ACO REACH — Frequently Asked Questions (FAQs)

A REACH ACO is a new variety of Accountable Care Organization (ACO). It is a group of providers that want to participate in the model paired with an organization that invests in the success of those providers through products, analytics and services to help them manage their patient panels and efficiently provide for beneficiaries’ care needs.

Any provider who accepts — and is in good standing with — Medicare can join a REACH ACO to participate in the program. This includes providers with closed panels.

Primary Care Providers with Traditional Medicare beneficiaries can become Participating Providers -- their patients are aligned to the ACO pending a CMS analysis of historical claims data. Patients showing a plurality of claims — indicating that they are receiving a majority of their primary care from the provider in question — are aligned to the ACO automatically via claims alignment. Patients that are not aligned through claims but see the provider in question regularly can be aligned during the Performance Year via Voluntary Alignment. Please visit this article for a more fulsome explanation of Voluntary Alignment.

Other providers (e.g. specialists, ancillary facilities, suppliers, etc.) can become Preferred Providers, which indicates that the provider and the REACH ACO are aligned to generate savings. ACO REACH beneficiaries may receive incentives to go to a Preferred Provider - such as copay or coinsurance reduction.

There is no cost to Participating Providers, Preferred Providers or their beneficiaries to participate in ACO REACH.

Pearl is currently enrolling providers to start in ACO REACH on January 1st, 2025.

Patients who become part of a REACH ACO will retain their Traditional Medicare rights and benefits, including the ability to see any provider they choose who accepts Medicare, and REACH ACOs are required to inform those patients of this at the outset of the Performance Year. REACH ACOs cannot employ barriers to care or punitive measures commonly used by Medicare Advantage or commercial insurance (e.g., prior authorization or referral requirements). Depending on the REACH ACO they join, beneficiaries may see benefit enhancements, including low or no copays for preferred providers, incentives for healthy behaviors, etc.

When you join a REACH ACO as a Participating Provider, Medicare will look at the history of your claims submissions for the last few years and determine the patients you have been providing care to and enroll them in the REACH ACO. Any additional patients can sign a simple form choosing you as their PCP — Pearl will help with this — which will enroll them into the REACH ACO through a process called Voluntary Alignment as one of your patients at the start of the following quarter (e.g., a patient who elects your as their PCP and signs a Voluntary Alignment form in February will be enrolled beginning April 1 of the same year).

‘Aligning’ a patient to you — either automatically through claims history “attribution,” or manually through Voluntary Alignment — just means that you will receive credit for managing the care of that patient: the cost of their primary care services will be included in determining your monthly capitated payment and their total-cost-of-care in each year of the program will be part of the calculation to determine whether you benefit from having generated Shared Savings.

No, quite the opposite! HMOs are another form of controlling costs, but they often rely on narrow networks and high degrees of utilization-management that can be frustrating for patients. The ACO REACH program maintains Medicare’s open access and never penalizes patients for the way they access care, but rewards them for listening to their doctor.

Participating Providers (i.e., PCPs) cannot participate in both a REACH ACO and another Medicare ACO program during the same Performance Year. Participating in a REACH ACO has no effect on commercial ACO participation.

Preferred Providers can participate in multiple CMMI value-based models.

High performing ACO providers can often earn even more in a REACH ACO and benefit from the stability offered by the monthly, fixed primary care payment. Further, many providers participating in other Medicare value-based programs favor the flexibility and lessened administrative burden offered by the ACO REACH model.

Pearl’s goal is to help providers find the right value-based care program for them. ACO REACH might not fit your practice, but we want to make sure each PCP understands the program, what they can potentially earn, and has the support they need to be successful should they choose to participate. In order to facilitate this aim, Pearl can provide a provider or practice with an analysis of their historical performance (which you can request at the bottom of this page!) to help you understand how you would likely perform in ACO REACH.

Should ACO REACH make sense for you, Pearl will facilitate participation by coordinating with Medicare and providing your practice with the tools and analysis necessary to succeed in the program. Our arrangements are structured so that Pearl only succeeds when our partners are successful, ensuring economic alignment and an incentive for Pearl to help you every step of the way.

Providers can earn a significant amount of additional revenue through Shared Savings in ACO REACH. Medicare establishes a total-cost-of-care target for Participating Providers, based on the costs associated with the historical claims for their Traditional Medicare patient panel, the disease burden of that panel, and the regional costs of services — this is called ‘the benchmark’. Providers whose costs are below their benchmark in a given performance year will receive a portion of the savings they helped generate.

Pearl offers a range of risk arrangements based on providers’ tolerance for risk exposure, including upside-only arrangements (where providers are not responsible for repaying Medicare for any losses they incur) and upside/downside arrangements (where providers receive a greater portion of the savings they generate, but must also pay a portion of losses). Pearl will work with you to determine the most appropriate risk track based on your historical performance, care model and comfort.

The performance year benchmark is established using a historical three-year baseline period: 2017, 2018, and 2019. These are the same benchmark years used for all REACH performance years (e.g. PY2025). CMS identifies which patients would have been aligned to the ACO during those benchmark years, determines their costs (i.e., Total Medical Expenditures — TME), risk scores, and the regional TME rates during those benchmark years to create the historical baseline benchmark. This essentially creates a 2019 baseline benchmark dollar amount.

CMS must take this 2019 benchmark dollars and trend it forward to establish a comparable Performance Year benchmark (e.g. PY2025) so Performance Year costs can be fairly compared. CMS takes these historical benchmark costs and trends them forward to the performance year (e.g. PY2025) by making prospective adjustments. Medicare adjusts for changes in disease burden (i.e., risk score) and costs (i.e., inflation) to trend the baseline benchmark forward to establish a PY benchmark in 2025 dollars.

Base Primary Care Capitation (BPCC or PCC) is the payment mechanism through which most primary care services are reimbursed in Medicare’s ACO REACH model. Unlike fee-for-service (FFS) payments (i.e. compensation for each patient visit or procedure), primary care capitation allows for stable monthly payments to primary care providers for managing their respective Medicare ACO patient panels.

These monthly PCC payments are designed to offer both revenue stability and revenue neutrality for providers transitioning to this new value-based payment model and incentive structure.

1. Revenue Stability: The monthly payments to providers for managing their respective Medicare patient panels are intended to be the same throughout the year, regardless of the services provided in any given month. This enables providers to transition away from compensation for the volume of patients they see and procedures they administer, and toward a more proactive care model focused on maximizing value to patients and the healthcare system.
2. Revenue Neutrality: To facilitate the transition to this new payment model, the monthly PCC payments are calculated to approximate the payments that providers would have otherwise received for primary care services in a fee-for-service model as accurately as possible. Over the course of the year, the monthly PCC payments should therefore add up to the revenue that providers would have otherwise received for the same PQEM codes in fee-for-service.

In the ACO REACH model, providers have the opportunity to increase revenue through Shared Savings by delivering high quality care more efficiently across their Medicare patient panel. Primary Care Capitation is the payment mechanism that enables primary care providers to maintain their baseline revenue while transitioning to a care model that positions them to generate additional Shared Savings revenue.

PCC is calculated by looking at the proportion of the Total Medical Expenditures (TME) that is attributed to the primary care services that a PCP provided to their Medicare FFS patients over a specific period of time (e.g. for performance year 2025, it is based on the first three quarters of 2024). This proportion is then applied to the anticipated TME for the provider’s beneficiaries (i.e., the benchmark) for the upcoming performance year to create a nominal dollar capitation rate. The result is a per-beneficiary-per-month (PBPM) amount for each beneficiary aligned to the ACO’s participating PCPs.

Short answer: Yes, because the monthly BPCC amount is based on historical spend. In other words, it’s based on how PCPs billed in the year prior.

Long Answer: It is intended to sufficiently fund each PCP’s aligned panel of ACO beneficiaries based on the 2024 performance year medical expenditures. Remember, the BPCC is paid on a PBPM basis, (e.g. $26.48 PBPM), so if a PCP has more patients attributed to them in 2025 (e.g. 100 patients) compared to 2024 (e.g. 80 patients), their capitated payments will reflect the increase in patients (i.e., $41.30 BPCC amount * 100 patients * 12 months).

Short answer:  It may, but in a way that ties out financially and logically.

Long answer:  CMS will modify the 2025 BPCC amounts on a monthly basis. Some notable drivers of these adjustments include changes to:

• The count of currently aligned beneficiaries (e.g. the number of currently aligned 2025 patients will change over time with the addition of voluntarily aligned patients or monthly patient exclusions);
• The regional rate based on movement of beneficiaries during PY2025 (e.g. a patient move from County A to County B, since benchmark rates vary by county);
• The risk score of beneficiaries during PY2025 based on updated diagnostic codes (e.g., a patient acquires or resolves a new condition, which increases or decreases the benchmark);
• CMS' estimate of the rate of inflation of healthcare expenditure and utilization of healthcare services (the "USPCC trend").

There will be a significant impact to PCPs’ reimbursement for Primary and Qualified Evaluation and Management (PQEM) codes (i.e. primary care codes) beginning in January of 2025.

For all PCPs participating in a fully-capitated BPCC REACH ACO:

1. Billing: PCPs should continue billing CMS as they normally would for all claims for all ACO patients. No changes here. It is critical to continue submitting FFS claims to maintain the capitation rates in future performance years.
2. Reimbursement: Instead of being reimbursed by CMS for primary care claims, CMS will “zero out” their claims, meaning PCPs will receive $0 from CMS for their primary care services provided to ACO aligned beneficiaries, if the PCP selected 100% BPCC. If a PCP selected 20% BPCC, for example, CMS will reduce their claims by that amount.
3. Capitation: On a monthly basis, the ACO will pay each PCP a capitated payment for aligned beneficiaries, whether or not a PCP sees some, all, or none of their aligned beneficiaries.
   For example, if an ACO patient does not see her PCP during a given month, the ACO will still reimburse the PCP the capitated amount for that patient.
4. Shared Savings Revenue: PCPs have the opportunity to bear and capture value from the REACH ACO risk model by sharing in the cost savings that they generate from high-quality, cost-effective care. While shared savings are not paid out monthly like BPCC, PCPs will be rewarded about six to nine months after the performance year ends (e.g. Q3 2026).

(For Participant Providers who elected a FFS reduction <100%, the above guidance will hold true, except they will still receive a portion of the Medicare FFS when submitting claims.)

The value of capitation is to provide PCPs with more consistent, predictable monthly revenue so they can dedicate more of their time to managing the patients who need them most. Paying PCPs a stable capitated payment each month will reduce unnecessary utilization, increase quality of care, and lower the overall cost of healthcare. Dedicating more time to the highest-risk patients will lead to better patient outcomes, especially in the costly post-acute care setting (e.g. reduced skilled nursing facility utilization).

ACO REACH is the most innovative Medicare model ever launched by CMS. Requiring capitation is necessary to encourage PCPs to shift away from traditional FFS compensation to value-based payment arrangements and will benefit patients tremendously.

At Pearl, we believe that capitation is not only the future of reimbursement, but also the best, most tangible approach to fixing our broken and expensive healthcare system. We advise all of our PCPs to follow these simple tactics to excel in the REACH ACO model:

1. Provide Annual Wellness Visits as early in the year as possible.
   This will enable PCPs to identify new chronic conditions, help ensure that patients have appropriate documentation for current health issues, and provide the opportunity to capture appropriate risk adjustment to properly fund the patient panel.
   
   
2. Provide preventative primary care services for high-risk patients with multiple chronic conditions.
   Proactive management of high-risk patients will allow PCPs to identify issues sooner, thus lowering the likelihood of hospitalization, reducing cost of care, and untapping shared savings for providers. If PCPs lower the TME for their patients, they will share in the savings they generate.
   
   Additionally, increased primary care services in the current year (2024) will lead to increased BPCC amounts for ACO providers in the following year (2025).
   
   
3. Voluntarily align Medicare FFS patients.
   Educate patients on the benefits of Voluntary Alignment to enhance care coordination and to retain (or grow) a provider’s panel to ensure a more stable monthly capitated amount.