ACO REACH MODEL & ADVANTAGES OF VALUE-BASED PURCHASING

2. In the wake of escalating U.S. healthcare costs over recent decades, the need for innovation in payment models has never been more pressing. A shift from the traditional fee-for-service payment model to a value-based purchasing system has become the focal point for large governmental and private sector payers. This transformation necessitates a close partnership and alignment of business interests between payers and healthcare providers.  Enter the ACO REACH Model, a groundbreaking approach that seeks to address these challenges and promote value-based purchasing. THE ACO REACH MODEL: A CATALYST FOR HEALTHCARE TRANSFORMATION In 2019, the CMS Innovation Center unveiled the ambitious ACO Model. This signifies a paradigm shift in healthcare economics as it tests flexible payment arrangements within the traditional fee-for-service Medicare program. Simultaneously, it incorporates beneficiary engagement and benefit enhancement tools that have gained popularity among private-sector payers and Medicare Advantage plans. TRANSFORMING RISK-SHARING ARRANGEMENTS The ACO REACH introduces a revolutionary approach to payment-capitated and partially capitated population-based payments, moving away from the conventional fee-for-service models.

3. Full Capitation • Direct Contracting entities that accept full capitation revenues can earn up to 100% of savings or owe up to 100% of losses. This provides a significant financial incentive for providers to manage costs efficiently. • Partial Capitation • For those that accept partial capitation payments, they can share up to 50% of the savings achieved using a benchmark or owe up to 50% of losses. This provides a middle-ground option for healthcare entities looking to transition gradually. BROADENING PARTICIPATION IN CMS INNOVATION CENTER MODELS The model encourages participation from organizations that are new to Medicare fee-for-service. This includes physician-managed organizations that have traditionally operated exclusively within the Medicare Advantage program. It also opens the door for organizations that manage complex chronic and seriously ill beneficiary populations, historically less likely to participate in risk-sharing arrangements with Medicare. EMPOWERING BENEFICIARIES One of the distinctive features of the ACO REACH Model is its emphasis on empowering beneficiaries to take an active role in their healthcare. Direct Contracting Entities are encouraged to provide incentives for beneficiaries to engage with their providers. This includes initiatives like:

4. Providing vouchers for over-the-counter medications • Sponsoring meal programs • Offering wellness program memberships, etc. REDUCING PROVIDER BURDEN To meet the healthcare needs of patients more effectively, the ACO REACH Model streamlines the quality measurement process. It requires a smaller set of core quality measures, reducing the administrative burden on healthcare providers. Additionally, it allows waivers to facilitate care delivery, promoting a more patient-centered approach.