The Strategy Behind CMS’ 2024 Updates to ACO REACH

Three principles are guiding the U.S. Centers for Medicare & Medicaid Services’ (CMS) 2024 updates to the Accountable Care Organization Realizing Equity, Access and Community Health (ACO REACH) model: care coordination, managing health equity-related risks and social determinants of health.

Among a number of new requirements, the agency will also require participating organizations to develop and implement a health equity plan to identify underserved communities in their markets. Participants will also have to develop initiatives to address those health disparities.

Going forward, CMS will also tie improvements in health equity to payment, a key new component of the program that is closely linked with social determinants of health.


“The ability to recognize low-income subsidy status and a state-based area deprivation index will help us better understand the needs of the communities we serve,” Annemarie Switchulis, COO of the ACO Empassion Health, told Hospice News. “We truly believe that this is the missing element to caring for the full person. This is one giant step in that direction.”

The revised payment system is designed to increase the impact of the agency’s Health Equity Benchmark Adjustment, which rewards participants for reaching certain thresholds for improving equitable access to quality care across patient populations.

Starting in 2024, participants that achieve these benchmarks will receive bonuses on a graduated scale based on their performance. Top performers will receive $30 per-beneficiary, per-month (PBPM). Participants at the next level of performance will get a $20 PBPM, whereas others will receive $10 PBPM.


In this context, the health equity aspects of the model can be used as a form of risk adjustment, according to Anna Basevich, senior vice president of enterprise partnerships and customer enablement at the health care analytics company Arcadia.

“The same way that we’d say that a patient with five or six really heavy chronic conditions is going to have higher costs, we would say that a patient that has not had access to the right level of preventive and chronic disease care over the course of their lives is likely going to incur higher costs on Medicare,” Basevich told Hospice News. “There are nuances that we see in Medicaid in particular — that patients who have traditionally faced barriers to care actually see lower costs, which sort of lulls you into complacency until inevitably they encounter poor outcomes and, at that point, incur higher costs.”

These changes also reflect the inherent relationship between health equity and social determinants, Basevich said. The “really successful ACOs” are those that look at social factors more broadly and engage proactively with underserved communities, she continued.

CMS launched ACO REACH on Jan. 1, replacing the Global and Professional Direct Contracting (GPDC) models. CMS has said that ACO REACH reflects its redesigned strategy for payment system demonstrations, in which advancing health equity is a key tenet. 

In its redesigned strategy, the agency also announced plans to ensure that 100% of Medicare beneficiaries become aligned with an accountable care entity.

Hospices that have joined ACOs are able to participate in ACO REACH directly. Providers can also develop preferred provider relationships with ACOs. The two parties can negotiate mutually beneficial terms that are customized to the needs and characteristics of their patient population. This practice began with the direct contracting models and will continue in the new program.

These contracts can involve shared-savings arrangements in which providers can receive a portion of the dollar amount of any health care cost reductions.

These arrangements have paid off for CMS. The agency reported this week that its Medicare Shared Savings Program (MSSP) reduced spending by $1.8 billion in 2022, making it the sixth consecutive year the program has generated significant savings.

Currently, shared savings program ACOs include close to 575,000 participating clinicians who provide care to nearly 11 million Medicare beneficiaries, according to CMS.

In addition to the health equity components, CMS also has plans to strengthen its vetting of prospective participants, as well as promote greater transparency and care coordination.

“Many of our frail and elderly are overwhelmed with a maze of a health care system. Care coordination is essential to guide the aging population to the care they need and deserve,” Switchulis said. “Some of the positive effects of good care coordination are also cost savings and improving the understanding of the patient’s individualized plan of care. Coordination really does work at decreasing redundancy and unnecessary tests and procedures and focuses on smooth transitions through care.”

Also starting next year, the program in 2024 will include policies intended to ensure that physicians and other providers continue to play a “primary role in accountable care,” CMS indicated.

Additionally, at least 75% control of each ACO’s governing body must be held by participating providers or their designated representatives, compared to 25% during the first two performance years of the GPDC models.

The program will also mandate that at least two beneficiary advocates sit on the governing board, both of whom must hold voting rights.

“A lot of these shifts, particularly around the governance structures and the role of providers in that, are really critical to making sure that ACO REACH doesn’t become a pure business venture and essentially a health insurance gambit of understanding how you can maximize profits without having the right guidance from folks that are really steeped in providing care and driving patient outcomes,” Basevich said. “It opens the door for the right people to be in the room and have their voices heard, making sure that these organizations are ultimately moving in a direction that improves patient care.”

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