Introducing the ACO REACH Program: Advancing Accountable Care and Health Equity

 Wayne Carter CFO's Corner, RCM
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Important Considerations for Providers and Provider-led ACOs to Grasp:

The Biden administration recently unveiled an innovative accountable care model, marking a significant step forward in the Center for Medicare and Medicaid Innovation’s revised strategic priorities. Known as the ACO Realizing Equity, Access, and Community Health (REACH) program launched in January 2023. Providers interested in participating in this new program should prioritize advanced planning to ensure a smooth transition.

The ACO REACH program replaces the Geo Direct Contracting model, which faced controversy during the previous administration. The Geo model aimed to enable both traditional and non-traditional risk-bearing entities to assume risk for lives across an entire market, going beyond the attribution method used in other ACO models. However, due to complaints from various stakeholders, the Biden administration decided to pause and ultimately cancel the Geo model on the same day the ACO REACH program was announced. Although this may disappoint Medicare Advantage-focused organizations seeking to expand their reach, they will still have an avenue for supporting value-based care through the ACO REACH model.

The Global and Professional Direct Contracting models will be retired and replaced by ACO REACH. Existing participants in the GPDC model will be transitioned into the ACO REACH program and will have until the end of the year to comply with the new regulations.

An emphasis on health equity is a notable change in the ACO REACH program. CMS has introduced a benchmark adjustment that provides positive incentives for ACOs covering underserved communities and beneficiaries, aiming to avoid penalizing them inadvertently. CMS acknowledges that underserved communities often underutilize healthcare services compared to their needs, creating a disincentive for ACOs to serve these areas. The ACO REACH model seeks to reverse this disincentive.

Adjustments at the Individual Beneficiary Level will be determined by dual-eligibility status and the University of Wisconsin Area Deprivation Index, utilizing the census block of residence. These adjustments can have a significant impact, potentially resulting in a $30 per beneficiary per month increase for the most underserved individuals and a $6 per beneficiary per month reduction for the most affluent beneficiaries. However, since these adjustments are netted out across a population, CMS estimates that the overall benchmark change for most ACOs will be marginal, with only a +/- 0.2% effect. ACOs with a high proportion of underserved beneficiaries may experience a benchmark change of up to 1%.

There will be limitations on increasing coding intensity. While the symmetric 3% cap on changes to the population risk score remains, two modifications have been made. Firstly, the 3% cap will not include changes to the demographic risk score, offering greater flexibility when the covered population ages. Secondly, starting in 2024, a static reference year population will be adopted, which will restrict changes in coding intensity compared to a rolling reference year population.

Governance within the ACO must be provider-led, with a minimum of 75% of voting rights held by Participant Providers. Previously, the threshold for provider representation was as low as 25%. However, ACOs can propose lower thresholds for governing body composition, provided they detail the current governing body and outline ways in which Participant Providers will be involved in governance. Additionally, the ACO’s governing body must have separate individuals serving as Medicare beneficiaries and consumer advocates to prevent conflicts of interest.

The benchmark discount has been reduced to improve savings retained by ACOs participating in the Global risk-sharing option. The discount will decrease from 5% to 3.5% in the outyears, aligning it more closely with the allowance for risk score coding accuracy improvement. This adjustment aims to enhance the long-term financial feasibility of ACOs in this model. 

Nevertheless, it still poses financial difficulties for ACOs when comparing it to alternative risk options such as MSSP Enhanced, Professional, and Global.

Considerations for Choosing ACO REACH vs. MSSP Enhanced Track:

ACOs must carefully weigh the trade-offs between ACO REACH and MSSP Enhanced Track. Two key factors should heavily influence this decision-making process. One of the key factors to consider is comprehending how the ACO’s initial benchmark is influenced by its historical performance in comparison to the region, as assessed using the MA rate book. Secondly, assessing the ACO’s expected ability to reduce the total cost of care (TCOC), considering that REACH offers additional contracting opportunities with downstream providers and ancillaries. 

ACOs striving to achieve TCOC reductions exceeding 7% in the initial years and surpassing 12% in subsequent years will find greater advantages in participating in ACO REACH. For individuals who have concerns about the demanding threshold in REACH, there is the possibility of initiating the journey in the Professional track and subsequently transitioning to the Global track within a span of two years. Other factors to consider include the administrative costs associated with REACH, the role of voluntary alignment in driving growth, regional trends’ impact on success, the potential for earning in the High Performers Pool, timing of cash flow, and benefit allowances play a pivotal role in enhancing the clinical impacts on TCOC.

Additional Noteworthy Changes:

Between PY2023 and PY2026, the quality withhold will undergo a reduction from 5% to 2%. This reduction reduces the risk for ACOs with lower quality performance on the ACO REACH metrics and improves provider cash flow within the year. However, it also imposes limitations on the upside potential for top performers who would typically receive additional incentives from the High Performers Pool.

Commencing from PY2023, the optional stop-loss arrangement will undergo adjustments to provide a more precise coverage of costs for beneficiaries exceeding the predicted spending. By implementing a risk-adjusted attachment point, larger ACOs that are willing to take on the risk associated with high-cost beneficiaries can evaluate the possibility of waiving the optional stop-loss arrangement.

ACO REACH program participants are not permitted to concurrently participate in overlapping programs, including Primary Care First, Independence at Home demonstration, Kidney Care Choices model, Vermont All-payer model, and Maryland Primary Care Program, and Medicare Shared Savings Program.

Participants are mandated to develop and implement a plan to identify and rectify health disparities as part of the health equity provisions. Furthermore, patient benefit is used as leverage to expand nurse practitioners’ scope of practice without physician supervision. This includes granting nurse practitioners the ability to certify patients’ need for hospice care, establish/review/sign a home infusion plan of care, order/supervise cardiac rehabilitation, and refer for medical nutrition therapy.

Expectations for Future Changes:

The landscape of CMS programs has experienced significant changes in recent years, and we are currently in a transition period. Each administration strives to leave its mark on alternative payment models, but there has been a consistent push over the past decade to move away from fee-for-service reimbursement and promote value-based models. However, few value-based programs implemented by CMMI have yielded substantial reductions in spending or improvements in quality. The Government Accountability Office and MedPAC have urged CMS to tackle the issues of confusion and duplication within certain alternative payment models. While these programs are still maturing, CMS is actively considering the long-term trajectory.

To ensure the sustainability of ACO programs, several key issues must be addressed:

  • Reducing the number of programs and improving their compatibility.
  • Generating significant savings for the government, which has been a challenge thus far.
  • Establishing a sustainable benchmark reset mechanism for providers.
  • Encouraging a greater shift of risk while maintaining flexibility for providers based on their circumstances.
  • Addressing the complexities of benchmark setting for both small and large-scale ACO programs.


The introduction of the ACO REACH program marks a significant milestone in advancing accountable care and promoting health equity. While challenges remain, including program sustainability and the need for further improvements, CMS is actively working to address these concerns. By considering the factors discussed and evaluating the trade-offs, providers can make informed decisions regarding their participation in the ACO REACH program, ultimately contributing to a more sustainable healthcare system.

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Wayne Carter

I've been working in healthcare industry of the United States in various types of departments since 2013. Started my career from the bottom as a Accounts Receivable executive, Practice management team handler, Entire Practice Management and now I'm employed at BillingParadise as a Content Lead. Areas of Expertise: End-to-End Revenue Cycle Management, Content Writing, Digital Marketing, RCM applications and Software, Healthcare Business Development, Healthcare Sales, and Healthcare Automation.

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