From DCEs to REACH ACOs: Innovation Center releases model “refresh”
Application deadline is April 22
For current Direct Contracting Entities (DCEs), the future may look a bit different come 2023. At that time DCEs who elect to remain in the model will transition to the REACH ACO model – Realizing Equity, Access and Community Health Accountable Care Organization.
If you’re wondering why the Center for Medicare and Medicaid Innovation (Innovation Center) is changing this model, it stems from their review of 10 years of models and their strategy “refresh” released in late 2021. Under their refresh, the Innovation Center released its vision, five strategic objectives and six lessons learned.
The new vision is “a health system that achieves equitable outcomes through high quality, affordable, person-centered care.” The five objectives are outlined below.
The six lessons learned are now guiding the Innovation Centers’ decisions on continuing, sunsetting or revising models. They include:
- Ensure health equity is embedded in every model
- Streamline model portfolio and reduce complexity and overlap to help scale what works
- Tools to support transformation in care delivery can assist providers in assuming financial risk
- Design of models may not consistently ensure broad provider participation
- Complexity of financial benchmarks have undermined model effectiveness
- Models should encourage lasting care delivery transformation
For the DCE model, these lessons led to the Innovation Center retaining the Professional and Global options (with revisions) and eliminating DCE’s Geographic option. Existing DCEs will need to determine if they want to continue in the revised model. If so, they will need to come into compliance by January 1, 2023. At that time, they will be known as REACH ACOs.
The revised model starts January 1, 2023 and will run through the 2026 performance year. The application period began March 7, 2022 and ends April 22, 2022. Applications will be scored based on five key domains: organizational structure; leadership and management; financial plan and risk-sharing experience; patient centeredness and beneficiary engagement; and clinical care.
Applications are non-binding. Existing DCEs do not need to apply. For application details, refer to ACO REACH | CMS Innovation Center.
Changes to Consider under REACH ACO
As you consider applying (or remaining), the good news is that much of the larger framework of the DCE model remains intact. There will still be Standard, New Entrant and High Needs Population ACOs. For those with significant experience in this type of model, say a Next Gen ACO, the Standard Option ACO may be the best fit. For those with limited experience in an ACO or value approach, the New Entrant ACO could offer opportunities. And for those providers whose patients are complex, high needs beneficiaries, including those who may be dual-eligibles, the High Needs Population ACO aligns with models of care seen in the the PACE program. In addition, capitation will still be based on either primary care or total care capitation and an advanced payment option continues. Claims-based and voluntary alignment remain. There are several larger differences that existing DCEs and applicants will want to assess.
First, there is a new focus on health equity. Clearly this aligns with the Innovation Center’s objectives of advancing health equity. Each REACH ACO will need to develop a Health Equity Plan that is based on the CMS Disparities Impact Statement. The term “underserved” is based on definitions used in a January 2021 Executive Order.
There is also a health equity benchmark adjustment that will come into play. This benchmark is to reflect that underserved populations have historically spent less than their level of need, so this could disincentivize some ACOs from participating under prior benchmarking approaches. Going forward, each beneficiary will receive a composite score based on two measures (area deprivation index and dual eligibility). Then all beneficiaries will be stratified into deciles by CMS with the top decile receiving a $30 per beneficiary per month boost (PBPM) with the bottom five deciles receiving a downward $6 PBPM adjustment.
The following is an example: an ACO with 100 beneficiaries scoring in the top decile and 500 beneficiaries in the bottom five deciles in a given month would receive a net neutral benchmark impact for that month [($30PBPM x 100) – ($6 PBPM x 500) = 0]. The Innovation Center indicates that its simulations of this policy suggest marginal impact to most ACOs and maximum effect on the Performance Year Benchmark of approximately +1% for the handful of ACOs with the highest proportion of underserved beneficiaries and approximately -0.5% for the handful of ACOs with the lowest proportion of underserved beneficiaries
The ACOs also must collect beneficiary-reported demographic and social needs data. To improve access, a new benefit enhancement will be offered to increase the range of services that may be ordered by Nurse Practitioners (NP). In particular, the NP would be able to the need for hospice care, diabetic shoes, order and supervise cardiac rehabilitation, to establish, review, sign, and date home infusion therapy plan of care, and refer a REACH Beneficiary for medical nutrition therapy for a REACH beneficiary.
Second, there is a significant emphasis on governance and monitoring. DCEs currently must have a minimum of 25% of the governing board who are participant providers with voting rights. In REACH ACOs, 75% of participating providers (or their designated representatives) generally must hold governing board voting rights. Each REACH ACO governing board must include a beneficiary representative and a consumer advocate with governing board voting rights. They may not be the same person. REACH ACOs will be monitored more closely through a variety of review, data analytics and compliance requirements. Those could include audits of charts, medical records, and health equity implementation plans, plus claims analyses, potential interviews, or site visits and more.
Third, there are changes to the discount factor and withholds. The quality withhold will be reduced from 5% to 2%. The withhold can be earned back. For the global model participants, the discount factor maxes out at 3.5%, down from 5%. (Professional model participants do not have discount factors applied.) These changes should be well-received by existing DCEs and new ACOs alike.
Fourth, to address coding intensity, there are several changes to risk adjustments. First, for risk adjustment growth caps, an ACO-specific symmetric 3% risk score cap will be applied to the ACO’s average risk score. The current risk score cap is based on either the CMS-Hierarchical Condition Category (HCC) prospective risk adjustment model or CMMI-HCC concurrent risk adjustment model. The new approach places a +/- 3% cap on HCC growth relative to the underlying demographic growth of the reference year population. As a result, the symmetric 3% risk score cap is expected to more appropriately constrain risk score growth based on the true health status of the aligned beneficiaries as measured by their demographic risk score. Second, the model uses a static reference year population for the ACO-specific demographic risk score growth for the remainder of the model performance period.
Finally, it is important to note that no REACH ACO may have a greater than 50% population with a specific medical condition or belong to a specialized subpopulation for which a targeted total cost of care initiative exists.
Next Steps
There are additional changes to consider and nuances to understand as a REACH ACO. Review the complete model Request for Application for details. Determine whether you’re able and willing to meet the new requirements. Analyze the financial impacts (full financial methodology papers will be released this summer). New applicants need to apply by April 22 deadline.
Resource available at ACO REACH | CMS Innovation Center. CLA is here to help.
Jennifer Boese is the Director of Health Care Policy at CLA. She is a highly successful public policy, legislative, advocacy and political affairs leader, including working in both the state and federal government as well as the private sector. She brings over 20 years of government relations and public policy knowledge with her to CLA. Well over half of her career has been spent dedicated to health care policy and the health care industry, affording her a deep understanding of the health care market and environment, health care organizations and health care stakeholders. Her role at CLA is to provide thought leadership, policy analysis and strategic insights to health care providers across the continuum related to the industry's ongoing transformation towards value. A key focus of that work is on market innovations and emerging payment models. Her goal is to help CLA clients navigate and thrive in an increasingly dynamic health care environment.
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