The United States Centers for Medicare and Medicaid Services (CMS) recently issued changes to the ACO REACH Model, including adjusting the financial methodology and strengthening the operational flexibility and risk management. Some of the announced changes are below.
Benchmarks
One such change relates to the benchmark blend of historical/regional expenditures for standard ACOs. In performance year 2025, CMS will not increase the percentage of expenditures comprising the benchmark blend rate as previously planned. Instead, the rate for Standard ACOs will be held at a blend of 55% historical baseline expenditures and 45% regional expenditures.
Additionally, in ACO REACH, the current upward and downward adjustments from blending regional expenditures into the benchmark are limited, with the ceiling limited to 5% of the adjusted fee-for-service (FFS) United States Per Capita Cost (USPCC) for the performance year. In performance year 2025, CMS will reduce the ceiling from 5% of the adjusted FFS USPCC to 3% of the adjusted FFS USPCC for Standard ACOs.
Currently, the Health Equity Benchmark Adjustment in ACO REACH uses an equity score that is an equal blend of: (1) National ADI scores, (2) State ADI scores, and (3) Dual-Eligibility or Low-Income Subsidy status. The State ADI was added in performance year 2024 to better identify underserved people living in high-cost-of-living areas. For performance year 2025, CMS will remove the National/State blended ADI and replace it with an area-level socioeconomic deprivation measure that uses standardized variables. This will ensure the ADI accurately captures deprivation in areas with high housing values. CMS will provide additional information about the new methodology in the coming months.
Risk Adjustment Model
In performance year 2024, risk scores are blended using 67% of the risk scores under the 2020 risk adjustment model (V24) and 33% of the risk scores under the revised 2024 risk adjustment model (V28). For Standard and New Entrant ACOs, the model-wide Coding Intensity Factor (CIF) is capped at 1% for performance year 2024. In performance year 2025, CMS will continue with implementing V28, with risk scores blending using 33% of the 2020 (V24) model and 67% of the 2024 (V28) model. For Standard and New Entrant ACOs, the model-wide CIF will remain capped at 1%.
Stop-Loss Reinsurance
Currently, all REACH ACOs have the ability to participate in a stop-loss reinsurance arrangement. In 2025, CMS will apply a uniform multiplier adjustment at Final Reconciliation to stop-loss payouts. This will make it so that model-wide payouts equal model-wide stop-loss charges, which will help ensure the model’s stop-loss reinsurance is budget-neutral.
Provisional Settlement
Provisional Settlement permits ACOs to settle part of their Performance Year Shared Savings/Shared Losses on an earlier timeline, with an estimation error. Starting with performance year 2025, CMS will modify Provisional Settlement to reflect the calculation of total monies owed, rather than solely shared savings/losses. At the Final Financial Settlement, CMS will adjust the Provisional calculation of total monies owed to account for additional claims-run out and final quality and risk scores and the CIF.
Additionally, because of the decreased risk from including total monies owed in the Provisional Settlement process, CMS will reduce the Financial Guarantee requirements from 4.0% to 3.75% of benchmark for ACOs electing Enhanced Primary Care Capitation and/or Advanced Payment Option.
NAACOS Response
The National Association of ACOs (NAACOS) has a mixed reaction to the changes, with Aisha Pittman, senior vice president of government affairs for NAACOS, saying, “We expected there were going to be some changes. We will likely see some ACOs drop out or struggle to participate. I don’t have a good sense yet because our members are interpreting, [but] that’s always the fear.” However, Pittman went on to acknowledge that “CMS has their requirements about generating savings.”