CMS changing direct contracting to an ACO gets mixed reaction


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The Centers for Medicare and Medicaid Services has redesigned its Medicare Direct Contracting Model to an Accountable Care Organization model focused on health equity.

The ACO Realizing Equity, Access, and Community Health (REACH) Model will replace the Global and Professional Direct Contracting (GPDC) Model at the end of the year.

The new ACO REACH Model will require all participating ACOs to have a robust plan describing how they will meet the needs of people with traditional Medicare in underserved communities and make measurable changes to address health disparities. This includes greater access to enhanced benefits, such as telehealth visits, home care after leaving the hospital, and help with copays, CMS said. 

CMS said it would use an innovative payment approach to better support care delivery and coordination for people in underserved communities.

REACH ACOs can include primary and specialty care physicians. 

CMS said it would operate the GPDC Model until the end of the year, with more robust and real-time monitoring of quality and costs for model participants. Those entities restricting medically necessary care will face corrective action and potential termination from the model, CMSsaid.

The first performance year of the redesigned ACO REACH Model will start on January 1, 2023, and the model performance period will run through 2026. 

CMS is releasing a Request for Applications for provider-led organizations interested in joining. Current participants in the GPDC Model must agree to meet all the ACO REACH Model requirements by January 1, 2023 to participate.

CMS is also canceling the Geographic Direct Contracting Model effective immediately. The Geographic Direct Contracting Model, which was announced in December 2020, was paused in March 2021 in response to stakeholder concerns.

Both models were being tested by the CMS Innovation Center.


The Global and Professional Direct Contracting Model was controversial because opponents, including progressive Democrats, believed it would lead to the privatization of Medicare.

Physicians for a National Health Program, an organization of 25,000 doctors who support Medicare for All and oppose Medicare privatization, have rejected the ACO REACH model, as it did the GPDC.

“ACO REACH is Direct Contracting in disguise,” said Dr. Susan Rogers, an internal medicine physician and president of PNHP. “This new model doubles down on Direct Contracting’s fatal flaws, inserting a profit-seeking middleman between beneficiaries and their providers. ACO REACH will pay middlemen a flat fee to ‘manage’ seniors’ health, allowing them to keep 40% of what they don’t spend on care as profit and overhead.”

PNHP objections include the potential for middlemen to restrict patient care and the fact that traditional Medicare beneficiaries will still be automatically enrolled into ACO REACH entities, as they were with direct contracting, without their consent. Once enrolled they cannot cannot opt out unless they change primary care providers, PNHP said. 

Also, companies that can participate include private equity investors and other profit-seeking firms that are ultimately accountable to investors, the organization said. 

Others applauded CMS’s redesign.

The National Association of ACOs president and CEO Clif Gaus said, “Many of the criticisms against Direct Contracting were a product of great misunderstanding about the model and the overall shift to value-based payment. Instead, keeping the model with additional focus on equity, increased provider governance, improvements to risk adjustment, and other changes is best moving forward.”

Premier said, “The redesigned model improves upon the earlier iteration of Medicare Direct Contracting by ensuring that healthcare providers are in the driver’s seat. ACO REACH includes several updates for which Premier has long advocated including reducing discounts to ensure providers have adequate payment under the Global track, reducing the quality withhold and applying consistent methodologies and policies across participants to ensure healthcare providers have the same opportunity to participate as non-providers.”

Also, CMS has built into the payment methodology a mechanism to address equity by applying a beneficiary-level adjustment that will increase the benchmark for those ACOs serving higher proportions of underserved beneficiaries, Premier said. 


The ACO REACH Model builds on CMS’ ten years of experience with accountable care initiatives, such as the Medicare Shared Savings Program, the Pioneer ACO Model and the Next Generation ACO Model, CMS said.

Twitter: @SusanJMorse
Email the writer: [email protected]


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