ACO REACH Model Performance Year 2024 (PY2024) Model Update - Quick Reference

In response to stakeholder feedback, the Centers for Medicare & Medicaid Services (CMS) is announcing a coordinated set of changes to the Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) Model starting in performance year 2024 (PY2024) that are expected to improve the model test by 1) increasing predictability for model participants, 2) protecting against inappropriate risk score growth and maintaining consistency across CMS programs and Center for Medicare and Medicaid Innovation models, and 3) further advancing health equity. 

Increasing Predictability for Model Participants


PY2024 Model Update


Beneficiary Alignment: Reduced Escalation of Beneficiary Alignment Minimum for New Entrant ACOs and High Needs Population ACOs

In order to set levels of growth that are consistent, predictable, and more attainable for New Entrant ACOs and High Needs Population ACOs, CMS is reducing the beneficiary alignment minimum for New Entrant ACOs for PY2025 from 5,000 to 4,000 and maintaining the beneficiary alignment minimum of 5,000 for PY2026.


For High Needs Population ACOs, CMS is reducing the beneficiary alignment minimums from 1,200 to 1,000 for PY2025 and from 1,400 to 1,250 for PY2026.

Beneficiary Alignment Fluctuations: 10% Buffer on Alignment Minimums for all ACO Types

Recognizing that there are temporary fluctuations in beneficiary alignment that ACOs may not be able to predict, CMS will provide a 10% alignment buffer beginning in PY2024. This buffer will be applied across all ACO types such that an ACO may continue to participate in the model even if their beneficiary count temporarily drops below the beneficiary alignment minimum by up to 10%. An ACO may have the buffer applied only once throughout the remainder of the model (i.e., an ACO may not remain below 10% of their beneficiary alignment minimum for more than one of the model’s remaining performance years).

Refinement to Eligibility Criteria for Alignment to a High Needs Population ACO

The model’s eligibility criteria for alignment to a High Needs Population ACO currently includes beneficiaries with one or more conditions that impair mobility or neurological condition, significant chronic or other serious illness reflected by risk score and unplanned hospital admissions, or signs of frailty.  CMS is expanding these criteria to include beneficiaries that have at least 90 Medicare-covered days of Home Health services utilization or at least 45 Medicare-covered days in a Skilled Nursing Facility within the previous 12 months. Like the existing eligibility criteria, every quarter CMS will reevaluate the claims or voluntarily aligned beneficiaries submitted for High Needs Population ACOs who did not meet the high needs eligibility criteria in the previous quarter. If the beneficiary meets any of the eligibility criteria, then the beneficiary will be aligned to the High Needs Population ACO. The revised eligibility criteria are expected to more effectively identify beneficiaries with complex needs that would benefit from participation in a High Needs Population ACO.

Modification of Financial Guarantee Policy

CMS is updating the financial guarantee policy regarding securing financial guarantees for consecutive performance years prior to Final Settlement for the prior year. Specifically, CMS is modifying the financial guarantee policy such that ACOs that have elected Provisional Financial Settlement and have fully paid Shared Losses (or received Shared Savings) are only required to update their financial guarantee to reflect the amount required for the current performance year.


Additionally, CMS will increase the financial guarantee for ACOs that have selected Enhanced Primary Care Capitation and/or Advanced Payment Option to 4% (an increase from 2.5% for Professional risk ACOs and 3% for Global Risk ACOs) starting in PY2024. This increase in the financial guarantee is intended to mitigate risk resulting from differences between Provisional Settlement and Final Settlement.

Update to Provisional Settlement

To facilitate the above change to the financial guarantee policy as well as better approximate the performance results for the full performance year, CMS is modifying Provisional Settlement to reflect 12 months of performance year experience (with 0 months of run-out), an update from 6 months of performance year experience (with 6 months of runout) previously. As a result, Provisional Settlement will essentially match the Quarter 4 Quarterly Benchmark Report for the performance year. This modification will enable the early savings/loss payments calculated in Provisional Settlement to estimate the payments in Final Settlement more closely.


Application of Symmetric Risk Corridors to Retrospective Trend Adjustment (RTA)

To support payment accuracy, an RTA is applied to modify benchmarks if the prospective trend factor is over- or under-stated by more than 1%. In order to apply the RTA to the preliminary financial benchmarks and create predictability regarding final financial performance, CMS will apply symmetric risk corridors to the RTA. There will be three symmetric RTA corridors: (+/-) 0-4%, (+/-) 4-8%, and greater than (+/-) 8% with REACH ACOs accepting 100%, 50%, and 0% responsibility for each corridor, respectively.


This means that REACH ACOs will be responsible for 100% of the RTA (positive or negative) up to 4% and REACH ACOs will be responsible for 50% of the RTA (on top of the 100% accepted adjustment from 0-4%) beyond 4% and up to 8%. If the RTA goes beyond 8% of the predicted benchmark, the portion of the RTA above 8% will not affect the ACO’s benchmark.


Improving predictability of the worst- and best-case scenarios of the impact from the RTA is intended to help ACOs budget and invest with more certainty to care for their aligned beneficiaries.


Protecting Against Inappropriate Risk Score Growth


PY2024 Model Update


Revisions to Risk Adjustment Methodology

The revised 2024 Part C risk adjustment model, being applied in the Medicare Advantage (MA) program, will be applied to Standard and New Entrant ACOs. PY2024 risk scores will be blended using 67% of the risk scores under the current 2020 risk adjustment model and 33% of the risk scores under the revised 2024 risk adjustment model. The downward impact of the blended risk adjusted model on benchmarks is expected to be approximately 0.4%.


The ACO-level 3% symmetric Cap and zero-sum model-wide Coding Intensity Factor (CIF) will both continue to be applied as risk score growth constraints to the Standard and New Entrant ACOs. The 2024 Cap application will shift to a static reference year with a demographic adjustment. The shift to the 2024 risk adjustment model, with the Cap changes, is expected to reduce the downward impact of the CIF.


For Standard and New Entrant ACOs, the model-wide CIF will be capped at 1% for the 2024 performance year. As we continue to consider changes to the ACO risk adjustment methodology, we will examine the impact of and interaction with the Cap and CIF as well as broader financial methodology features scheduled to go into effect PY2025 and PY2026. Additionally, to facilitate predictability and transparency earlier in the payment year, we are exploring options for sharing normalization factors and the CIF.


High Needs Population ACOs will continue with the CMMI-HCC concurrent risk adjustment model. Starting in 2024, the Cap and CIF risk score growth constraints will be applied where the 2024 Cap application will shift to a static reference year and the CIF will be capped at 1%, if statistically reliable.


Advancing Health Equity


PY2024 Model Update


Revisions to Composite Measure Utilized for the Health Equity Benchmark Adjustment (HEBA)


In order to better identify underserved beneficiaries living in high cost-of-living areas, CMS is revising the composite measure used to identify underserved beneficiaries for the HEBA by incorporating two new variables: Low-Income Subsidy (LIS) Status and State-based Area Deprivation Index (ADI). In calculating the revised composite measure, CMS will apply the National-based ADI, State-based ADI, and Dual Medicare-Medicaid status/Low-Income Subsidy (LIS) status equally.


PY2024 HEBA Score = (1/3 weight) National-Based ADI + (1/3 weight) State Based ADI + (1/3 weight) Dual Medicare-Medicaid status/Low-Income Subsidy status

Expanded Access to the HEBA

To increase the impact of the HEBA, CMS will apply a more continuous distribution of adjustment amounts under the HEBA such that the upward adjustment extends beyond the top decile of underserved beneficiaries and the downward adjustment is limited to the bottom three deciles. Specifically, the adjustments to ACO benchmarks in the modified policy will be $30 per-beneficiary, per-month (PBPM) for beneficiaries with equity scores in the top decile, $20 PBPM for beneficiaries in the second decile, $10 PBPM for the third decile, $0 PBPM for the next four deciles, and -$10 PBPM for the bottom three deciles.

Addition of Pulmonary Rehabilitation to Nurse Practitioner (NP) and Physician Assistant (PA) Services Benefit Enhancement (BE)

As pulmonary rehabilitation can be critical to improving the health of beneficiaries with Chronic Obstructive Pulmonary Disease, CMS is expanding the current NP and PA Services BE to permit NPs and PAs that are Participant Providers or Preferred Providers with a REACH ACO participating in this BE to certify and order Pulmonary Rehabilitation Care Plans.

Page Last Modified:
10/12/2023 12:18 PM