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  • Washington Highlights

    CMS Announces New ACO Model to Replace Direct Contracting


    Erin Hahn, Health Policy Analyst, Value Based Care

    On Feb. 24, the Centers for Medicare & Medicaid Services (CMS) announced an updated Accountable Care Organization (ACO) model to replace the Direct Contracting Model. The new ACO Realizing Equity, Access, and Community Health (REACH) Model will take effect in January 2023, with applications due by April 22, 2022.

    The ACO REACH Model includes several key changes relative to the current Direct Contracting Model:

    • Stronger patient and provider governance: The ACO REACH Model requires 75% provider representation on the board. In addition, the board must include one patient representative and one consumer advocate in voting positions.
    • Focus on Health Equity: The ACO REACH model will require applicants to describe their health equity efforts. ACOs that participate in the model will submit an annual health equity plan and collect and report data on patient demographics and social determinants of health. In addition, ACOs will receive a waiver to allow nurse practitioners to provide extended services without direct supervision from a provider. The CMS will also risk adjust the benchmarks based on patients’ dual eligibility status and the Area Deprivation Index for the county in which they reside.
    • Higher Payments to ACOs: The CMS reduced their carve-outs to the benchmark. The ACO REACH Model will have a maximum CMS discount of 3.5% (compared to 5% in Direct Contracting) and a quality withhold of 2% (rather than 5%).   

    The ACO REACH Model uses the same quality measures and financial methodology as Direct Contracting. ACOs receive prospective, capitated payments for either primary care (Professional or Global Track) or for the total cost of care (Global Track), paid per beneficiary per month. ACOs in the Professional Track are at 50% risk, and those in the Global Track are at 100% risk. The model’s quality measures include admissions, readmissions, and patient satisfaction for all patients, as well as days at home and timely follow-up after acute events for patients with chronic conditions.