On February 24, 2022, the Centers for Medicare & Medicaid Services (CMS) announced that it had redesigned the Global and Professional Direct Contracting Model for 2023. The Center for Medicare and Medicaid Innovation (Innovation Center) has released a Request for Applications (RFA) to solicit a cohort of participants for the new version of Direct Contracting, which will be called the Accountable Care Organization (ACO) Realizing Equity, Access, and Community Health (“REACH”) Model. The Direct Contracting model will be renamed the ACO REACH model to better align the model’s name with its purpose: to encourage health care providers to coordinate care to improve the care offered to people with Medicare – especially those from underserved communities. The RFA is available here and more information is available here.
CMS also plans to release more information on current Medicare Direct model participants and to increase monitoring the performance of contracts under both the 2022 model and the ACO REACH Model. The new cohort of contractors will begin participation in the ACO REACH Model on January 1, 2023. Current Direct Contracting Model participants must agree to meet all the ACO REACH Model requirements by January 1, 2023 to continue participating.
Additionally, CMS announced the permanent cancelation of the Geographic Direct Contracting (Geo) Model. The Geo Model was announced in December 2020, was paused in March 2021, and is being canceled.
A comparison table of ACO REACH and Direct Contracting Models is available on the CMS website.
Background on Medicare Direct Contracting
The Direct Contracting Model is a voluntary Accountable Care Organization (ACO) model administered by CMS using contracts with Direct Contracting Entities. The Direct Contracting Model changes financial incentives to reward high quality care while allowing patients to remain in original Medicare.
The Direct Contracting Model also aims to improve beneficiaries’ experience of care. Beneficiaries may be aligned to an entity participating in the model if they choose (or already have) a primary care doctor who is part of a Direct Contracting Entity participating in the model. Beneficiaries maintain the right to opt out of model-related aspects of care and can elect to see any provider they choose without being restricted to a network. Beneficiaries aligned to DCEs participating in the Direct Contracting Model may benefit from aspects of the model such as increased access to telehealth and in-home skilled care for beneficiaries who are not otherwise eligible for home health services. All beneficiaries who are aligned to a DCE in the Direct Contracting model remain in Original Medicare and retain all of their rights and privileges, including the freedom to see any Medicare provider. By tying payments to improvements in the quality of care provided, health care providers are incentivized to collaborate across multiple treatment plans, spend more time with patients with complex, chronic conditions and ultimately, improve patient health outcomes.
There are two voluntary risk-sharing options under the Direct Contracting Model. In each option, participating providers accept Medicare claims reductions and agree to receive at least some compensation from their DCE.
CMS’ Principles for Accountable Care
In its announcement, CMS stated that the goals of the redesigned ACO REACH Model are to improve quality of care and care coordination for patients in traditional Medicare, especially for patients in underserved communities. CMS stated that the ACO REACH Model provides tools and resources to empower doctors and other health care providers to achieve these goals. This approach affords patients greater individualized attention to their specific health care needs while preserving choice of providers and all other services and flexibilities in Traditional Medicare.
According to CMS, ACO REACH will enable CMS to test an ACO model that can inform the Medicare Shared Savings Program and future models by making important changes to the Medicare Direct Model in three areas.
The ACO 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; and (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. CMS will adjust the discount rate for Global risk contracts to 3-3.5% starting in payment year 2023, which should make ACO REACH more attractive than Medicare Direct for contractors that take global risk.
The ACO REACH Model will also allow participation by three different participant types: (1) Standard ACOs for organizations with substantial experience serving people with Traditional Medicare; (2) New Entrant ACOs for organizations with less experience serving the Traditional Medicare population; and (3) High Needs Population ACOs, for organizations that serve small Traditional Medicare populations with complex health care needs.
Current Medicare Direct Model participants must agree to meet requirements for the ACO REACH Model by January 1, 2023 in order to continue their participation.
In order to increase transparency, CMS is will be releasing more information about the Medicare Direct Program for the remainder of 2022 and plans to do the same with ACO REACH. For Medicare Direct, CMS is sharing information at the participant level, including:
See here for a link to this information.
CMS will also share aggregate information for the Model, including the number of aligned beneficiaries, and information on quality and financial performance based on operations and actuarial data, not the model’s evaluation, which will be updated quarterly. It is important to note that the quality information presented is limited to two claims-based measures—All Condition Readmissions and Unplanned Admissions for Patients with Multiple Chronic Conditions. In addition, information will be shared on the payments being made to model participants on a quarterly basis. Data for additional quality measures may be provided when information becomes available. Independent evaluation results for the ACO REACH model will be posted by CMS when available.
Entities that are now participating in Direct Contracting will need to convert to the ACO Reach model in 2023 with applications for existing contractors and new applicants will be available in spring of 2022. The ACO Reach Model will continue through payment year 2026. Participants in the current model include health systems, managed care organizations, and medical practice management companies.
For more information contact David Szabo or your Locke Lord attorney.
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