CMS Announces ACO REACH Policy Changes for 2024
Post Written by Sameer Kalarn, Associate Consultant
Three quarters through the first performance year of ACO REACH and participants are finally getting a full picture of what it's like operating in the new model. As the program now looks to the next performance year, CMS released ACO REACH policy updates based on months of feedback from participants regarding the health equity benchmark adjustment, attribution concerns, risk adjustment, financial guarantees, and more. Here, we will break out the important changes in policy and how the changes will affect participants.
After a full review of the policy updates, CMS program operators look to be focused on concerns around the intended impact of REACH on health equity and keeping ACOs participating in the program. To explain this further, let’s first dive into the changes made to beneficiary alignment and revisions to the health equity benchmark adjustment.
Beneficiary Alignment - making adjustments to alignment criteria and minimums
REACH uses a prospective claims based beneficiary alignment methodology that looks for plurality of primary care services with a REACH participant provider including PCPs and certain specialists. The period looks at two consecutive 12-month periods six months prior to the base year and the initial list of aligned beneficiaries is shared with ACOs prior to the start of the performance year. New beneficiaries can be added throughout the performance year through the process of voluntary alignment in which a beneficiary selects a primary clinician through Medicare.gov or through a paper-based alignment form from a REACH ACO. Beneficiaries can drop off from REACH providers if they select another primary provider or are no longer eligible for alignment with a REACH provider.
Three policy changes were released for beneficiary alignment. First, changes to beneficiary minimums include reductions for PY2025 and 2026. For New Entrant ACOs, the new minimum for PY2025 shifts from 5,000 to 4,000 beneficiaries. For High Needs ACOs, the new minimum for PY2025 shifts from 1,200 to 1,000 and 1,400 to 1,250 for PY2026. Next, beginning in 2024 there will be a 10% minimum attribution buffer added to the program for all types of REACH ACOs, but an ACO can only be below the minimum for one performance year and the buffer can only be applied once per ACO. Finally, the eligibility criteria for a beneficiary to be included under a High Needs Population is expanded to include beneficiaries with 90 days of Medicare covered Home Health care or 45 Medicare covered days in a Skilled Nursing Facility.
Expansion and revisions to the Health Equity Benchmark Adjustment (HEBA)
The Health Equity Benchmark Adjustment attempts to accurately socially risk adjust beneficiary level benchmarks by creating a measure based on the National Area Deprivation Index and dual Medicaid status of the beneficiary. This positive or negative adjustment is rolled up and applied to the ACO level cost of care benchmark that is used to measure against actual spend and determine shared savings.
Changes to the HEBA include revisions of the calculation methodology and expanded access to HEBA through increased upward adjustments and new limits to the downward adjustment.
The revised HEBA calculation now includes two new variables, Low-Income Subsidy Status and State-based Area Deprivation Index. The revised calculation and weighting is below. These changes come as a response from CMS to address concerns that the National Based ADI misrepresents urban dense areas with high Black and Latinx populations as being low need. You can read more about this flaw here, in a previous post by HSG.
Revised Calculation for PY2024 HEBA Score = (⅓ weight)National Based ADI + (⅓ weight)State Based ADI + (⅓ weight)Dual Medicare-Medicaid & Low Income Subsidy Status
The expanded access to the HEBA funds comes with additional funds in the highest need decile, shifting benefits from the top decile to the top three, and a limit on downward adjustments from the bottom five deciles to the bottom three.
The new HEBA PMPM Adjustments include:
$30 upward adjustment for the top decile
$20 upward adjustment for the second decile
$10 upward adjustment for the third decile
$10 downward adjustment for the bottom three deciles.
What this means for those participating in REACH
First, the addition of the State Based ADI and Low Income Subsidy Status is a further attempt to capture and incorporate more data to identify underserved individuals at a more granular level and promote the appropriateness of equity-related adjustments. Second, the PMPM HEBA adjustments are pushing more funds toward underserved communities, supporting work provided to the top 30% of these identified communities in 2024 compared to only the top 10% in 2023. On the other side of the coin, providers serving more well off communities will now see a downward adjustment for the bottom 30% of the population in 2024 compared to the bottom 50% in 2023 but will see a more severe adjustment(-$10PMPM in 2024 compared to -$6PMPM in 2023). Overall this shift does support ACOs and provider groups caring for underserved communities, but will now only impact the 30% extremes in the population which hints that CMS is not fully confident in the measure criteria and calculation for the health equity benchmark adjustment. Along with these changes, CMS has also pushed out a voluntary survey to gauge how ready provider groups are to collect social determinants of health information, which is a REACH requirement starting in PY2024. All of this seems to indicate that CMS is struggling to create a better way to measure the social needs of the population without more data from providers and that we may not see a better HEBA methodology until a majority of providers collect and submit patient reported SDOH information.
Regarding the changes in beneficiary attribution, the expansion of the High Needs criteria, reduction in beneficiary minimums, and the one time 10% buffer show a response to concerns around alignment for appropriate care and difficulties with attribution. Many ACOs have signaled that they are struggling with gaining beneficiaries and were especially surprised by the more-than-expected attrition in aligned populations. It seems that at this point, ACOs will have to take the brunt of the responsibility to seek out more providers and beneficiaries in order to stay compliant with the program; they will just have a bit more time to do this. With more financial performance and comparison reports finally arriving, ACOs have important decisions to make around further moving providers from other Medicare programs to REACH to bolster the number of attributed beneficiaries for the coming performance years.
The announced policy changes really show that CMS is attempting to further promote health equity in the ACO REACH model and create more flexibility in program participation to keep ACOs engaged and in the program. The changes in the HEBA criteria and weighting of the ADI show that CMS doesn't have a proper fix yet but does acknowledge the flawed methodology. These changes are good ways to slow the bleeding, but better solutions are needed to keep beneficiaries aligned to REACH providers and for more resources to be equitably distributed to the right populations. HSG encourages participants in ACO REACH to continue monitoring their performance in the program and voicing their opinions about what is and is not working.
Are you interested in learning more about ACO REACH or if this model might be right for you? HSG routinely leads clients through successful CMMI program applications. Reach out to learn more about how we can help your organization be successful in this or other CMMI programs.
About the Author: Sameer Kalarn is an associate consultant at Helgerson Solutions Group. Connect with him on LinkedIn.
