Policy Update: Direct Contracting Is Now ACO REACH

March 3, 2022

Direct Contracting Is Now ACO REACH
Direct Contracting was a model started under the Trump administration that sought to attract companies that exclusively operated in Medicare Advantage into traditional Medicare. In successfully attracting some of those companies, Direct Contracting also pulled some of the Medicare Advantage baggage in with it. This led Senator Elizabeth Warren (D-MA) and Representative Pramila Jayapal (D-WA) to link Direct Contracting to the “privatization” of Medicare. These criticisms were not accurate and CMS stood with the value-based health care movement and rebranded Direct Contracting into the ACO Realizing Equity, Access, and Community Health (REACH) Model. 

In addition to rescuing Direct Contracting from politics, for the time being, CMS also made four significant changes to ACO REACH. 


  1. Allows new organizations to join for 2023
  2. Increased physician governance from 25% to 75%
  3. Further limited risk adjustment changes so that the program and individual ACOs are protected from large shifts due to risk adjustment
  4. Health equity bonuses to benchmarks up to 1% of total cost of care

Other Direct Contracting provisions continue. Most practices will do far better under the much more stable Medicare Shared Savings Program. We are evaluating the program carefully for those who may be the exceptions. 
Round 4 PRF Updates
HHS is still working on processing all round 4 PRF applications but still has about 15% of applications submitted in October 2021 left to process. As such, some practices who applied for round 4 saw these funds hit their bank account late last week. Practices should sign in to the portal to attest to having received the funds (if any practice wishes to return or reject the payment it is also done through the portal). Practices who keep the funds will have until Dec 31, 2022 to use them and will be required to report on their use by March 31, 2023.
As a reminder, what these funds can be used for is pretty broad. Most recently, HHS released a flyer stating that the funds can be used to recruit and retain personnel.
Primary Care First Webinar
In February, our team hosted a webinar for Primary Care First practices to review key requirements and deadlines as well as review how the ACO work you’re already doing aligns with the work you will need to do to be successful in PCF. Click here to access the recording and slides.
Aledade Comments on MA Advance Notice 
CMS published the Advance Notice of Methodological Changes for Calendar Year 2023 for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies on February 2, and in addition to including the proposed payment policies, this year’s Advance Notice outlined clear intentions to pave a path for health equity and value in Medicare Advantage (MA) in the coming years.
Many of the proposed health equity elements as well as a proposal to develop a measure around value-based care in MA are in the Request for Information stages and will likely take years to come to fruition, in future rulemaking. Aledade’s primary recommendations to CMS centered on:

  • Supporting stratifying measures in Star ratings using existing stratification data and reporting out adjusted Stars ratings on CMS.gov; 
  • Commending the agency’s goal to develop and implement a Health Equity Index to summarize measure-level performance by social risk factors into a single score;
  • Urging CMS to outline a clear strategy to be able to move from assessing MA plans’ beneficiaries’ social needs to measuring health outcomes; and 
  • Supporting the development of a value-based care measure to capture the arrangements MA organizations have with providers, including how plans are aligning incentives with their providers so that they are rewarding better value over volume. 

 We will send out the link to our full comments + a blog summarizing them in the coming days. 
Thank you for everything you are doing and please stay safe.