The Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) Model is a framework established by the Centers for Medicare & Medicaid Services (CMS) through the Center for Medicare and Medicaid Innovation (CMMI). This model aims to improve the coordination and quality of care for Medicare beneficiaries while reducing overall healthcare expenditures. A central feature of ACO REACH is its explicit focus on advancing health equity and addressing disparities within the Medicare population. The model officially began its first performance year on January 1, 2023, succeeding and replacing the former Global and Professional Direct Contracting Model (GPDC).
Structural Components and Participants
The core organizational structure centers on the “REACH Entity,” which contracts with CMS and is accountable for the cost and quality of care delivered to its aligned beneficiaries. The framework accommodates three types of organizations. Standard REACH entities are established organizations, such as existing ACOs, with substantial experience serving traditional Medicare fee-for-service patients. New Entrant REACH entities are newer to the Medicare space, often relying on voluntary enrollment initially. High Needs Population REACH entities focus specifically on serving beneficiaries with complex medical or social needs, often including individuals dually eligible for Medicare and Medicaid.
A REACH Entity’s network includes Participant Providers and Preferred Providers. Participant Providers are the primary clinicians (e.g., doctors and physician groups) utilized by CMS for beneficiary alignment and quality reporting. These providers must hold at least 75% of the control on the governing body of the REACH Entity, ensuring the organization remains provider-led. Preferred Providers are optional supplementary providers, such as specialists, who can participate in the ACO’s payment mechanisms but are not included in the beneficiary alignment or quality performance calculations.
Beneficiary Alignment
Beneficiaries are linked to a REACH Entity through alignment, which occurs in one of two ways. Claims-based alignment is the traditional method, where CMS assigns a beneficiary to the ACO based on the historical volume of primary care services received from the Participant Providers. The model also encourages Voluntary Alignment, allowing a beneficiary to proactively choose a specific Participant Provider as their primary clinician. Voluntary Alignment is prioritized and takes precedence over claims-based alignment, giving patients a direct voice in their care coordination structure.
The Financial Framework
The financial model of ACO REACH shifts payment from traditional fee-for-service to a value-based system, holding the REACH Entity accountable for the Total Cost of Care (TCOC) for its aligned beneficiaries. The Primary Care Capitation (PCC) is a monthly, risk-adjusted payment made to the REACH Entity for primary care services. This fixed amount per beneficiary per month replaces traditional fee-for-service payments for primary care visits and specific evaluation and management services.
REACH Entities operate under two risk-sharing arrangements: the Professional Option or the Global Option. The Professional Option is a lower-risk track where the ACO is responsible for 50% of shared losses and retains 50% of shared savings. Entities choosing this option must participate in the PCC mechanism, limiting financial exposure to primary care expenditures. The Global Option requires the ACO to assume 100% of both shared losses and shared savings for the entire TCOC.
Under the Global Option, the REACH Entity may elect to receive payments via the Total Care Capitation (TCC) mechanism. TCC provides a single monthly payment covering all Medicare Part A and Part B services, replacing all fee-for-service payments for primary care and specialty services. Performance is measured against a target benchmark calculated by CMS, which blends the ACO’s historical spending with regional spending. A symmetric cap of 3% is applied to the growth of the ACO’s risk score to mitigate inappropriate coding intensity.
A discount is applied to the benchmark for Global Option entities, representing guaranteed savings CMS retains before shared savings are calculated. For all ACOs, up to 2% of the benchmark is held back as a quality withhold. The ACO earns back this withhold based on performance against mandated quality metrics, financially linking incentive payments directly to the quality of care provided.
Ensuring Health Equity and Quality
A foundational component of the ACO REACH Model is its commitment to addressing health disparities through mandatory requirements focused on equity and quality improvement. Every REACH Entity must develop and execute a comprehensive Health Equity Plan, which identifies specific underserved populations and outlines concrete strategies to reduce barriers to equitable care. This plan must include collecting data on social determinants of health (SDOH), such as housing stability and transportation access, which is reported to CMS and can result in a bonus on the ACO’s quality score.
A unique financial mechanism, the Health Equity Benchmark Adjustment (HEBA), provides additional resources to REACH Entities serving high-need populations. This adjustment is based on a composite measure combining the Area Deprivation Index (ADI), which quantifies socioeconomic disadvantage, with the beneficiary’s dual eligibility for Medicare and Medicaid. Beneficiaries who fall into the top decile of this composite score trigger an upward adjustment to the ACO’s benchmark, while a downward adjustment is applied to those in the lowest deciles. This targeted adjustment supports ACOs that take on the burden of caring for more complex and underserved communities.
Quality performance is measured using a focused set of metrics tied directly to the financial reconciliation process. These mandated measures include patient-reported outcomes, such as the CAHPS® Patient Experience Survey, and claims-based metrics that assess specific outcomes. The claims-based measures track hospital readmissions, unplanned admissions for chronic conditions, and the speed of post-discharge care. This ensures the ACO is actively coordinating transitions of care.