Ageism | Aging | Managed Care | March 10, 2022

Direct Contracting Model to be Replaced with ACO REACH

BY Nicole Fallon

The new ACO REACH model incorporates feedback from stakeholders, including LeadingAge, on the Direct Contracting model; accounts for lessons learned from current participant experience and reflects the Administrations priorities. CMMI describes the goals of the new model as seeking to promote health equity and address health disparities, continuing the momentum of provider-led organization participation in risk-based models and protecting beneficiaries and the model through more participant vetting, monitoring and transparency.

LeadingAge has been advocating to CMMI for more opportunities for aging service providers to meaningfully participate in risk-based models including leading these models, if they choose. CMMIs indicates that they are seeking “innovative organizations” who may include” provider-led organizations that have strong track records in taking on risk and improving quality of care for seniors and other vulnerable populations outside of FFS Medicare.” Unlike the Medicare Shared Savings ACO program that limits the lead role to primarily hospitals and physicians, the ACO REACH model follows the same definition as the GPDC model, which indicates that a “participant provider” is “an individual or entity that (1) is Medicare-enrolled provider or supplied (as such terms are defined in 42 C.F.R. 400.202),” and who meets several other criteria around their participation in the model. This definition of provider includes skilled nursing facilities, home health agencies and hospice providers.

The model allows for beneficiary alignment determining where an individual receives the plurality of their primary care using claims data or through voluntary alignment where the beneficiary designates their main source of care. This is another item that LeadingAge has advocated for to elevate aging service providers’ position within these models, by making them a key contributor to the model’s payment through this alignment function. This voluntary alignment option allows a SNF, HHA, or hospice provider to play a key role in beneficiary assignment to REACH ACOs.

LeadingAge shared with CMMI that we have members with experience serving elders, coordinating their care and services and taking on risk. As part of its RFA, CMS/CMMI note they are seeking applicants who are, “health care providers with a strong track record of direct patient care and those who have had success improving the lives of people in underserved populations to apply to be part of this transformative model.” Underserved populations include serving dual eligibles, people of color, individuals with disabilities and those in rural communities.

LeadingAge also expressed concerns about the proposed Geographic Direct Contracting Model, including its potential as proposed to limit beneficiary choice and provider access. The CMMI announcement also notes that this version of Direct Contracting is now canceled. In our communications with CMMI, we stressed the importance of CMS/CMMI maintaining provider-led models to offer an alternative to the managed care plan options currently in the market. By doing so, we argued the agency could maintain true beneficiary choice. A key aspect of the ACO REACH model changes underscores the retention of beneficiary choice of providers, coverage, and benefits including the ability to see any Medicare provider. This offers a true alternative to the limited networks of some Medicare Advantage plans.

Here are the key differences between the current GPDC and the new ACO REACH:

  • Timeline: The ACO REACH model will run from January 1, 2023, through December 31, 2026. GPDC started in 2021 and was expected to run for 6 performance years through the end of 2026.
  • Participants: The same types of providers and suppliers can participate but in GPDC, the participants or model leads were called Direct Contracting Entities (DCEs) and in the new model, they will be called REACH ACOs.
  • Governance: Under GPDC, participating providers had to make up 25% of the governing body’s voting members. For the new ACO REACH, this is increased to 75% of voting members must be participating providers or their designated representatives, and there must be at least one beneficiary representative and one consumer representative, both who have voting rights.
  • Application: Current GPDC participants will not need to reapply. However, they must have a strong record of compliance and agree to comply with the new ACO REACH requirements to remain in the program. For new applicants, there will be some additional scoring criteria used to determine which applicants are ultimately selected to participate. These new criteria include:
  • Demonstrating a strong track record of direct patient care;
  • Demonstrating a record of serving historically underserved populations while delivering quality outcomes;
  • Evaluation of risks posed by REACH ACO ownership/parent companies.
  • Quality withhold: This is reduced from 5% under GPDC to 2% in the ACO REACH program.
  • Discount under Global option: This discount applies only for those entities that select the Global risk option. Essentially, it is a way for CMS to ensure savings to the program by reducing the benchmark. This discount is currently 2% in GPDC and had been scheduled to increase incrementally until it reached 5%. The REACH ACOs that opt for Global will start at a 3% discount and max out at 3.5% over the duration of the model.
  • Risk Adjustment: CMS/CMMI will be publishing more information this summer on their methodology but they have made changes where they will adopt a static reference year population and then cap risk score growth tied to demographic growth.
  • Health equity plan requirement: CMS/CMMI added a new requirement for REACH ACOs to identify underserved communities within its beneficiary population and implement initiatives to measure and reduce health disparities for such populations over the course of the model performance period.

CMS has issued a Request for Application for the new ACO REACH model and is seeking provider-led organizations to apply. Applications must be submitted by 11:59 p.m. ET on April 22, 2022. CMMI indicates as of right now this will be the only application opportunity for this “new” model. The current GPDC model will continue through the end of 2022 and then transition to ACO REACH on January 1, 2023. New applicants will be selected in June 2022 and will have the option to participate in an implementation period.