Skip to main content

The Hidden First in CMS' ACO REACH Incentive Model

Analysis  |  By Laura Beerman  
   September 19, 2022

The agency embeds equity in quality benchmark payments as part of a "zero-sum game" to support the underserved.

Health equity is the lynchpin that will enable CMS' ACO REACH program to introduce upside and downside incentives, even for participants who enter the model at lower risk thresholds.

The goal? Rewarding providers for serving more vulnerable populations and addressing their social determinants of health (SDOH)—a component that largely has been missing from value-based reimbursement.

In a Q&A with Ashley Perry, chief strategy and solutions officer for Socially Determined, she highlighted how the model can help speed health equity data collection, analysis, and use. Socially Determined is a healthcare analytics company that delivers Social Risk Intelligence to organizations committed to addressing SDOH.

HealthLeaders: What's new about ACO REACH's quality benchmark approach and why is it important?

Perry: This is the first time that CMS has intentionally embedded within the economic incentives of a model an effort to adjust for providers that are disproportionately serving more vulnerable populations. I think it's an important signal in terms of what the agency is doing, both within the innovation center models [Center for Medicare & Medicaid Innovation, or CMMI] as well as potentially more broadly.

HL: What are the components of how these new incentives will work?

Perry: So broadly with ACO REACH, CMS is not only creating incentives within the program for providers to address beneficiaries' social needs but adjusting the way that they're calculating the benchmark and the risk adjustment methodology itself to financially incentivize providers to do that work.

The first component is in the post-baseline adjustments to how reimbursement is calculated. The calculation will now include the Area Deprivation Index (ADI), which is a measure of deprivation driven by a number of community-level factors that exists at a group level across the entire country.

For CMS, the idea here was we're going to adjust a benchmark for this program [ACO REACH] based on a combination of a census block group ADI and an extra bump if the beneficiary is dual eligible.

In doing so, the post-baseline health equity adjustments are taking into account the vulnerability of the community in which the providers are serving as well as the individual beneficiary. This is based on data CMS already has and doesn't require any data collection effort on the part of program participants.

HL: What is the other component that's changed?

Perry: The other is the 2% quality measure withhold that participants have the opportunity earn back by hitting their quality targets. There is up to a 10% opportunity to get a bonus or to earn back that 2% withhold by collecting [SDOH-related] demographic data.

HL: What is the significance of this?

Perry: It's the first time we've seen the introduction of a zero-sum game, health-equity-driven adjustments to the benchmark. Some providers are going to see a bonus and others are going to see a reduction, and that is tied to the vulnerability of the population that they're serving. So it's the first explicit incentive that we've seen to try and encourage providers to serve more of those kinds of beneficiaries.

It's also a signal that participants—not only in this program but really in all CMS programs—should start to expect that they're going to be asked by the agency to collect demographic and SDOH data. And that they should be prepared to apply the data collection and risk analytics methodologies that they're using on the clinical side to manage performance on the social side.

HL: How do stakeholder bridge the gap between the now-clear understanding that 80% of health outcomes are not based on clinical care and actually changing those outcomes?

Perry: There is clear evidence that the vast majority of healthcare utilization costs and outcomes are driven by factors that happen outside the four walls of a clinic or hospital. We see that every day. The more interesting question is, what do you do about that?

Socially Determined's view is that we need to think more holistically about the data and analytic insights that exist outside of enterprise healthcare data systems that we've used to date.

Part of the solution here is being able to open the aperture around the data that we're using—to be more proactive about identifying subsets of populations that are in need, but may not exist in our datasets today, and then proactively engage those individuals before they show up in your ED or get readmitted to the hospital.

“There is clear evidence that the vast majority of healthcare utilization costs and outcomes are driven by factors that happen outside the four walls of a clinic or hospital. We see that every day. The more interesting question is, what do you do about that?”

Laura Beerman is a contributing writer for HealthLeaders.

Get the latest on healthcare leadership in your inbox.