ACO REACH Presents New Opportunities in the Push for Value-Based Care

Since Accountable Care Organization (ACO) policy began with the Affordable Care Act (ACA), there have been two main pathways for the development of ACOs: The Medicare Shared Savings Program (MSSP), which remains unchanged, and the development of ACO models by the Centers for Medicare and Medicaid Innovation (CMMI).

Driven by value-based care initiatives, the ACO Realizing Equity, Access, and Community Health (REACH) is CMMI's latest model introduction. ACO REACH is an important innovation that will help organizations meet evolving patient needs. Starting January 1, 2023, ACO REACH replaced the Global and Professional Direct Contracting model (GPDC). Created in part as a response to GPDC model criticisms, ACO REACH was designed “to improve the quality of care for people with Medicare through better care coordination by reaching and connecting health care providers and beneficiaries, including those beneficiaries who are underserved.”

Development of the ACO REACH Model

While much of the GPDC model remains intact, ACO REACH advances health equity through this new iteration. According to CMMI, “The ACO REACH model promotes health equity and focuses on bringing the benefits of accountable care to Medicare beneficiaries in underserved communities.” ACO REACH introduces an innovative approach to payments, allowing providers to move away from fee-for-service (FFS) compensation, and will require all participants to develop and implement a detailed health equity plan to understand and address underserved communities.

Importantly, ACO REACH promotes provider leadership and governance. It includes policies that ensure doctors and other health care providers play a key role in accountable care. The GPDC required only 25% of an ACO’s governing body to be held by participating providers. ACO REACH has returned that percentage to 75%, prioritizing provider-led organizations. Additionally, ACO REACH requires at least two beneficiary advocates to be on the ACO’s governing board (consisting of at least one Medicare beneficiary and at least one consumer advocate) that each have voting rights.

Risk Sharing Options

• While the goal of ACO REACH is to expand healthcare and promote health equity, its risk-sharing tracks remain essentially unchanged from the GPDC model. A lower risk-sharing arrangement—consisting of 50% savings/losses—is the Professional option. The Professional track offers Primary Care Capitation Payments, a risk-adjusted monthly payment for primary care services provided by the ACO’s participating providers.
• A higher risk-sharing option is the Global track. Consisting of 100% of savings/losses, this track also offers Primary Care Capitation Payments in addition to Total Care Capitation Payments. Total Care Capitation Payments are risk-adjusted monthly payments for all covered services provided by the ACO’s participating providers.
• An Advanced Payment Option is also available with Primary Care Capitation Payments. This option applies only to non-primary care services, making it complementary to Primary Care Capitation Payments as the two will never apply to the same service.

Stop Loss Measures

• CMMI requires ACOs to provide a financial guarantee assuring that shared losses can be repaid. This requirement can be met in three ways—cash held in escrow, a letter of credit, or a surety bond. There are many benefits to using a surety bond rather than cash escrow or a letter of credit, including increased financial flexibility for the organization, reduced or eliminated impact on balance sheets, and having a team of experts to handle claim resolutions.
• Specific stop loss insurance protects against severity by reimbursing claims over a pre-determined dollar amount. It also assists in cash flows by paying claims within 30-60 days of the filing date. This is an important path to consider if the ACO is cutting FFS checks to providers. CMMI also provides specific stop loss coverage which addresses claims over a predetermined dollar amount, but their claims are handled through the reconciliation process.
• Aggregate stop loss insurance is designed to protect the ACO and its parent if the benchmark is exceeded. This coverage protects against frequency of risk and allows the ACO to cap downside risk should the benchmark be exceeded. Aggregate stop loss coverage is an important option for all ACOs to consider.

Driving the Movement Towards Value-Based Care

What sets ACO REACH apart from previous models is its focus on health equity. By including policies to ensure health equity, ACO REACH prevents communities from being underserved. And by maintaining much of the GPDC model’s design, CMMI allows participants to take full financial risk for Medicare services. This promising evolution will not only result in better community health and more value-focused care but will also provide greater regulatory flexibility and more financial risk and reward opportunities.

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