The Biden administration is redesigning the controversial Direct Contracting Model to add new requirements to tackle health equity and ease progressive lawmakers’ concerns over the role of private equity. The Centers for Medicare & Medicaid Services (CMS) announced that the professional and global Direct Contracting Model will transition in 2023 to the Accountable Care Organization Realizing Equity, Access and Community Health (ACO REACH) Model. In addition, the geographic Direct Contracting Model on pause since March 2021 will be eliminated immediately.
“Under the ACO REACH Model, health care providers can receive more predictable revenue and use those dollars more flexibly to meet their patients’ needs—and to be more resilient in the face of health challenges like the current public health pandemic,” said Center for Medicare and Medicaid Innovation (CMMI) Director Liz Fowler in a statement.
More on Model
The REACH Model builds on CMS’s ten years of experience with accountable care initiatives, such as the Medicare Shared Savings Program, the Pioneer ACO Model, and the Next Generation ACO Model. CMS created the REACH Model to better reflect the priorities of the Biden-Harris Administration, to highlight changes due to feedback received from participants and stakeholders, and to affirm its commitment to health equity as central to improving quality of care. Indeed, key goals of the REACH Model are to improve quality of care and care coordination for patients in Traditional Medicare, especially for patients in underserved communities.
Like the GPDC Model, the REACH Model will offer two voluntary risk sharing options: (1) Professional Option (Professional): A lower-risk option with 50 percent Shared Savings/Shared Losses and Primary Care Capitation Payment; (2) Global Option (Global): A full risk option with 100 percent Shared Savings/Shared Losses and either Primary Care Capitation Payment or Total Care Capitation Payment.
The risk sharing options involve two capitation payment mechanisms: (1) Total Care Capitation (TCC) Payment: A per-beneficiary, per-month (PBPM) capitated payment for all services provided to aligned beneficiaries by all participant providers and those preferred providers who have opted to participate in TCC Payment; (2) Primary Care Capitation (PCC) Payment: A PBPM capitated payment for primary care services provided to aligned beneficiaries by all participant providers and those preferred providers who have opted to participate in PCC Payment.
The aggregate amount of savings or losses that ACOs in Global or Professional will be eligible to receive as Shared Savings or be required to repay as Shared Losses will be constrained by a series of risk corridors. In addition, a stop-loss arrangement will be an optional feature of both Global and Professional, to reduce the financial uncertainty associated with infrequent, but high-cost, expenditures for aligned beneficiaries.
The REACH Model will use a payment approach to better support care delivery and coordination related to patients in underserved communities, and will require all model participants develop a robust health equity plan to reduce health disparities within beneficiary populations. The CMS Innovation Center will provide participants with a template based on the CMS Disparities Impact Statement created by the CMS Office of Minority Health to identify health disparities, define health equity goals, establish a health equity strategy, and a plan for implementing the health equity strategy and monitoring and evaluating progress to advance health equity for underserved communities.
New participation in the REACH Model will begin on January 1, 2023 and run for three years through 2026. The application period for Performance Year 2023 and the optional Implementation Period (running August 1, 2022 through December 31, 2023) is March 7, 2022 to April 22, 2022, with REACH ACO selection occurring in approximately June 2022. Although the GPDC Model will continue until December 31, 2022, current GPDC Model participants must agree to meet REACH Model requirements by January 1, 2023, to continue participation.
What’s Wrong with Value-Based Model
With the REACH Model in mind, we point out a Health Affairs article addressing why more than a decade of experimentation with value-based payment has produced mixed spending and quality results with little impact on health disparities. The authors argue CMS has a bold plan to improve its programs; however, they alone may not achieve optimal results. The authors argue this is due, in part, to: dynamics already in place around commercial plan-provider relationships; lopsided market leverage between “must-have” providers and health plans that cannot sell products without including those providers in their networks; and structural inequities in resources available to different providers. Each of these factors, alone and in combination, poses critical barriers to successful value-based payment. The authors argue CMS should consider where its policies have impact beyond Medicare and where non-Medicare market dynamics modulate the effectiveness of its programs.