Providers seek more incentives in ACO REACH to target highly underserved areas

The new value-based care model ACO REACH has been touted as the first ever to hold providers accountable for tackling health equity. 

But some providers say the Biden administration isn't offering enough financial incentives for them to fully reach patients in extremely underserved communities.

This year is the first performance period for the ACO REACH model, which lets providers take on more financial risk for meeting a quality and spending benchmark. Each of the 132 participants must create and implement a health equity plan that identifies disparities in care among its patient population. The benchmark targets will be adjusted based on how well the provider mitigates these disparities. 

“We want to be in these underserved communities because we believe everyone should get access to primary care in this country and they are not getting it,” said Gary Jacobs, executive director of the Center for Government Relations and Public Policy for VillageMD, a primary care company. Jacobs spoke about the payment model during a recent webinar sponsored by Bright Spots in Healthcare.

But Jacobs warned that the economic incentives may not be there for providers to literally extend their reach into underserved communities with little to no access to primary care and no history of value-based care participation.

VillageMD and other stakeholders such as the National Association for Accountable Care Organizations (NAACOS) have reached out to the Centers for Medicare & Medicaid Services (CMS) and the Center for Medicare and Medicaid Innovation (CMMI) to address the issue. 

One of the biggest problems is a 3% cap on risk scores for new providers that stays in place for 24 months. 

The problem with the cap is that it could be hit quickly if a provider starts to treat areas without good access to primary care and with beneficiaries with a lot of unmanaged diseases like COPD or diabetes, according to NAACOS.

Going into such areas also means that providers don’t have a good history of the average healthcare costs. ACO REACH’s benchmark (the target providers must meet to qualify for shared savings) is calculated based on historical fee-for-service Medicare spending in a given area.

But installing a risk adjustment cap in areas without such a history is difficult, because “you don’t know [the] population you are treating because you don’t know what the costs will be,” Jacobs said. “Economics have to be resolved going forward.”

Another issue surrounds how the equity benchmark adjustment is calculated. The agency looks at each beneficiary in the ACO and relies on a composite measure that includes a score on an area deprivation index (ADI) and dual eligibility status. 

The ADI looks at socioeconomic factors correlated with health disparities and whether the beneficiary is underserved, according to an explainer from CMS. 

Each of the 2.1 million beneficiaries served by an ACO REACH provider will get a score based on the ADI and their dual eligible Medicaid-Medicare status.

NAACOS noted that there are issues with the calculation of the ADI, chief among them that it doesn’t factor in cost-of-living adjustments. This means the ADI could leave out high-poverty areas in large cities.

A September 2022 analysis from analytics company CareJourney compared the ADI for both Los Angeles County and Okaloosa County in Florida, which has a lower cost of living.

“What we found is that aside from the variables related to housing, Los Angeles County and Okaloosa County look very similar,” the analysis said. “However, the variables relating to housing result in a substantially different raw ADI score.”

CMS told Fierce Healthcare it will respond to the concerns from the ACO REACH participants. Jacobs said VillageMD is in discussions with the CMMI, which is overseeing the model, on the incentives. 

How the equity plan fares could have lasting ramifications for providers. CMMI Director Liz Fowler, Ph.D., has said the goal is to include the plan requirement in other payment models.

CMS and the Department of Health and Human Services are also looking for ways to measure providers on how they close equity gaps.