would have a number of benefits, including increasing the number of lives under Clover Assistant management and enabling us to rapidly increase the number of physicians we worked with directly,” said Clover CEO Andrew Toy in a statement. “While we were successful in those goals, we have not seen a clear line to profitability in this business.”
Toy said Clover remains focused on its Medicare Advantage insurance business and software platform Clover Assistant, which aggregates patient data to help clinicians with treatment decisions. The company underwent corporate restructuring earlier this year and laid off about 10% of its workforce.
In the second quarter this year, Clover had its first ever adjusted-earnings profitable quarter. Yet, the company once again posted a loss in third quarter results released in early November.
Clover says it should reach full-year adjusted earnings profitability in 2024.
Many organizations stayed on when Medicare direct contracting transitioned to ACO REACH this year following backlash from progressive lawmakers concerned about the privatization of Medicare.
ACO REACH has more stringent requirements than in direct contracting around the screening, design and practices of ACOs, including a much stronger emphasis on provider-led organizations and addressing health disparities.
