What Comes Next In Prioritizing Equity In Payment? The ACO REACH Model

Starting in January 2023, health care payment policy will take an important step toward health equity. Last month, the Centers for Medicare and Medicaid Services (CMS) announced a new accountable care model that replaces the prior Directing Contracting models and incorporates changes to help organizations address equity and access through accountable care organization (ACO) participation.

The forthcoming ACO Realizing Equity, Access, and Community Health (REACH) model makes several foundational advances required for promoting equity through payment model design. These advances include intentional planning on how participants will improve health equity, collection of data on individual-level social determinants, and use of financial incentives directly tied to equity. The REACH model builds on CMS’s equity-based payment incentive in the End-Stage Renal Disease Treatment Choices Model announced last year, the first time a model has directly financially rewarded equity gap closure. While individual organizations in existing ACO programs may be working on advancing equity in their own settings, ACO REACH is also first model built on a CMS Innovation Center strategic refresh oriented explicitly around this goal.

More broadly, ACO REACH underscores a call to action for health care stakeholders to take several steps as part of a broader framework for addressing equity by going beyond traditional approaches to value-based payment. In this article, we outline how the REACH model takes several foundational steps needed to prioritize equity in health care payment. We also describe the work that we believe still needs to be done. (See exhibit 1 at end of article.)

Policy Intention And Goals

In policy, intention precedes implementation. It will be hard to meaningfully combat disparities so long as they are viewed as unintended consequences addressed solely through monitoring. A key first step for advancing equity through payment is setting an explicit intention to do so, an intention reflected in ACO REACH.

In particular, organizations participating in the REACH model will be required to develop and implement a Health Equity Plan to identify underserved patients and implement initiatives to reduce health disparities. The model requires participants to create their equity plans based on the CMS Disparities Impact Statement created by the CMS Office of Minority Health. One part of this five-step tool requires ACOs to explicitly define their goals for advancing equity. While the nature of goals will also almost certainly vary across participants, the act of goal setting is itself a powerful behavioral motivator for individuals and organizations, and also a critically important step for advancing equity through payment.

Through participants’ health equity plans, CMS will have an unprecedented look at how ACOs can pragmatically address disparities based on their specific populations and health care environments. Policy makers can use initial goals to adjust future requirements and move toward more specific, quantitative goals that drive targeted investments and capacity building. For instance, future models can prompt participants to move from initial goals around infrastructure for social determinants screening and referrals toward outcome-related goals (for example, goals for reducing outcome disparities between historically marginalized populations and other patient groups).

Data Collection And Equity Measurement

ACO REACH contains a Health Equity Data Collection Requirement under which participants will collect and report data on certain demographic and social determinants of health for individuals. Of course, data collection is insufficient alone for driving change. Rather, it is a foundational step on the path toward reliably identifying beneficiaries who face social disadvantages and creating equity metrics that help reveal how historically marginalized communities fare compared to others under different payment approaches. This work is particularly important and can serve as an example for other payers and policy makers to follow, given major gaps and variation in how these data are currently collected among individuals receiving care through value-based payment models.

Consideration Of Equity In Value

In accord with statutory requirements, value-based payment models have historically been evaluated based on their impact on quality and spending. While these are important considerations, it will be hard to improve equity if models also do not consider different facets of equity, such as access and outcomes stratified by group. There is a particular gap and need to understand how payment models affect access to care for different groups.

In addition to features used in other payment models (for example, waiving the requirement of a prior three-day hospitalization for coverage of a skilled nursing facility stay), ACO REACH also includes a nurse practitioner services benefit enhancement designed to reduce barriers to care access, particularly for individuals with limited access to physicians. Through waivers, this strategy would allow nurse practitioners to certify patient needs (for example, for hospice) and order and supervise certain services (for example, cardiac rehabilitation).

While not directly targeted at specific patient groups, the reality is that historically marginalized patients face disparities in areas encompassed by these waivers, including hospice use and cardiac rehabilitation referrals. In turn, approaches that expand access to these services could deliver outsized benefits to these patient groups and address equity. These dynamics should be assessed through rigorous evaluation of this facet of ACO REACH. In future models, policy makers can also explore different approaches to expanding access, such as team-based care (for example, benefit enhancements based on care delivered by teams of physicians, nurses, pharmacists and other clinicians) and use of telehealth.

Financial Adjustment For Historically Marginalized Groups.

ACO REACH includes a Health Equity Benchmark Adjustment that adjusts the financial performance benchmark for ACOs serving higher proportions of patients from historically marginalized groups. Traditionally, clinicians and organizations may face financial disincentives to providing care for historically marginalized patients; for these patients, care can be more costly and positive outcomes harder to achieve due to the impact of both clinical and social determinants of health. Indeed, physicians in areas with a higher proportion of historically marginalized groups were less likely to participate in early ACO programs, compared to physicians in more affluent areas with fewer minorities.

The ACO REACH benchmark adjustment uses the Area Deprivation Index (ADI) to classify the level of social deprivation in geographic areas and then applies flat, per-beneficiary-per-month adjustments for individuals residing in the highest and lowest deprivation areas. This approach represents an effort to mitigate disincentives for providers to participate in ACO REACH and care for these populations.

Future models can build on this approach through several enhancements. As individual-level social determinants data collection increases, payment models could transition to using individual-level measures of need, rather than area-level measures, to determine any benchmark adjustments. Policy makers could also use area-level measures such as ADI for allocating funds to providers practicing in different regions and serving different communities, earmarking dollars in particular for social determinants-related investments. For example, future payment models could provide funds (for example, via per-member-per-month payments) to providers located in areas with greater social need, with requirements that those funds are used to screen and address needs either directly or in partnership with community groups. This approach could build upon the Accountable Health Communities model, for which CMS created a screening tool for defined health-related social needs such as transportation problems and housing instability, using funds to move from screening to addressing those needs.

Final Thoughts

Experience with ACO REACH—the first of what could become a new class of equity-focused value-based payment models—will likely have substantial implications. CMS has expressed the intention to use learnings from the model to inform the Medicare Shared Savings Program and future models. Insights from the REACH model are also likely to impact payment model design and implementation beyond Medicare. Therefore, while no model is perfect and additional steps are needed in future models, it will be important to watch and evaluate ACO REACH in our progress toward using health care payment to promote equity.

Exhibit 1: Steps for advancing equity through payment, and examples from ACO REACH

Source: Authors’ analysis.

Authors’ Note

Dr. Liao reports service on the Physician-Focused Payment Model Technical Advisory Committee. The views represented here are his and do not represent those of the committee. Dr. Navathe reports grants from Hawaii Medical Service Association, Commonwealth Fund, Robert Wood Johnson Foundation, Pennsylvania Department of Health, Ochsner Health System, UnitedHealthcare, Blue Cross Blue Shield of North Carolina, Blue Shield of California, and Humana; personal fees from Navvis Healthcare, YNHHSC/CORE, Maine Health Accountable Care Organization, Singapore Ministry of Health, Elsevier Press, Medicare Payment Advisory Commission, Cleveland Clinic, Analysis Group, VBID Health, Advocate Physician Partners, Federal Trade Commission, and Catholic Health Services Long Island; personal fees and equity from Navahealth; equity from Agathos, Inc., and Embedded Healthcare; and noncompensated board membership for Integrated Services, Inc., outside the submitted work.


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