ACO REACH: Promoting Health Equity Through Value-based Care


With the rising cost of health care in the country, providers and payors are looking for ways to lower the cost of care while maintaining great quality.  These rates of increase are not sustainable, and the Centers for Medicare & Medicaid Services (CMS) has intentionally redesigned the Global and Professional Direct Contracting Model to create the Accountable Care Organization (ACO) Realizing Equity, Access, and Community Health (REACH) Model. This cohort begins January 1, 2023, for those approved entities that have chosen to move forward. ACO REACH is the CMS Innovation Center’s first foray into a form of capitation with traditional Medicare beneficiaries, while emphasizing health equity and social determinants of health.

The Model focuses on provider-based organizations. These organizations could choose between three types of ACOs to participate:

  • Standard ACO – providers who historically have served traditional Medicare patients
  • New Entrant ACO – organizations without historical experience treating Medicare patients
  • High Needs Population ACO – serves Medicare patients with complex needs

ACOs can choose to participate either through the Professional option, which offers 50% savings/losses or the Global options which is 100% savings/losses. There are also two types of capitation payments allowed in ACO REACH:

  1. Primary Care Capitation (PCC) which is a risk-adjusted monthly payment for primary care services for those providers that are in the ACO.
  2. Total Care Capitation (TCC) that is a risk-adjusted monthly payments for all covered services provided by the ACO participants.

For Professional, the ACO can only choose Primary Care Capitation whereas the Global option allows a choice between primary care and total care capitation. 

The capitation payment works as such:

  1. The Participant Provider would collect the co-sharing amount from the patient and bill Medicare for the service as they would any other traditional Medicare patient.
  2. That information is then received and adjudicated by the local Medicare Administrative Contractor (MAC).
  3. The capitated payment will then be sent to the ACO by CMS, and the ACO will reimburse the provider based on prearranged fee reduction agreements.

This allows the ACO to innovate ways to incentivize the providers to improve quality and decrease costs. For example, the ACO could provide an annual wellness visit payment or create quality metrics that if achieved, would unlock other payments.

CMS has also built several health equity components into ACO REACH. The first is the requirement of a Health Equity Plan (HEP), whereby the ACO would review the Medicare patients aligned to the ACO and identify one or more underserved community with a health disparity the ACO believes they can address. The ACO works with the providers to then deploy interventions to address that disparity.

CMS will also implement a health equity benchmark adjustment that adds a per patient per month dollar amount to the benchmark (the spending target for the ACO) for ACOs that serve a higher proportion of the most disadvantaged groups. This will be balanced by a per patient per month deduction from the benchmark for patients not in underserved areas. This adjustment is budget neutral, meaning that the negative adjustment for some ACOs will offset the positive adjustment for others.

Finally, CMS will require reporting of certain heath equity and social determinants of health data over the life of the ACO contract. Beginning in 2023, each ACO must report health equity data for their patient population, which includes Medicare Beneficiary Identifier (MBI), first and last name, sex assigned at birth, date of birth, preferred language, and beneficiary race and ethnicity. Starting in 2024, the ACO will be measured on the data collection for sexual orientation and gender identity. Also starting in 2024, the ACOs will be measured on the use of a social determinants of health tool. CMS will put forth more information on that in the coming months.

The ACO REACH model affords flexibility and creativity when incentivizing traditional Medicare patients to drive down costs and provide great care to patients. This model is the most advanced to come from the Innovation Center since  the Next Generation ACO Model in 2016.  CHESS applauds CMS in their redesign of the GPDC model and looks forward to our continued collaboration with the Innovation Center.

About the Author

Melissa Pollock Headshot

Melissa Pollock, M.Div., CHC

Director, ACO Compliance and Regulatory Affairs at CHESS