CMS Replaces Direct Contracting Model with New ACO REACH Model

CMS has overhauled the Global and Professional Direct Contracting model and announced the ACO Realizing Equity, Access, and Community Health (REACH) model. The redesigned accountable care organization aims to address previous criticisms, improve care for Medicare beneficiaries, and advance health equity.

“The Biden-Harris Administration remains committed to promoting value-based care that improves the health care experience of people with Medicare, Medicaid, and Marketplace coverage,” CMS Administrator Chiquita Brooks-LaSure, said in the press release.

“To fulfill that commitment, CMS, through the Innovation Center, is testing new models of healthcare service delivery and payment to improve the quality of care that people receive, including those in underserved communities. The Innovation Center is making improvements to existing models and launching new models to increase participation in our portfolio, and CMS will be a strong collaborator to healthcare providers that participate in those models.” 

The agency and the CMS Innovation Center (CMMI) affirmed new guidelines for the future payment models it will test. First, Medicare fee-for-service (FFS) models must ensure that beneficiaries maintain their rights, including the freedom of choice to see any Medicare provider.

Second, the tested model must help promote greater health equity and high-quality care. Third, the models must reach underserved communities and improve access to care for these populations.

If models do not meet these principles, CMS will redesign them or discard them, the agency said

The new ACO REACH model, which the agency said adheres to the CMS guidelines, will promote health equity and address care disparities, according to CMS. In addition, the model will prioritize provider-led organizations, incorporate feedback from beneficiaries, and increase beneficiary protections.

CMS will also increase the screening and monitoring of model applicants and participants and aim to provide more transparency and data sharing on care quality and model participant financial performance.

The ACO REACH model will require participating ACOs to submit a plan that describes how they will address care disparities and Medicare beneficiary needs in underserved communities. CMS will also leverage a payment approach under the ACO REACH model that supports care delivery and coordination for underserved populations.

According to CMS, Medicare FFS beneficiaries who receive care through a REACH ACO will have access to enhanced care coordination services, telehealth visits, post-discharge home healthcare services, and may receive assistance with copays.

“CMS is testing a redesigned model because accountable care organizations make it possible for people in Traditional Medicare to receive greater support managing their chronic diseases, facilitate smoother transitions from the hospital to their homes, and ensure beneficiaries receive preventive care that keeps them healthy,” CMS Deputy Administrator and Director of CMMI Liz Fowler, PhD, JD, stated in the press release.

“Under the ACO REACH Model, health care providers can receive more predictable revenue and use those dollars more flexibly to meet their patients’ needs — and to be more resilient in the face of health challenges like the current public health pandemic.”

In addition to redesigning the Direct Contracting model as the ACO REACH model, CMS has terminated the Geographic Direct Contracting model. CMS announced this model in December 2020 and paused it in March 2021 due to stakeholder concerns.

The Direct Contracting model will continue until December 31, 2022, and the ACO REACH model will begin January 1, 2023. For the remainder of 2022, CMS plans to monitor Direct Contracting model participants more closely and penalize participants who do not meet the new model guidelines.

The ACO REACH model performance period will run through 2026. Provider-led organizations can apply now to join the ACO REACH model. Current Direct Contracting participants must agree to meet all ACO REACH requirements by the start of 2023 to enter.

The redesigned ACO model comes after numerous healthcare organizations urged CMS to maintain the model but implement necessary changes.

Several stakeholders have expressed their gratitude for the CMS announcement.

“Many of the criticisms against Direct Contracting were a product of great misunderstanding about the model and the overall shift to value-based payment,” Clif Gaus, president and chief executive officer of the National Association of ACOs (NAACOS), said in a statement. “Instead, keeping the model with additional focus on equity, increased provider governance, improvements to risk adjustment, and other changes is best moving forward.”

Organizations also appreciated that CMS considered their modification requests.

“ACO REACH includes several updates for which Premier has long advocated, including reducing discounts to ensure providers have adequate payment under the Global track, reducing the quality withhold, and applying consistent methodologies and policies across participants to ensure healthcare providers have the same opportunity to participate as non-providers,” Blair Childs, senior vice president of public affairs at Premier, said in a statement.