What the ACO REACH Model Means for Direct Contracting’s Future

A new path was laid out last week for home-based care providers wishing to engage in direct contracting with the federal government.

As the U.S. Centers for Medicare & Medicaid Services (CMS) announced Thursday, the Global and Professional Direct Contracting (GPDC) Models will expire at the end of 2022. On Jan. 1, 2023, the accountable care organization (ACO) “REACH” Model – which stands for “Realizing Equity, Access and Community Health” – will take its place.

While the announcement may have concerned some advocates of direct contracting at first, it’s makeover appears to be confirmation that direct contracting will continue under the Biden administration, albeit with greater oversight.


The direct contracting models had taken considerable heat since the administration took over, including from Sen. Elizabeth Warren (D-Mass.).

“The shift was also caused, I think, by a lot of concerns voiced in the industry relating to the participants – and the Conditions of Participation in the program – more than the operation of the program itself,” Francois de Brantes, senior vice president of Signify Health Inc. (NYSE: SGFY), told Home Health Care News.

The Dallas-based Signify Health – a tech-enabled value-based care platform – deferred applying to be a direct-contracting entity (DCE) due to new models historically experiencing some “hiccups” from the outset, de Brantes said. But in the interim, it was preparing to eventually become a DCE while helping out existing ones.


The ACO REACH Model will differ from the GDPC Models in a few ways.

The first is governance structure. As opposed to the GPDC, which mandated that participating providers hold at least 25% of the governing board voting rights, REACH mandates that number generally be 75%.

Furthermore, a beneficiary advocate and a consumer advocate must be included on each ACO REACH board. In GPDC, one person was able to operate as both.

Health equity, meanwhile, is the overarching theme addressed in the switch from the GPDC Models to the ACO REACH Model. There were no policies that explicitly addressed health equity in the GPDC Model.

In the ACO REACH Model, however, there are multiple, including:

– A requirement for all REACH ACOs to develop a health equity plan, which must include both an identification of health disparities and then a concrete plan designed to mitigate those disparities

– The introduction of a “health equity benchmark adjustment,” which will be used to “better support care delivery and coordination” for patients in underserved areas

– Data collection from beneficiaries regarding demographics and social needs

– An increase in the range of services that nurse practitioners can order to improve access to care

The ACO REACH Model also differs in its discounts for global entities. Below are the discount rates for Professional ACOs at the top – which are not applicable – as well as the Global ACOs at the bottom.

The top chart represents the GPDC Models while the bottom represents the ACO REACH Model.

“The reduced discount rate for Global ACOs to 3-3.5% beginning in PY2023 will further CMS’ goal of increasing participation in full risk [fee-for-service] initiatives,” CMS said.

Among a few other changes, monitoring and compliance measures are far more extensive under the REACH Model.

There’s also an opportunity to continue adjusting the model in the future, which de Brantes believes is inevitable.

“I think there will have to be,” he said. “Especially when you look at the emphasis on [data] collection and the fact that there’s going to be a requirement to collect social determinants of health data from attributed beneficiaries. That means that you’ve got to do something about it. So what do you end up doing about it? How will that adjust things?”

The increased focus on data is a reason to be encouraged by the new model, according to insiders.

As is the increased focus on health equity, at least for providers that already view serving underserved communities as part of their mission, such as the current DCE VillageMD.

“Many of the changes to the model reinforce VillageMD’s strategies and will allow us to move into more communities to serve the healthcare needs of all residents,” Gary Jacobs, the executive director of VillageMD’s center for policy, said in a statement shared with HHCN. “At VillageMD, we believe that all Americans are entitled to high-quality team-based primary care. ACO REACH will allow organizations like VillageMD to continue to expand our health equity strategy in a more focused and meaningful way.”

VillageMD is a home-focused primary care provider. The company is armed with over $6 billion in backing from Walgreens Boots Alliance (Nasdaq: WBA).

In 2021, there were 53 DCEs, including VillageMD. This year, there are at least 99, according to CMS data.

“I think there was a real excitement from all of us when we saw and read the details of the announcement because of the specific focus on reducing inequities,” de Brantes said. “Historically, beneficiaries have been underserved in certain areas. And by the way, in these areas, the participation of providers systems in advanced alternative payment models is much lower than it is in other, better served areas of the country.”

In CMS’ mind, honing in on these traditionally underserved areas better underscores the idea of the program in the first place.

If the most underserved beneficiaries can be better cared for, ultimately, that should reduce overall costs and help get ACOs and CMS closer to their shared goal.

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