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Thought Leaders: ACO REACH Model

Chris Smedley was featured in the March/April edition of MCOL Thoughtleaders newsletter. The question for consideration was:

“What are your impressions and implications of the CMS ACO REACH model that will replace their GPDC direct contracting entity model?”

CMS and CMMI have announced the continuation of Direct Contracting (DC), but the program has been rebranded as ACO REACH Model. This change is significant and acknowledges the need to promote health equity and address healthcare disparities for underserved communities. It also recognizes the importance of clinician voice and provider-led organizations participating in these programs that will undoubtedly undergo increased levels of vetting to ensure that their goals align with the vision of CMS.

It’s hard to find a boardroom that isn’t focused on addressing health equity and disparities today. As a matter of fact, I cannot think of one. And, while many organizations are still predominantly focused on fee-for-service, all are faced with the challenge of navigating value-based payment models to some degree. The ACO REACH Model reflects the convergence of the two, and it has the potential to shape healthcare delivery for the future.

The current DC program will remain unchanged until 2023 when it sunsets, and ACO REACH takes its place as the next step in CMS’ ongoing efforts to reduce Medicare expenditures and enhance quality and accessibility for beneficiaries. Applications are currently open through April 22, 2022 for model year 2023. A few highlights of the new program include:

  • Continuation of DC program’s partial and global capitation options, with benchmark adjustments designed to reward providers serving a greater portion of medically underserved Medicare or dual-eligible beneficiaries.

  • ACO REACH adds a Nurse Practitioner benefit enhancement, requires substantial demographic data gathering and analysis, and reduces Global Discount reductions and the amount of Quality Withhold.

  • Participating providers or their reps will need to hold at least 75% of voting board seats up from 25% in the expiring DC model.

  • In addition, Boards must include both a Consumer Advocate and a separate Medicare Beneficiary representative.

  • CMS has improved ACO REACH Global Risk Sharing Option financial attractiveness by capping deductions to deter risk score coding growth from 4% to 3% for PY2024 and from 5% to 3.5% for PY2025 and 2026.

  • The Quality Withhold has also been reduced for all entities from 5% to 2% of the benchmark year.

Despite the additional administrative requirements, CMS’ improvements are positive, advancing the interests of both providers and program beneficiaries in ways that further the goals of value-based care. Participating DC Entities can continue in the ACO REACH program if they meet the new governance requirements, as well as being open to qualifying health systems wishing to enter the value-based market on their own. Early adopters will have the benefit of learning and adapting to these new models, with the potential to exit the program before the model year begins.

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