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How CMS' Updates to ACO REACH Model Affect Participating Providers

Analysis  |  By Jay Asser  
   August 16, 2023

The federal agency has made the changes after receiving feedback from stakeholders and participants.

CMS announced changes to the ACO REACH Model for 2024, which will advance health equity and afford participating providers more predictability.

ACO REACH is a value-based model that replaced the Global and Professional Direct Contracting Model and encourages providers to form an Accountable Care Organizations (ACOs) to shift away from fee-for-service in Medicare while taking on more financial risk. There are currently 132 participants in the model, which began on January 1, 2023, and runs through performance year (PY) 2026.

The updates to the model further incentive providers to participate. Included in the changes is a reduction on the beneficiary alignment minimum for new entrant ACOs from 5,000 to 4,000, as well as for High Needs Population ACOs from 1,200 to 1,000 for PY2025 and from 1,4000 to 1,250 for PY2026.

CMS is also providing a 10% buffer on alignment minimums for all ACOs starting in PY2024, which will allow ACOs to temporarily drop their beneficiary count while continuing to participate in the model.

Eligibility criteria for alignment to a High Needs Population ACO is being refined so beneficiaries with at least 90 Medicare-covered days of home health services utilization or at least 45 Medicare-covered days in a skilled nursing facility within the last year are included.

Additionally, CMS is revising the risk adjustment methodology in Medicare Advantage. PY2024 risk scores will be blended using 67% of the scores with the 2020 standards and 33% of the scores under the new 2024 model.

When it comes to the Health Equity Benchmark Adjustment (HEBA), CMS is adding two new variables—low-income subsidy status and state-based area deprivation index—to calculate the composite measure for identifying underserved beneficiaries.

HEBA will also see expanded access with CMS adjusting the ACO benchmarks in the modified policy to $30 per person, per month for beneficiaries with the highest equity scores.

The changes to the model make it more predictable for participants, maintain consistency across CMS programs and models, protect against inappropriate risk score growth, and advance health equity efforts.

Clif Gaus, president and CEO of the National Association of ACOs (NAACOS), said the updates address many of the concerns that have been raised by NAACOS members.

"We believe these changes will satisfy many concerns and stabilize future participation," Gaus said in a statement. "Additionally, we encourage CMS to explore adding features of REACH into a permanent track within the Medicare Shared Savings Program. Using MSSP as a chassis for innovation while infusing lessons learned from Innovation Center models into a permanent program is another path for stabilizing and growing participation in ACOs."

Jay Asser is the contributing editor for strategy at HealthLeaders. 


The ACO REACH model, which incentivizes providers to move towards value-based care in Medicare, is being revised for 2024 to address concerns and improve future participation.

Participating providers will see a reduction on the beneficiary alignment minimum for new entrant ACOs, a 10% buffer on alignment minimums, eligibility criteria for High Needs Population ACO extended, and risk adjustment in Medicare Advantage revised to 33% under the new 2024 model.

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