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Lessons from ACO REACH and the Future of Medicare Innovation 

June 26, 2024

Dr. Eric Weaver

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A Decade of APM Experimentation 

Over the past decade, the Center for Medicare and Medicaid Innovation (CMS Innovation Center or CMMI) has tested more than 50 alternative payment models (APMs) with a wide range of participants and features. These demonstrations are the leading edge of a generation of value-based payment initiatives with the primary strategy to address solvency issues with the Medicare Trust Fund. These models have also become important levers to enable care delivery transformation that supports improved patient outcomes and enhanced care coordination. According to a recent CBO report, six of the 49 CMMI payment demonstrations have produced modest savings, and only four have been certified for expansion by the CMS Actuary.  While net budgetary savings have been modest for the portfolio at large over the last decade, the key lessons learned along the way have positioned CMMI to successfully transition from a phase of experimentation to scaling best practices with a much smaller number of models.  

As we look to the road ahead, the CMS Innovation Center appears optimally positioned to reach its goal of having 100% of Medicare beneficiaries in an accountable care relationship by 2030 by an informed focus on effective implementation, continuous improvement, and portfolio optimization. However, the path to 2030 is not entirely clear, and the evolution of these models could take various forms, possibly including new and more sophisticated CMMI programs and innovative program updates to the Medicare Shared Savings Program (MSSP). 

ACO REACH as an Exemplar for Successful APM Design  

In looking for ways to enhance the effectiveness of their APM portfolio, CMMI has been designing new accountable care and advanced primary care models with three principles in mind to emphasize team-based, person-centered care. First, they are seeking to increase investment in primary care through stable, prospective payment.  Second, there is a commitment to promote health equity by considering it in all stages of model development, including ideation, model design, recruitment, implementation, and evaluation. Third, the Innovation Center wants to ensure that practice transformation is sustainable by scaling success into both more sophisticated next generation programs as well as the Medicare Shared Savings Program and pursuing multi-payer alignment to reduce administrative burdens and increase the impact of accountable care reforms.   

The ACO Realizing Equity, Access, and Community Health (REACH) Model is a program that supports all of these aims – from having a capitation mechanism that supports next-level risk assumption and primary care investment to it serving as a keystone for health equity through its focus on underserved populations.  ACO REACH provides prospective payment to primary care providers, with a portion of financial benchmarks paid in advance to fund preventive care. Enhanced primary care capitation is CMS’ approach to providing a continuous stream of interest-free loans to providers to make key investments in care delivery transformation. Inherent within its design is its focus on health equity, with ACO REACH serving as the first model to integrate specific provisions aimed at reducing health disparities and ensuring that all populations have access to high quality care.  

While ACO REACH is a leading exemplar in the CMMI portfolio, perfectly complementing the MSSP’s efforts to improve patient experience and outcomes and drive cost savings for CMS, the model is currently scheduled to sunset at the end of 2026.  The scheduled termination raises questions about what comes next. CMMI is actively exploring ways to integrate the successful elements of ACO REACH into other models and programs to ensure continuity and build on the progress made in the overall value movement. By embedding the principles of primary care investment, health equity, and sustainable practice transformation into its broader portfolio, CMMI aims to sustain and amplify the positive impacts of ACO REACH, thereby continuing to advance towards a more equitable, efficient, and patient-centered healthcare system. 

Overcoming the Controversy of GDPC 

The ACO REACH model has been a successful program for the CMS Innovation Center despite the initial controversy with the Global and Professional Direct Contracting (GPDC) model that served as the precursor to ACO REACH. Direct Contracting was a progressive program that drew upon the best elements of prior CMS/CMMI value-based care initiatives, such as MSSPs and NextGen ACOs and offered enhanced benefits for no additional cost while improving access to accountable primary care for Medicare beneficiaries suffering from a broken fee-for-service payment system. In using many of the same operating levers as Medicare Advantage such as capitation, beneficiary engagement incentives, benefit enhancements, and pass through of benefits to “preferred providers,” there was a political firestorm around this program.  

Critics of Direct Contracting claimed that the program only served to enrich private investors and incentivized risk adjustment upcoding. The single payer constituency led a coordinated attack on the program wanting it to end before there was concrete evidence to prove that it benefits patients, providers, and the Medicare system.  Those calling for an immediate termination of the program had some legitimate concerns; however, there was also a great amount of confusion from opponents during this time, based on a misunderstanding of ACOs were trying to achieve in transforming care delivery in the first place. For example, one of the most common critiques from opponents of GPDC was that Direct Contracted Entities will prevent Medicare beneficiaries from seeing preferred providers, thus limiting services through narrow network limitations. (This, of course, is a tool that ACOs do not have in managing the care for Traditional Medicare beneficiaries.)   

Despite the initial controversy, the relaunch of GPDC as ACO REACH quelled most concerns by addressing key issues raised by critics. The rebranding included a stronger emphasis on transparency, accountability, and health equity, with specific measures to ensure oversight and prevent the misuse of funds. ACO REACH aimed to alleviate fears of Medicare privatization by setting clearer guidelines and enhancing patient protections. Additionally, the model’s focus on promoting health equity and improving access to care for underserved populations demonstrated a commitment to addressing disparities, which helped to counteract criticisms about prioritizing profit over patient care. By incorporating feedback and making these adjustments, ACO REACH managed to build more trust and support among stakeholders, showcasing its potential to transform care delivery effectively without compromising patient outcomes. 

ACO REACH Performance Success 

As of 2024, the ACO REACH program has demonstrated substantial growth and impressive performance outcomes. With 122 participating ACOs, the program now provides care to over 2.6 million Traditional Medicare beneficiaries, marking a 24% increase in covered lives compared to 2023. This expansion highlights the program’s ability to attract and retain healthcare providers committed to value-based care. 

The performance results of ACO REACH have been equally noteworthy. In 2022, CMS reported that ACO REACH’s predecessor, the Global and Professional Direct Contracting model, saved Medicare $371.5 million while distributing $484 million to participating ACOs. These savings underscore the program’s effectiveness in reducing healthcare costs while ensuring that providers are fairly compensated for their efforts. 

ACO REACH has proven to be a valuable complement to the Medicare Shared Savings Program (MSSP), enhancing patient experiences and outcomes, increasing earnings for primary care organizations and providers, and driving cost savings for CMS. Performance metrics from 2022 illustrate this success: 

  • CMS Shared Savings: ACO REACH achieved $203 per beneficiary, compared to $173 per beneficiary in MSSP. 
  • Provider Shared Savings Revenue: ACO REACH generated $265 per beneficiary, surpassing the $242 per beneficiary in MSSP. 
  • Total Shared Savings Generated: ACO REACH reached $468 per beneficiary, higher than the $415 per beneficiary in MSSP. 

These results highlight the program’s ability to deliver significant financial benefits while maintaining high standards of care for Medicare beneficiaries. By providing a payment model for providers more experienced with assuming financial risk for populations, ACO REACH not only supports the broader goals of healthcare reform but also ensures the sustainability and effectiveness of accountable care initiatives. 

What’s Next for ACO REACH? 

CMMI’s payment model portfolio is a catalyst for the transformation of the care delivery system, driving better care with improved outcomes at a lower overall cost, and ACO REACH is its leading exemplar. ACO REACH represents a significant step forward in value-based care due to the sophistication of the model in improving care quality, enhancing coordination, and promoting health equity. Despite the initial controversies with the GPDC program, the ACO REACH model has proven that it can achieve its goals without compromising patient care. 

With its scheduled termination date on the horizon at the end of 2026, CMS will need to decide whether to extend the program with modifications or what might follow ACO REACH as the next generation program. With the stated goal of having every Medicare fee-for-service beneficiary in an accountable care relationship by 2030, CMMI is steadfast in its commitment to perpetuate key ACO REACH learnings at scale to meet their accountable care objectives. Lessons drawn from ACO REACH inform the next decade of value-based care as CMMI moves from experimentation to actualization.  

The Future Beyond 2026:  Uncertainty and Opportunity 

The continuity of ACO REACH payment model design features is crucial for preserving the gains made in value-based care and for driving further innovations in the healthcare system. Leaders in the accountable care community have spoken out loudly in support of ACO REACH, and CMS has recognized this by actively engaging with stakeholders to ensure that the transition to new models, such as the proposed full-risk track in MSSP, which will build on the successes and lessons learned from ACO REACH. This engagement highlights CMS’s commitment to maintaining a trajectory of improvement in patient outcomes and cost savings, even as specific programs evolve and adapt over time. 

In a recent episode of the Lumeris podcast, “Enabling Health Value”, Elizabeth Fowler, Ph.D., J.D., the Deputy Administrator and Director of the Center for Medicare and Medicaid Innovation, stated the following: We’re committed to improving the ACO REACH model and the opportunities it can bring to improve care for beneficiaries. We are indeed looking to expand the successes of this model to other providers in the Shared Savings Program. We are currently evaluating what lessons we can import into the program. You will see more on that coming very soon.”mThe future of Medicare’s value-based care models post-2026 is uncertain in terms of the composition of the overall APM portfolio. While the MSSP will remain a central component, there is potential for more sophisticated CMMI programs or new innovation models to emerge. Lumeris is positioned to support the next generation of programs, leveraging our extensive experience and proven success in both the REACH and MSSP models. 

We recognize the importance of being ready for whatever comes next. Whether it’s an advanced CMMI program or another innovative model introduced by CMS, Lumeris stands prepared to help providers navigate and succeed in these environments. Our tools, solutions, and experience in driving substantial value in both REACH and MSSP will be crucial in unlocking new opportunities and maximizing outcomes in the evolving landscape of Medicare innovation. 

Lumeris: Driving Value in CMS Programs 

Lumeris has demonstrated substantial success in supporting healthcare providers through both the ACO REACH and MSSP programs. Our comprehensive solutions and toolsets are designed to drive outcomes, enhance health equity, and support sustainable practice transformation. By aligning economic models with the reorganization of care delivery, we enable our partners to take on two-sided risk contracts, which is a strategic lever for amplifying upside revenue potential. 

As the leading enabler of value-based care transformation, Lumeris brings 15 years of concentrated learnings, achievements, and breakthroughs in healthcare transformation. Our readiness to take downside risk is crucial for our partners, as it ensures that high-quality, cost-effective, and equitable care is consistently delivered to patients. 

While this whitepaper addresses the current state and future potential of Medicare innovation models, it is important to underscore that Lumeris has a lot to offer beyond 2026. We are committed to supporting our partners through the transitions and transformations that lie ahead, ensuring that they continue to thrive and deliver exceptional care to their patients. We eagerly await further developments on the next phase of ACO REACH as it stands as a testament to the power of value-based innovation and collaboration in shaping the future of healthcare.  

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