ACOs unsure about health equity adjustment to REACH model

Accountable care organization participants aren’t convinced the new ACO REACH health equity benchmark adjustment is going to move the needle and enhance care for beneficiaries in underserved communities.ACO industry watchers agree the policy is a good start, but many believe regulators will have more success driving health equity if they adopt an adjustment that isn’t budget-neutral and alter how the adjustment is calculated.

“It’s definitely a step in the right direction, but I don’t think anyone’s seeing it as a real game changer and some of the uncertainty raises some concern,” said Aisha Pittman, vice president of policy at Premier.

The Center for Medicare and Medicaid Innovation unveiled the ACO Realizing Equity, Access, and Community Health model in February as a replacement for the Global and Professional Direct Contracting model.

ACO REACH includes several novel policies meant to advance health equity, including offering an extra $30 per beneficiary per month to ACOs serving the neediest 10% of enrollees. That upside adjustment is offset by a $6 downward adjustment for treating the 50% least-underserved beneficiaries.

CMMI will identify underserved beneficiaries as those living in socioeconomically disadvantaged neighborhoods, as measured by the Area Deprivation Index, who are eligible for Medicaid.

CMMI believes the adjustment has the potential to advance health equity, a Centers for Medicare and Medicaid Services spokesperson wrote in an email.

Southwestern Health Resources ACO based in Farmer’s Branch, Texas, currently participates in the direct contracting program and plans to move into ACO REACH next year. Southwestern Health Resources ACO was drawn to the new model in part because it focuses on health equity, said Christy Cawthon, the ACO’s vice president of medical economics.

But Cawthon doesn’t think the benchmark adjustment will adequately compensate Southwestern Health Resources to expand into underserved communities. The ACO needs extra help to care for beneficiaries in the top 20% or even 30% most disadvantaged areas, she said. And CMMI should be careful about how it evaluates the adjustment, since costs might go up in the first year as new beneficiaries enter the system and get caught up on missed care, she said.

“We want to make sure that the right infrastructure is put in by both sides, that it’s not a zero-sum approach,” Cawthon said. “CMMI may need to invest a little bit more. Providers may need to invest a little bit more.”

CMMI could make the adjustment more effective if it created an a financial add-on to encourage investment in certain underserved regions, said Melanie Matthews, CEO of PSW, an ACO based in Olympia, Washington.

Extending accountable care models into underserved communities brings significant costs that ACOs themselves are unwilling or unable to shoulder, and $30 might not be enough, said David Ault, a lawyer at Ropes & Gray and former CMMI division director.

“If you’re not in underserved communities, you’re not going to go into underserved communities. You’re not going to be encouraged or incentivized. If you’re already going into underserved communities, well, you didn’t need the incentive anyway,” Ault said.

The $30 is an initial first step and may be updated as data are collected, the CMS spokesperson wrote. CMMI chose that amount to balance the need to create incentives for ACOs in underserved areas with limiting the effects of the downward adjustment.

But the $6 downward adjustment for treating patients outside of the most underserved decile could also work against CMMI’s goal to get all Medicare beneficiaries into accountable care relationships by 2030, said Mara McDermott, vice president at McDermott+Consulting.

The agency made an understandable policy choice to establish a budget-neutral health equity adjustment, McDermott said. Still, that might result in participants dropping out, she said.

“I worry that people look at this and they say, ‘Why would I take a nominal decrease on a very risky model, when I can either sit it out altogether or go into a less risky model with no nominal decrease?'” McDermott said.

Eliminating the budget neutrality requirement could solve this problem, said David Pittman, senior policy advisor at the National Association for ACOs.

But ditching budget neutrality raises questions about how to make the model cost-effective.

CMMI tests out new healthcare delivery systems within Medicare and Medicaid to improve health and lower costs. CMMI models need to either reduce spending without worsening quality or improve quality without raising costs in order to be expanded beyond their test periods.

“We understand it’s difficult to try to thread this needle between helping these underserved patients but also creating models that save money and meet their criteria. It’s just a difficult task,” David Pittman said.

Some ACO watchers also want CMMI to modify how it will determine what constitutes an underserved area. The Area Deprivation Index is a useful tool for certain areas of the country, but national deciles in particular obscure disparities in specific locations, said Dr. Louisa Holaday, a primary care physician and researcher at the Icahn School of Medicine at Mount Sinai Hospital in New York. No neighborhoods in Washington, D.C., fall into the top decile of underserved areas, for example.

Holaday argued that supplementing the Area Deprivation Index with the Centers for Disease Control and Prevention’s small area life expectancy estimates could provide CMMI with greater insight.

CMMI reviewed a lengthy list of potential measures for the adjustment and chose the Area Deprivation Index in part because it correlates with other measures of interest, such as rurality, according to the agency’s request for applications. CMMI may add variables to the formula before the 2023 performance year, the CMS spokesperson wrote.

Stakeholders also have questions about how the benchmark adjustment will interact with the model’s risk score growth cap, Ault said. ACO REACH limits participants’ overall risk score growth to 3% a year, but ACOs moving into disadvantaged neighborhoods could hit that cap quickly.

Tweaks to the policy may arrive when CMMI reveals details about the model, which is expected to happen this summer. Modifications could also occur in subsequent performance years based on feedback from stakeholders. “To some degree, this is all models, right? They’re never perfect,” McDermott said.

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