How the ACO REACH Model Can Maximize Provider Profits

The statements contained in this document are solely those of the authors and do not necessarily reflect the views or policies of CMS. The authors assume responsibility for the accuracy and completeness of the information contained in this document.

By: Bill Lane, EVP Network Development & Global Risk Contracting

As the U.S. population ages and healthcare costs increase, Medicare spending is projected to rise from 10% of total federal spending in 2021 to 18% in 2032. The Centers for Medicare & Medicaid Services (CMS) is looking for new ways to improve care while managing costs.

As part of the CMS long-term strategy, they want all Medicare beneficiaries to participate in value-based care programs by 2030. CMS also developed the CMS Innovation Center to develop and test different payment and care-delivery models to lower costs and improve patient outcomes. The Accountable Care Organization Realizing Equity, Access and Community Health (ACO REACH) model is focused on improving healthcare equity to underserved beneficiaries while lowering costs and improving outcomes. ACO REACH accomplishes this through coordinated, value-based care across the healthcare landscape, from primary care to hospitals.

How the ACO REACH model works

The ACO REACH model was designed to incentivize providers to be more cost-efficient while providing quality care. It was designed to deliver coordinated, value-based care to underserved communities. It also helps improve patients’ overall outcomes and decreases costs. An ACO REACH organization manages the cost of care for Traditional Medicare beneficiaries who are taking part in this model. CMS pays the ACO REACH management team for the estimated cost of care for beneficiaries that year.The ACO REACH team then pays the providers. If there are savings left over from the CMS estimate, the ACO REACH group and the providers split the remaining money.

For example, let’s say CMS pays ilumed, an ACO REACH organization, $10 million to care for 1,000 beneficiaries. If ilumed and our provider partners spend only $8 million while still meeting CMS’s quality metrics, they get to split the remaining $2 million as a reward for being good stewards of CMS funds and their patients’ healthcare. It’s a win-win for everyone involved.

The model works in two different ways:

Professional: CMS pays the ACO REACH group for Part B costs, which are the primary care costs only. This is a lower-risk model for ACO REACH organizations and there’s no risk for providers in this network. The lower risk also provides a lower reward for both parties.

Global: CMS pays the ACO REACH entity for both Part A and Part B costs, including hospital and primary care costs. This is the higher risk model for ACO REACH organizations; providers in the model have no risk. The upside to higher risk is that it also comes with a higher reward for both the ACO REACH organization and their providers. Ilumed operates under the global-risk model.

The ACO REACH payment model

The ACO REACH model allows more flexibility and creativity in how providers are paid compared to CMS. In Traditional Medicare, providers are paid for every service and treatment separately (fee for service). Providers also get paid after services are performed, causing a delay in payment. They could be motivated to offer unnecessary services or tests to make more money.

In the ACO REACH model, providers can earn up to three payments.

1. An upfront monthly payment per beneficiary, called a capitation rate. This payment method comes with a few perks, including:

– A more sustainable and reliable method for providers to get paid.

– Predictable monthly cash flow that helps pay for day-to-day operations or can be used to invest in their practice.  

– Typically, providers receive more money than CMS offers for traditional fee-for-service payments.

While there are a lot of benefits, it isn’t a free ride for providers. They’re monitored on an ongoing basis to ensure they’re providing quality care to patients.

2. Quality bonuses, which are bonuses based on patient outcomes. When the patient has improved outcomes, providers get a bonus for high-quality care. When the patient flourishes, so does the provider.

3. Shared surplus savings. As mentioned before, the ACO REACH organization and provider split any unused funds at the end of the year. Providers who offer cost-effective, quality care are rewarded for their hard work.

ACO REACH is the greatest opportunity for providers to deliver the highest level of care at the most efficient cost. And with this model, providers not only have a reliable, consistent income, but they have an opportunity to exceed their financial expectations when they act in their patients’ best interests.

How ACO REACH helps reduce costs and improve care quality

The cost of visiting an emergency room for common health issues is about 12 times higher than a visit to the primary care doctor. These unnecessary ER visits cost the system $32 billion a year. The ACO REACH program can help reduce some of these avoidable ER trips by improving communication and coordination between patients and providers.

Using this model, ilumed helps to do this in several ways, including:

– Having in-network providers see patients at least once per quarter, to stay on top of healthcare issues.

– Coaching providers to offer last-minute openings so patients can see their provider when they need to.

– Providing a patient outreach team who can help if patients are having scheduling issues or problems getting into the doctor. The team also helps patients with their treatment needs at home.

ilumed also provides additional benefits that are not included with Traditional Medicare.

ilumed’s patient benefits:

– Transportation services for provider appointments.

– Assistance with scheduling provider appointments.

– Support if they’re experiencing issues like food insecurity, housing problems or loneliness. illumed can help with food delivery, financial assistance and more.   

– $0 copays for primary care visits, compared to about 20% of the total cost for Traditional Medicare beneficiaries.

ilumed’s provider benefits:

1. BrainStream, ilumed’s proprietary analytics platform, offers a 360-degree view of patients by analyzing all Medicare claims data and other indexes to pinpoint the most at-risk cases.

2. Real-time notifications when a patient is admitted to the hospital.

3. 24/7 support teams that help both providers and patients, including:

– An outreach team that assists patients with scheduling appointments and transportation.

– Social workers who connect patients to local community resources when needed.

– A case-management team that helps patients with chronic conditions stick to their treatment plans.

4. Plus, a support team to transition patients from the hospital to step-down care, whether that’s at home or in a skilled nursing facility.

Why ACO REACH is better than ACO

There are several reasons ACO REACH works better than Accountable Care Organizations (ACOs):

1. Providers are evaluated individually, not as a group. In the standard ACO care model, all providers are evaluated as a group for reporting purposes. That means top-notch providers can be dragged down by middling providers. While in the ACO REACH model, each provider is evaluated individually. Great providers can have their work recognized.

2. Only upside for providers. For most ACOs, providers take on risk and reward. With the ACO REACH model, the ACO REACH entity takes on the risk, not providers. Providers have no risk, only reward.

3. Greater transparency. With ilumed, there’s a higher degree of transparency from day one.We give providers an itemized list at both the contract and entity level so they can see the value and how it works for them.  

ilumed should be your ACO REACH entity

Not all ACO REACH organizations are created equally. ilumed has designed a team with unparalleled experience in managing global risk. Before coming to ilumed, our CEO Debbie Finnel ran the largest publicly traded global risk-management service for Humana. Our clinical team is led by providers with extensive experience in managing the cost of care and who understand how to mitigate global risk. We’ve taken what we’ve learned in the Medicare Advantage space and applied it to Traditional Medicare to level up our ACO REACH program.

The future of healthcare is changing with a huge government push toward value-based care. If you’re not working to lower costs while providing quality care, you’re dying. ilumed has been on the cutting edge of the healthcare industry. Contact us now to discover how we can help you succeed.

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