Skylight Health Acquires ACO Partners and Enters Value-Based Contracting for Traditional Medicare Patients

TORONTO, ON – July 14, 2021 – Skylight Health Group Inc. (NASDAQ: SLHG; TSXV:SLHG) (“Skylight Health” or the “Company”), a multi-state primary care group in the United States, today announced the acquisition of ACO Partners LLC (“AP”), a new Accountable Care Organization (“ACO”) that will begin participation in the Medicare Shared Savings Program (“MSSP”) offered by the Centers for Medicare and Medicaid Services (“CMS”) effective January 1, 2022.

  • An Accountable Care Organization (“ACO”) is a healthcare organization that ties provider reimbursements to quality metrics and reductions in the cost of care.
  • An ACO will share in the savings it achieves for the Medicare program through its MSSP participation for fee-for-service beneficiaries, and direct contracting program with CMS;
  • Under the Medicare Shared Savings Program, the organization can see annual shared savings from 40% (single-sided risk) up to 75% (full risk) on any attributed Medicare beneficiaries;
  • Skylight’s ACO will enable it to begin value-based care directly with CMS under a single-sided risk agreement in Year 1 with a goal of shifting to full risk;
  • This Acquisition expands potential for National payor contracting including Medicare Advantage;
  • In addition to Skylight participants of the ACO, Skylight expects to solicit new provider networks for participation in the Skylight ACO; and
  • Skylight expects to see the ACO benefit all current and future Skylight primary care practices for traditional Medicare patients at the start of the 2022 contribution year.

“We are very excited for this foundational step at Skylight,” said Prad Sekar, CEO at Skylight Health. “Having our own ACO means a number of key benefits that include gaining direct access to key quality and cost data on our Medicare patients that allows us to maximize opportunities under the MSSP. We retain the full dollar by contracting directly with CMS on traditional Medicare which means more capital to directly invest in programs that can maximize patient outcomes.”

In 2019 alone, ACO’s saved Medicare nearly $1.2 billion while maintaining a high level of care quality as measured by longstanding program metrics. ACO’s allow access to key data points including cost and quality data that can help providers understand how to maximize health outcomes and cost of care. For most independent providers, access and use of this data is a significant barrier to value-based care participation. Removing the barrier of access to the data, together with the integration of its proprietary analytics capabilities, Skylight expects to realize enhanced clinic performance and an improved strategic acquisition strategy.

Skylight expects to realize 3 key benefits from this acquisition:

  1. Direct CMS contracting for Traditional Medicare – under the MSSP, Skylight expects to receive in Year 1, up to 40% of the shared savings realized through programs and services aimed at optimizing patient outcomes and reducing cost of care. The Company expects to enter full risk contracting, which could see up to 75% of shared savings and other value-added incentives, including capitation, as it demonstrates savings and quality outcomes.
  2. National Contracting Platform – through the ACO, Skylight and its network of providers will benefit from scale and the opportunity to contract with national payors on managed care programs such as Medicare Advantage and commercial risk.
  3. Additional Provider Participation and Acquisition Opportunities – the ACO provides a platform for Skylight to gain additional provider participation. This can lead to opportunities for further consolidation as providers continue to seek buyers who are aligned with the practice’s long term patient care model and values.

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