Organizations Urge CMS, HHS to Terminate New ACO REACH Model

More than 200 healthcare organizations, including Physicians for a National Health Program (PNHP) and the American Medical Student Association, have urged CMS and HHS to terminate the ACO REACH model, stating that the model creates dangerous incentives to restrict care for seniors, among other concerns.

In a letter to CMS Administrator Chiquita Brooks-LaSure and HHS Secretary Xavier Becerra, the groups stressed that the new payment model would negatively impact Medicare fee-for-service (FFS) and the care it provides to seniors and individuals with disabilities.

The Center for Medicare and Medicaid Innovation (CMMI) recently announced the ACO REACH model as a redesigned version of the Direct Contracting model.

“Unfortunately, REACH retains the most dangerous elements of Direct Contracting, and under the guise of promoting equity, provides even more opportunities for middlemen to profit at the expense of beneficiaries and the Medicare Trust Fund,” the letter stated. “If allowed to continue, REACH would completely transform Traditional Medicare by allowing third-party middlemen to manage seniors’ care, without seniors’ full understanding or consent.”

Seniors tend to join Medicare FFS over Medicare Advantage because it comes with the freedom to choose their healthcare providers. The organizations argued that the REACH model might jeopardize this freedom, as millions of Medicare beneficiaries will be automatically enrolled into entities run by for-profit businesses like commercial insurers.

Seniors will be enrolled into REACH entities if their primary care provider chooses to participate in the model. Therefore, the only way to opt out of the model would be to change primary care providers, which could be difficult for seniors in rural areas or underserved communities, the groups said.

“Requiring seniors to change their physicians of choice because of a policy change at CMMI is an undue burden and does not serve the best interests of the public,” the letter stated.

Additionally, the groups expressed concern about the lack of transparency in the REACH model. According to the letter, CMMI can implement the model across Medicare FFS without receiving oversight or approval from Congress and without input from seniors, health advocates, or other stakeholders.

Similar to the Direct Contracting model, participating entities receive a capitated payment for providing care for Medicare beneficiaries. Entities keep the money they do not use to pay for healthcare services as profit and overhead. The organizations stated that this creates a dangerous incentive for entities to restrict care for seniors in hopes of making a more significant profit.

The letter also claimed that the payment model would deplete billions of dollars of Medicare revenue each year. According to the groups, Medicare FFS spends 98 percent of its budget on patient care, whereas REACH entities could spend as little as 60 percent on care and retain 40 percent of Medicare revenue for their own profit.

The Direct Contracting model has been a highly debated subject, with both advocates and critics requesting action from CMS and HHS.

CMS and CMMI launched the ACO REACH model following requests from healthcare organizations like the National Association of ACOs (NAACOS) and America’s Physician Groups (APG) to avoid terminating the model and instead make changes to it.

On the other side, lawmakers previously urged HHS and CMS to discontinue the Direct Contracting model, calling it a privatization tactic.

With the ACO REACH model introduction, CMS stated that it would prioritize provider-led organizations and maintain beneficiary rights, including their freedom to see any Medicare provider. However, the recent letter from PNHP and fellow organizations revealed that many stakeholders are still not pleased with the value-based payment model.