The Centers for Medicare & Medicaid Services (CMS) published new changes to the ACO REACH model to increase predictability for participating ACOs, protect against inappropriate risk score growth, and to advance health equity starting in performance year 2024 (PY2024). The ACO REACH model was created to deliver high-quality and coordinated care to patients while improving costs and health outcomes. Patients in a REACH ACO get help to manage chronic conditions, to receive more preventative health services, to receive care in more convenient ways like telehealth, and to better navigate the health system. When ACOs in the program achieve these goals of providing higher-quality care at a lower cost, they may be eligible to share in those savings. There are currently 132 ACOs participating in this model.

The first bucket of changes impact beneficiary alignment. CMS will reduce the beneficiary alignment minimum for new entrant ACOs from 5,000 to 4,000 and provide a 10% alignment buffer. For high need population ACOs, the alignment minimum is even lower, decreasing from 1,200 to 1,000. CMS is also expanding the eligibility criteria for alignment into a High Needs Population ACO to include beneficiaries that have at least 90 Medicare-covered days of Home Health services utilization or at least 45 Medicare-covered days in a Skilled Nursing Facility within the previous 12 months.

CMS will also modify both the financial guarantee policy and the Provisional Settlement starting in PY2024. ACOs that have elected Provisional Financial Settlement and have fully paid Shared Losses (or received Shared Savings) will now only be required to update their financial guarantee to reflect the amount required for the current performance year. And to facilitate this change, the agency will modify the Provisional Settlement to reflect 12 months of performance year experience (with 0 months of run-out) which was previously 6 months.

To address the Retrospective Trend Adjustment (RTA), CMS will now apply symmetric risk corridors meaning that ACOs will be responsible for 100% of the RTA (positive or negative) up to 4% and REACH ACOs will be responsible for 50% of the RTA (on top of the 100% accepted adjustment from 0-4%) beyond 4% and up to 8%. This change is intended to help ACOs better budget and invest with more certainty to care for their beneficiaries.

To protect against inappropriate risk score growth, CMS provided revisions to the risk adjustment methodology. The 2024 Part C Risk adjustment model used in the Medicare Advantage program will also now apply to Standard and New Entrant ACOs. Risk scores will be a blend of 67% of the risk scores under the current 2020 risk adjustment model and 33% of the risk scores under the revised 2024 risk adjustment model.

Lastly, CMS made three major revisions to advance health equity in the model. CMS will revise the composite measure that is used to identify underserved beneficiaries for the Health Equity Benchmark Adjustment (HEBA) by incorporating two new variables: Low-Income Subsidy (LIS) Status and State-based Area Deprivation Index (ADI). Adding the LIS and ADI variables will help ACOs better identify underserved beneficiaries living in high cost-of-living areas. CMS will also adjust ACO benchmarks to $30 per-beneficiary, per-month (PBPM) for beneficiaries with equity scores in the top decile, $20 PBPM for beneficiaries in the second decile, $10 PBPM for the third decile, $0 PBPM for the next four deciles, and -$10 PBPM for the bottom three deciles. This will increase the impact of the HEBA so that the upward adjustment extends beyond the top decile of underserved beneficiaries and the downward adjustment is limited to the bottom three deciles. And to support beneficiaries with Chronic Obstructive Pulmonary Disease, CMS is Nurse Practitioner (NP) and Physician Assistant (PA) to the Services Benefit Enhancement (BE). NPs and PAs that are Participant Providers or Preferred Providers with a participating ACO will be able to certify and order Pulmonary Rehabilitation Care Plans.

The National Association of ACOs, or NAACOS, applauded CMS for these FY 2024 updates. In a statement following CMS’ announcement complimented CMS’ continued improvement of the ACO REACH Model by addressing concerns raised by NAACOS members including financial protections from midyear changes to benchmarks, additions to the Health Equity Benchmark Adjustment to account for more patient characteristics, and updates to its risk adjustment policies. NAACOS went on to encourage CMS to add features of the model into a permanent track within the Medicare Shared Savings Program (MSSP). Another organization, America’s Physician Groups (APG) also commended CMS for making these changes, stating that their organization advocated for many of these changes based on the recommendations from their ACO Reach coalition members.