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MILLIMANWHITE PAPER ACOREACH:Direct Contracting 2.0 What to"grab"fromCMMI’slatestinnovation David Byron,FSA, MAAANoah Champagne, FSA, MAAABrent Jensen,FSA, MAAAColleen Norris, FSA, MAAA The Center for Medicare and MedicaidInnovation(CMMI)announcedrevisionstoitscurrent Medicare Fee-for-Service(FFS)Global and ProfessionalDirectContracting(GPDC)model,nowcalledthe Accountable Care OrganizationRealizing Equity, Access, and CommunityHealth (ACO REACH)model.1 Program overview BACKGROUND GPDC was designed as analternativerisk modeltothePathwaysMedicare Shared Savings Program (MSSP). This model attracted a number of continuing Next Generation ACOparticipants—CMMI’s sunsetting total-cost-of-case Medicare Fee-for-Service (FFS) model—as well as a number of MSSP ACOsand first-time participants in both 2021 and 2022. In the program’sfirst performance year (PY), 2021, there were 53 participatingDCEs followed by an additional 49 DCEs3that joined as a secondcohort in 2022. The GPDC program was then closed to newapplicants in the spring of 2021. ACO REACH(REACH)builds onthe principles andmethodology set forth in theexisting GPDC modeltoreflect thecurrentadministration’s priorities,incorporatestakeholderfeedback,andimproveparticipant experience.REACH’s statedgoals include “improving the quality of care for people withMedicare through better care coordination, reaching andconnecting healthcare providers and beneficiaries, includingthose beneficiaries who are underserved.”2 What’s changing? In the new REACH model,CMMI hasmade several programadjustments tobuild on the concepts introduced in GPDC andrevised them to align withcurrent priorities. CMMI has published itsown table4highlighting differences between the two models,withwhich we encourage interested ACOs to familiarize themselves. Applications for the new REACH model must be submitted toCMMI during the application window spanning March 7, 2022,and April 22, 2022.ExistingACOs (previously referred to asDirectContracting Entities or DCEs)will be able to continue theirparticipation in REACH without submitting an application duringthis window but will be required to have a strong compliance recordand agree to meet all REACH model requirements. In the section below(and shown inFigure 1),weoutline ahandful of what we believe are key changes to the model versusGPDC and discussthe implicationsof thechanges on existingDCEsas well as prospective REACH ACOs.The benchmarkingand attribution methodology in the REACH model is similar to themethodology implemented in the GPDCmodel. While thechanges discussed below will have an impact on the settlementcalculation and some organizational requirements, the modelmethodology remains largely unchanged from GPDC. CHANGE TO RISK ADJUSTMENT In addition,becausethe 3% risk score cap will be calculatedrelative to any change in the demographicrisk score over thatsame time period, an ACO’s risk score will not be penalized (orrewarded) forshifts initsalignedpopulation (to thedegreetherisk scoreis reflectedas a change in the demographic riskscore). This changehelps protectACOs that include providerswith evolving beneficiary pools from being unfairly impacted bythe risk score cap. Starting in 2024, REACH will adopt astatic reference yearpopulationfor the purpose of applying the±3% risk score cap. The±3% cap is compared to the cumulative risk score growth. In otherwords, the growth cap is 3% in total, not 3% per year.The staticreference population and reference time period has not yet beendefined, but we know that 2024 through 2026 will all use one singleyear as the reference year. Also, the 3% risk score cap will becalculatedrelative to the ACO’s demographic risk score growth. REDUCED GLOBAL DISCOUNT SCHEDULE Under GPDC, the risk score cap was applied relative to areference year that was continuously rolled forward such that itwas always two years before the performance year (e.g., forPY2022, the 3% risk score cap would be applied relative to a2020 reference year). CMS has revised the benchmark discounts for REACH ACOsparticipating in the Global option to 3% in 2024 and 3.5% in2025-2026 (a reduction from the 4% 2024 discount and 5%2025-2026 discounts in the GPDC model). Why this matters:DCEs that may have hesitated to considerthe Global option, due to the increasing discount, may considerrevisiting the option. Under ACO REACH, theGlobal discount willrequire REACH ACOs to reduce expenditures each year in orderto generate shared savings, but the required expenditurereduction is now a lower threshold. While a reduction in thediscount makes the Global option more appealing, the discount isstill a notable obstacle to overcome in relation to the Professionaloption. See the tables in Appendix A for a comparison of theshared savings and loss parameters between various CMMImodels along with brief commentary. Why this matters:This limits the opportunity for REACH ACOsto generate shared savings through increased risk score coding. In GPDC, DCEs