On August 14, 2023, the Centers for Medicare & Medicaid Services (CMS) released guidance on changes to the Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) Model starting in performance year 2024 (PY2024). The changes came about in response to stakeholder and participant feedback. All ACO REACH participants should familiarize themselves with the upcoming changes.

CMS’ stated aims for these updates are to improve the ACO REACH Model by:

1. Increasing predictability for model participants;

2. Protecting against inappropriate risk score growth and maintaining consistency across CMS innovation models; and

3. Advancing health equity

Highlights of the Model updates for each of the above aims are discussed below.

Aim: Increasing Predictability for Model Participants

In an effort to increase predictability for Model participants, CMS announced the following changes:

• Updated Beneficiary Alignment Rules

  • The minimum beneficiary alignment for New Entrant ACOs will be reduced for PY2025 from 5,000 to 4,000. The minimum beneficiary alignment for High Needs Population ACOs will be reduced for PY2025 from 1,200 to 1,000, and from 1,400 to 1,250 for PY2026.

  • CMS will provide a 10% alignment buffer beginning in PY2024 so that an ACO may continue to participate in the Model even if their beneficiary count temporarily drops below the beneficiary alignment minimum. An ACO may have this 10% buffer applied only once throughout the remainder of the model. This means that an ACO may not remain below 10% of their beneficiary alignment minimum for more than one of the Model’s remaining performance years.

• Eligibility Criteria for Alignment to a High Needs Population ACO

  • Eligibility criteria for alignment to a High Needs Population ACO will be expanded to include beneficiaries who 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.

• Modification of Financial Guarantee Policy

  • The financial guarantee policy will be modified such that ACOs that have elected Provisional Financial Settlement and have fully paid Shared Losses (or received Shared Savings) are only required to update their financial guarantee to reflect the amount required for the current performance year.

  • The financial guarantee for ACOs that have selected Enhanced Primary Care Capitation and/or Advanced Payment Option will increase to 4%.

• Retrospective Trend Adjustment (RTA) Changes

  • Currently, an RTA is applied to modify benchmarks if the prospective trend factor is over- or under-stated by more than 1%. Starting in PY2024, the benchmark for REACH ACOs will only be adjusted for a portion of the RTA in excess of 4%. There will be three symmetric RTA corridors: (+/-) 0-4%, (+/-) 4-8%, and greater than (+/-) 8% with REACH ACOs accepting 100%, 50%, and 0% responsibility for each corridor, respectively.

Aim: Protecting Against Inappropriate Risk Score Growth

In an effort to protect against inappropriate risk score growth and maintain consistency across CMS programs and CMMI models, CMS announced the following changes:

• Revisions to Risk Adjustment Methodology

  • Risk scores for Standard and New Entrant ACOs will be calculated using the same revised 2024 risk adjustment model applied under the Medicare Advantage (MA) program.

  • For Standard and New Entrant ACOs, the model-wide Coding Intensity Factor (CIF) will be capped at 1% for PY2024.

  • Starting in PY2024, CMS will apply the ACO-level 3% symmetric Cap to High Needs Population ACOs.

Aim: Health Equity Changes

CMS announced the following Model changes to further advance health equity:

• Revisions to Composite Measure Utilized for the Health Equity Benchmark Adjustment (HEBA)

  • To better identify underserved beneficiaries living in high cost-of-living areas, CMS is revising the calculation of the HEBA Score for PY2024 to be calculated as:

    • 1/3 Weight on National-Based Area Deprivation Index (ADI); plus

    • 1/3 Weight on State-Based ADI; plus

    • 1/3 Weight on Dual Medicare-Medicaid Status/Low-Income Subsidy Status.

• Expanded Access to HEBA

  • In an effort to increase the impact of HEBA, the adjustments to ACO benchmarks will be modified to be:

    • +$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 beneficiaries in the third decile

    • +$0 PBPM for the next four deciles

    • -$10 PBPM for beneficiaries in the bottom three deciles

REACH ACOs should review all of the changes made by CMS to assess their potential implications.

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