A Medicare value-based care payment pilot is set to end Dec. 31, 2026, and health organizations are trying to figure out what to do about it.
What’s now called the ACO Realizing Equity, Access, and Community Health (ACO REACH) model was launched in 2021 under a different name by the Centers for Medicare and Medicaid Service (CMS) Innovation Center.
The model is a new format of an accountable care organization (ACO), a group of hospitals and healthcare professionals that work together to provide value-based care to patients with traditional Medicare. These organizations receive monetary bonuses or penalties if they save Medicare money based on historical or expected expenses. They do this through approaches like ensuring patients get primary care and reducing unnecessary treatments and tests.
The 161,765 providers within 103 ACOs participating in ACO REACH will have to decide whether to transition to another ACO model or exit the program altogether if it ends. The National Association of ACOs is lobbying for an extension, but CMS has not said whether that will happen.
“There’s a big question mark right now,” Lauren Makhoul, a healthcare regulatory consultant, told us.
Why does this matter? ACO REACH is significant because it focuses on health equity, requiring participating ACOs to make and follow an equity plan to reduce care disparities for underserved communities.
It’s also the first CMS Innovation Center model to include a track dedicated to high-needs Medicare patients, meaning patients with one or more chronic conditions that impact mobility, Makhoul said.
This track, along with a different risk adjustment structure and other flexibilities for things like telehealth and home visits, made it easier for smaller high-needs-focused provider groups to join an ACO, Makhoul said. For instance, high-needs ACOs only need 1,000 traditional Medicare beneficiaries in 2025 to participate in ACO REACH. Organizations in CMS’s permanent and biggest ACO program, the Medicare Shared Savings Program (MSSP), must have 5,000+ Medicare fee-for-service beneficiaries.
“There are many smaller, very focused, more niche provider groups that serve a much higher-need population,” Makhoul said. “[ACO REACH] made it possible for these folks to participate when they otherwise would not have been able to.”
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In 2023, ACO REACH organizations were accountable for 2+ million patients, about half of them new to the model, according to CMS.
The 14 high-needs ACOs, though only accountable for 21,600 of those patients, averaged a 13.3% net savings rate in 2023 compared to a 2.8% net savings rate for standard ACOs, preliminary CMS data shows.
What’s next? If ACO REACH ends as planned, participating ACOs could try switching to the MSSP, which in 2025 has 476 ACOs with 655,725 healthcare providers and organizations providing care to 11.2+ million.
Both ACO REACH and the MSSP come with the possibility of great risk and reward, though.
CMS doled out $4.1 billion in bonus payments to 75% of ACOs in the MSSP in 2024. But 16 ACOs owed a total of $20.3 million to make up for costing Medicare more money compared to past years, per CMS.
ACO REACH data from 2023 shows $948.4 million in savings for participants, but 36 of them—27% of participating ACOs—saw net losses, per CMS.
Switching from ACO REACH to the MSSP would likely still be “destabilizing” to participating healthcare systems and physician practices, Bartley Bryt, chief medical officer of Privia Health, a physician support company that manages nine ACOs known collectively as the Privia Quality Network, told us.
The programs differ in structure, quality measures, and cost targets, he said.
“Business processes—both for physician practices as well as the administrative side of the business—you’ve got to change them,” he said. “That takes time, energy, and money.”
Research coauthored by Makhoul for a former employer, healthcare consulting and advisory firm Avalere Health, suggests ACOs serving high-acuity patients can also perform well in the MSSP.
Though every ACO is different, those that saw the biggest savings per patient in the MSSP served similar populations to high-needs ACOs within REACH. They had a higher proportion of beneficiaries who were dual eligible for Medicare and Medicaid and aged 85+.
“Based on the entities that are in MSSP that look the most similar to the high-needs ACO, [success] is possible,” she said.