Hospices Gauge How Quality Counts in ACO REACH

Hospice providers are seeking greater clarity when it comes to quality incentives in the Accountable Care Organization Realizing Equity, Access and Community Health (ACO REACH) program.

Introduced in late February, ACO REACH replaces the Global and Professional Direct Contracting (GPDC) models. CMS indicated that the program reflects its refreshed priorities for payment system demonstrations.

Among these priorities are improving the quality and cost of care for beneficiaries and a focus on diversity, equity and inclusion. Providers participating in the new model “are expected to use a model of care designed to serve individuals with complex needs,” according to CMS guidelines.


While in the program’s first year CMS is not penalizing providers that do not report these data, strong performance on these metrics would open up shared savings opportunities within ACO REACH, according to John Dickey, chief operating officer at Acclivity Health.

“It can actually have a pretty good impact on quality scores for the ACO if they’re able to capture that data and report it back to CMS,” said Dickey during a recent Acclivity Health webinar. “There’s no stick for that one, just a carrot, but we do expect that to change in future years once ACOs have time to get their arms around that collection of data.”

The program’s design will allow ACOs to keep more of the savings that they generate and reduce risk based on quality performance, according to Dickey.


Initially, the agency is focusing on two key metrics, all-cause hospital readmissions and unplanned admissions for patients who have multiple chronic conditions. CMS plans to publicly report aggregate quality and financial performance data each quarter.

Two voluntary risk-sharing options exist under the ACO REACH model. Contracted agencies will choose between a global, Total Care Capitation option and a professional, Primary Care Capitation option.

Each of these involves a capitated, risk-adjusted monthly payment for enhanced primary care services. These mirror the parameters for direct contracting, in which providers bore 100% of the risk associated with eligible patients for the global option or 50% risk with the professional option.

Quality is an essential element of the financial methodology underlying the program. CMS will withhold 2% of the capitation rate until a plan’s performance is consistent with the agency’s quality thresholds. This quality withhold is reduced from the 5% that would have existed in the discontinued direct contracting models.

CMS launched ACO REACH following public debate about the direct contracting models. This included calls from Sen. Elizabeth Warren, (D-Mass.) for CMS to eliminate the program, saying that it would leave Medicare vulnerable to what she called “corporate profiteers.”

CMS made the withhold reductions partly in response to these concerns, according to Yoni Kozlowski, health insurance specialist at the Center for Medicare & Medicaid Innovation (CMMI).

The discount and quality amounts withheld will rise from performance year to performance year throughout the ACO REACH demonstration, but at lower rates than in the direct contracting models, according to Kozlowski.

“We have updated the ‘glide path’ in the discount and quality withhold, [or] the way the discount and the quality withholds change over time,” said Kozlowski during a recent CMS webinar. “We went back and did some analysis, and essentially realized that we wanted to revise down those values to percentages that we felt were more appropriate for the ACO REACH model that created fair and accurate benchmarks with the right incentives in place.”

Though many hospices expect a seamless transition from direct contracting to ACO REACH, they will need a solid understanding of the new quality and compliance pieces.

Other elements that CMS will assess include whether patients are being moved in or out of Medicare Advantage plans and the potential misuse of beneficiary data.

They are also taking a closer look at marketing practices of participating providers. Though these are aspects CMS already monitors, providers can expect “a bit more strict review,” according to Dickey.

“As far as the impact, most of these [changes] probably aren’t going to create too much complexity compared to what direct contracting entities have had to do over the almost a year and a half,” said Dickey. “[But] expect to spend a little bit more time responding to CMS requests or audits than you’ve had to in the past.”

The first performance year of the redesigned ACO Reach model will take effect on Jan. 1, 2023. CMS began accepting applications earlier this month, with the submission window set to close on April 22. The demonstration period is set to complete by 2026.

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