CMS redesigns Direct Contracting into an ACO model

The Global and Professional Direct Contracting Model will be replaced with a more equity-focused and provider-led Accountable Care Organization Model in 2023, the Centers for Medicare and Medicaid Services said Thursday.

The agency also officially will end the Geographic Direct Contracting model, which it halted last March.

The redesigned model, called the ACO Realizing Equity, Access, and Community Health Model—or ACO REACH—includes new health equity requirements, changes to risk adjustment and additional application scoring criteria. As with GPDC, the Center for Medicare and Medicaid Innovation will run the model.

CMS’ announcement comes after Direct Contracting, started by the Trump administration to build off previous ACO models, came under fire from progressive lawmakers, who objected to Medicare Advantage and private equity influence in the program and worried profit-driven motives would compromise patient care. Meanwhile, provider associations and some Obama administration health officials have urged CMS recently to keep the GPDC and make changes. Applications for GPDC have been on hold since last year.

“I believe that the steps that we’re taking today are really the right steps, that we’ve addressed what we think are the concerns of the past model, while ensuring that we rely on our principles,” CMS Administrator Chiquita Brooks-LaSure said in an interview with Modern Healthcare. “We are very focused on making sure that all beneficiaries, all the people who are served in traditional Medicare, retain all the rights that are afforded to them.”

CMS decided to rebrand the model from Direct Contracting to an ACO because “nobody knows what Direct Contracting means,” Brooks-LaSure said, adding that participants also wanted to be called ACOs instead of direct contracting entities. CMS communicated with lawmakers, providers, beneficiaries and other stakeholders in creating the revamped model, officials said.

CMS will accept applications this spring for the first cohort of ACO REACH participants, which is slated to begin Jan. 1, 2023. Current GPDC participants can continue on in ACO REACH as long as they agree to meet all the new model’s requirements by the start date. The new model will continue through 2026. The agency may consider capping the model’s size, as some stakeholders have encouraged, but CMS needs robust participation to evaluate the program, a senior CMS official said.

ACO REACH will offer the same Global and Professional risk sharing tracks as GPDC and model participation will still be divided into Standard ACOs, New Entrant ACOs and High Needs Population ACOs, depending on an organization’s prior experience and patient population.

But ACO REACH will look different from GPDC in several other ways.

ACO REACH requires participants to develop a Health Equity Plan that identifies health disparities and highlights actions to mitigate them. Participants must collect beneficiary-reported social needs and demographic data, and a new health equity benchmark adjustment will help support care delivery and coordination for beneficiaries in underserved communities. The model introduces a new benefit enhancement that increases the range of services nurse practitioners can order in an effort to increase access to services, too.

The GPDC model did not include explicit health equity policies, according to a CMS comparison sheet of the programs.

The new model also increases provider and beneficiary influence in participating organizations, which provider groups requested. Providers will have to control at least 75% of REACH ACOs’ governing boards, compared to 25% in GPDC. This may ease some concerns about what kind of groups can enter the model, the senior official said.

Additionally, CMS is reducing the quality withhold for participants from 5% in GPDC to 2% in ACO REACH and lowering the discount rate for Global ACOs in later performance years. However, the new model does not make changes to the benchmarking system for earning shared savings, which some stakeholders say favors new entrants to CMMI risk models.

CMS ratcheted up application criteria for REACH ACOs, as well. The agency won’t explicitly prevent insurers or investor-back groups from applying—as a government agency, CMS can’t arbitrarily block groups of participants, according to the senior official. Application scoring will consider a demonstrated record of direct patient care, and a record of serving vulnerable communities and achieving quality outcomes. Applicants will also be evaluated on potential program integrity risks posed by ACO owners and parent companies.

CMMI also changed the program’s risk adjustment policies. Progressives worried GPDC left room for entities to abuse risk adjustment. Going forward, CMS will incorporate changes in population demographics when capping risk score growth for each individual ACO. CMS additionally plans to keep ensuring that scores across the model don’t increase faster than scores for traditional Medicare beneficiaries not aligned to ACO REACH.

The agency will also address transparency concerns in the models. CMS released data on current GPDC participants and will additionally share aggregate information, such as the number of aligned beneficiaries, and quality and financial performance information based on operations and actuarial data. CMS plans to share information on payments being made to model participants on a quarterly basis.

Brooks-LaSure expects this transparency to become the new normal for CMMI models.

“It’s important that people understand and know what’s happening. Transparency really also helps us build trust, and that is such a priority for us at CMS,” she said.

The agency will monitor participants compliance closely and annually assess how beneficiaries shift into or out of Medicare Advantage, confirm ACOs are coding appropriately, examine anti-competitive behavior and misuse of beneficiary data, and perform regular audits of ACO contracts with providers to learn about downstream arrangements.

CMS expects to continue receiving feedback on the new model. If significant adjustments need to be made in following years, CMS will take them under consideration, a senior official said.

“We’re continuing to learn lessons,” Brooks-LaSure said. “We have engaged with stakeholders in such a direct way over the last couple of months, and the changes that we’re making really reflect what we’ve heard. And that’s the role of the Innovation Center—to test, to find out what’s working, and when it’s working, to try to move it into the traditional Medicare and Medicaid program.”