ACO REACH Myth Busters

“The statements contained in this document are solely those of the authors and do not necessarily reflect the views or policies of CMS. The authors assume responsibility for the accuracy and completeness of the information contained in this document.”

By Debbie Finnel, Chief Executive Officer

The Direct Contracting Entity model first came under fire in early 2022. Since then, the Centers for Medicare & Medicaid Services (CMS) has decided to replace the DCE model with the ACO REACH model beginning January 1, 2023. The new ACO REACH model fosters health equity, puts providers in the driver’s seat of care and protects beneficiaries with increased monitoring and transparency. Yet the critics keep on critiquing. It’s time to bust their myths. Let’s set the record straight.

Myth #1: ACO REACH entities are controlled by Wall Street and an effort to privatize Medicare.

The ACO REACH model has been conceptualized over three administrations, starting with President Obama. It’s been a bipartisan approach to help improve health outcomes while lowering costs for American taxpayers and the healthcare system. ACO REACH is not an effort to privatize Medicare, nor is it Medicare Advantage dressed up with a new label. Rather, it’s a way to get back to the heart of medicine: helping people, especially those who are the most at risk.

ACO REACH is not about coding yourself to glory, denying care or limiting access. Instead, it helps us catch patients who fall through the cracks with regular, prevention-focused care. These patients often go without follow-up care and are then escalated to acute care settings, which then costs taxpayers more and inflates costs for the entire healthcare system. The U.S. spends more than $4,000 more per person on healthcare than any other high-income nation and yet our health outcomes are the worst . Our current fee-for-service system is broken. It creates a revolving door of episodic care that does not address underlying causes or inequities.

ACO REACH was designed to address the needs of the most vulnerable while helping to prevent fraud and waste in fee-for-service medicine. There are extremely stringent requirements and stopgap measures to prevent ACO REACH from being a money-making machine for Wall Street or anyone else. ACO REACH is about positively impacting good old-fashioned patient outcomes. There’s nothing Wall Street about that.

CMS needs to be sure that the dollars will be with ACO REACH entities and requires a significant reserve. Many in the ACO REACH world do not have deep enough pockets, so they work with private-equity groups for the financial guarantees the government requires. At ilumed, we choose private-equity partners who are aligned with our mission of being servant leaders who operate with compassionate empathy. We work with investors who keep the patient front and center in all we do so we can properly grow and scale our company without sacrificing our core values.

Myth #2: ACO REACH entities are simply middlemen who are motivated by profits and will restrict care to beneficiaries.

The work ACO REACH organizations are tasked with—focusing on prevention, improving patient outcomes, addressing social determinants of health—has been happening for years in Medicare under other umbrellas, like the Medicare Shared Savings Program and Medicare Advantage, to improve care and outcomes for individuals while lowering costs. Now, ACO REACH organizations can step into the spotlight and showcase their expertise and what they’ve been doing all along. Because we are no longer under a parent organization, we can spend more of our revenues on value-added benefits for both beneficiaries and healthcare providers. We can create more value at less cost. We’re better able to fund the providers doing the hard work of primary care, and we’re better able to support the beneficiaries with individualized care plans and outreach.

Primary care cannot simply stuff its pockets with money and expect to stay afloat. At some point, it becomes a snake eating its own tail. To create sustainable primary care, you must keep investing in your practice, staff and patients with clinical management, technology enhancements and patient outreach. If you don’t, you’re simply perpetuating episodic care, which is more labor intensive and costly. Effective primary care requires significant financial investment in the practice and patients.

The ACO REACH model applies a 3% coding-intensity factor to prevent coding inflation. If someone does try to siphon off more than they should in this model, they likely can’t do it for long and will be forced to write the government a check for anything they tried to take. If a CEO wanted a huge payout or private jet, they couldn’t get either using the ACO REACH model. It’s just not possible with the way CMS designed checks and balances into the program. There’s no scam thanks to the guardrails CMS put in place.

ACO REACH does not restrict care for beneficiaries. In fact, it goes beyond the traditional reach of healthcare that’s limited to the exam room and out into the community. Let’s use food insecurity as an example. Under the ACO REACH model, CMS encourages entities to not only identify social determinants of health but to help provide solutions. They want us to take out a microscope, then examine the data from multiple angles. Do we see disparities among certain racial or ethnic groups? Socioeconomic levels? Neighborhoods? They want us to help pinpoint where the problems are and come up with ideas to help alleviate those barriers to health. We’re not simply individual beneficiaries with this work, we’re helping entire communities. We’re making a difference.

Myth #3: The ACO REACH model is untested and will only inflate healthcare costs.

The ACO REACH model builds on the learnings of more than 50 CMS testing models over the past decade:

1. Embed health equity into every model.
2. Streamline the model portfolio and help scale what works.
3. Support transformation in care delivery by assisting providers with financial risk.

The ACO REACH model helps support CMS’s key strategic objectives to drive accountable care, advance health equity, support innovation and address affordability. While the program does not begin until January 1, 2023, it’s based on ten years’ worth of data and experience to make the greatest impact for the most at-risk Medicare beneficiaries. CMS continues to refine its models to make them more focused and strategic. Its vision has never been more in focus.

As I mentioned earlier, the U.S. healthcare system spends more per person for worse outcomes than any other high-income nation. Medicare is expected to become insolvent within the next 10 years. The pressure is on to improve health outcomes while reducing costs. ACO REACH does just that. Accountable care organizations helped Medicare save $1.9 billion in 2020 alone. The more providers we have focused on preventive care and social determinants of health barriers the more we can address the underlying problems within individual communities as well as the U.S. healthcare system.

Myth #4: ACO REACH secretly aligns patients to the model without their consent, lacks beneficiary protections and can’t address bad actors.

Patients are aligned to the ACO REACH model the same way they are aligned for all ACO demonstrations. CMS uses a formula based on claims for patients of participating providers. The beneficiaries are then notified of the program via a mailed letter that explains what the program is and why they have been selected for it. The beneficiary can opt out if they choose. Many entities also send a co-branded letter with the provider as an additional communication touch. A third notification letter could be sent if the entity or provider do not hear from the beneficiary. Patients cannot be aligned to the program without their knowledge. At ilumed, we see that once patients are involved, they love the added support and services they get.

In addition, the model gives providers 75% voting-right control of the governing board. The governing board must also give a seat to one beneficiary representative and a consumer advocate. For an entity to join the ACO REACH model, they must prove their track record of direct patient care serving historically underserved populations achieve positive quality outcomes. With the transition from DCE to ACO REACH, CMS took a hard look at the 2022 participating DCE entities and took less than half the applicants for 2023, proving that CMS takes its role as a gatekeeper and protector of beneficiaries very seriously.

CMS has also said they will be more transparent with the model’s progress before final evaluation results. As mentioned before, CMS has implemented guardrails against inappropriate coding and risk scoring to further protect beneficiaries and ensure they get access to the care they need. The model was built to protect beneficiaries with greater participant vetting, monitoring and transparency.

Let’s heal healthcare together

At ilumed, we aim to heal healthcare. We know it’s a group effort. To achieve it, we all need to collaborate—policymakers, payers, providers and patients. We can reimagine what has always been—a broken fee-for-service model—to come up with a care delivery system centered around people. People like providers who get into medicine to make a difference. People like patients who want to live with dignity and respect. People like case managers who connect patients to food banks that deliver. People like concierge specialists who make booking an appointment quick and easy. Let’s put the politics aside and focus on what really matters: helping Americans nationwide achieve their best health affordably.