ACO REACH Model: Executive Summary and Model Architecture Analysis

1. Executive Summary and Strategic Context

What Is This Model and What Problem Does It Solve?

The Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) Model is an advanced accountable care initiative operated by the CMS Innovation Center (CMMI) under the authority of Section 1115A of the Social Security Act. The model is designed to shift Original Medicare beneficiaries from fee-for-service (FFS) payment into full two-sided risk-sharing arrangements, with the explicit goal of improving quality of care and health outcomes by aligning financial incentives at the point of care delivery.

The problem ACO REACH addresses is structurally foundational: FFS Medicare creates fragmented care delivery in which primary care physicians, specialists, hospitals, and post-acute providers operate in isolation, generating unnecessary repeat diagnostic testing, conflicting treatment plans, and an absence of longitudinal care management. This fragmentation is especially damaging for beneficiaries with multiple chronic conditions and dual-eligible populations, who are simultaneously the highest-cost and highest-need beneficiaries in the Original Medicare program. ACO REACH responds by enabling diverse provider organizations — including primary care practices, specialist groups, health systems, and novel entrant organizations with MA or Medicaid managed care backgrounds — to form ACOs and accept financial accountability for the total cost of care.

The model is a redesign of the Global and Professional Direct Contracting (GPDC) Model, which ran for PY 2021 and PY 2022. The redesign introduced critical governance and oversight reforms, including policies requiring health care provider leadership and beneficiary advocates on ACO governing boards, along with more rigorous participant vetting, monitoring, and transparency requirements. ACO REACH's first performance year began January 1, 2023, and the model runs for four performance years: PY 2023 through PY 2026. CMS is not accepting new applications for the remaining model duration.

As of PY 2026, 74 ACOs are participating, serving beneficiaries in all 50 states, the District of Columbia, and Puerto Rico. At peak, 132 ACOs participated in PY 2023, with approximately 2.0 million beneficiaries aligned, growing to 115 ACOs and approximately 2.5 million beneficiaries in PY 2024, and 100 ACOs and approximately 2.18 million beneficiaries in PY 2025.

Strategic Significance for the VBC Market

ACO REACH is the most consequential advanced risk model currently operating in Original Medicare. Unlike the Medicare Shared Savings Program (MSSP), which defaults to one-sided risk for most participants and uses a shared-savings-only settlement structure, ACO REACH mandates capitation payment mechanisms, requires provider-level claims reductions, and offers both 50% (Professional) and 100% (Global) risk-sharing arrangements. In PY 2024, 103 of 115 ACOs elected the Global (full-risk) option. In PY 2025, 85 of 100 ACOs used Primary Care Capitation (PCC) and 15 used Total Care Capitation (TCC).

The model's financial scale is substantial. In PY 2024, $36.5 billion in total dollars were under risk across all 115 participating ACOs. ACOs generated $2.511 billion in gross savings — a 6.7% gross savings rate relative to retrospective adjusted benchmarks — with net savings to CMS of $988.3 million (2.6%) and net savings to ACOs of $1.522 billion (4.2%). This represents a significant increase from PY 2023, when CMS net savings were $694.6 million and ACO net savings were $948.2 million. Per-beneficiary-per-month gross savings increased 24% between PY 2023 and PY 2024, reaching $88.04 PBPM.

The PY 2021 cohort — the longest-tenured participants — drove performance improvement, accounting for 53% of total ACO savings in PY 2024, with a 6.5% net savings rate. This cohort-based learning effect directly validates the model's hypothesis that ACOs improve performance as they gain experience and refine care management strategies. The PY 2022 cohort achieved a 2.8% net savings rate, and the PY 2023 cohort achieved 2.4%, demonstrating a consistent maturation trajectory.

Political Context and Administrative Alignment

The current Trump administration — with Dr. Mehmet Oz as CMS Administrator and Abe Sutton as CMMI Director — inherited ACO REACH in its final two performance years. The model runs through PY 2026 and is not accepting new entrants, meaning the administration's primary leverage points are PY 2026 financial methodology adjustments and decisions about successor model design.

Starting in PY 2026, CMS implemented an adjusted financial methodology and operational changes to improve model sustainability, driven by findings from the PY 2023 Evaluation Report. The nature of those adjustments — including modification of the benchmark discount for Global ACOs, which in PY 2025 stood at 3.5% (compared to 3% in prior years) — reflects CMMI's effort to ensure the model generates durable CMS savings rather than simply rewarding ACO infrastructure build-out.

The administration's DOGE-influenced focus on fiscal discipline is broadly compatible with ACO REACH's design objective of generating CMS net savings, though the PY 2026 Substance Access Beneficiary Engagement Incentive (BEI) — which permits ACO participants in states where eligible hemp products are legal to consult patients about their use, entirely at participant expense — reflects a policy direction that represents a notable departure from prior CMMI norm-setting and warrants close monitoring.

Market Transformation Implications

ACO REACH is reshaping who can operate as an accountable care entity in Original Medicare. The model explicitly accommodated Management Services Organizations (MSOs), insurers, and primary care companies as lead organizations — not just hospital systems and physician groups. In PY 2023, over one-third of REACH ACOs were led by MSOs, and approximately 75% of all PY 2023 ACOs worked with an MSO in some capacity. This structural reality means that the ACO REACH ecosystem has normalized MSO-intermediated value-based care at scale — a market evolution with direct implications for private equity-backed primary care platforms, health plan-adjacent entities, and risk management companies.

High Needs Population ACOs — serving beneficiaries with HCC risk scores ≥ 3.0, significant frailty markers, or ≥ 90 days of home health in the prior 12 months — represent the model's most clinically ambitious track and consistently deliver superior financial results. In PY 2024, High Needs ACOs achieved a 14.0% net savings rate, compared to 4.2% for Standard ACOs and 8.6% for New Entrant ACOs. This performance differential underscores the financial logic of intensive, home-based, advanced illness-oriented care models for the highest-acuity Medicare population.

The model's geographic footprint — spanning all 50 states and Puerto Rico, with 49 counties each containing more than 10,000 aligned beneficiaries in PY 2023 — means ACO REACH has established the infrastructure for population-scale risk management outside the MA market, directly challenging the assumption that full-risk Medicare is achievable only through an insurance licensure framework.

2. Model Architecture and Payment Structure

Participation Structure and Eligibility

ACO REACH supports three distinct ACO types, each with different eligibility requirements and minimum beneficiary thresholds:

ACO Type	Eligibility Basis	Minimum Beneficiaries (PY 2023)	Minimum Beneficiaries (PY 2026)	Alignment Method
Standard ACO	Prior experience with Original Medicare risk-based contracts or existing FFS Medicare providers	5,000	5,000	Claims-based or voluntary
New Entrant ACO	Limited prior experience with risk-based FFS; may include organizations primarily familiar with MA or Managed Medicaid	2,000	5,000	Primarily voluntary; claims-based also used
High Needs Population ACO	Serves beneficiaries with complex needs meeting High Needs eligibility criteria (HCC ≥ 3.0, frailty markers, etc.)	500	1,250	Claims-based or voluntary

High Needs eligibility criteria for aligned beneficiaries include: HCC risk score ≥ 3.0 (concurrent/prospective Aged and Disabled), HCC ≥ 2.0 and < 3.0 with two or more unplanned admissions in the prior year, signs of frailty based on hospital bed or transfer equipment use, mobility impairment diagnosis codes, ≥ 45 days of SNF services in the prior 12 months, or ≥ 90 days of home health services in the prior 12 months.

Beneficiary alignment occurs through two mechanisms: claims-based alignment (assignment based on the historical primary care utilization pattern) and voluntary alignment (beneficiary actively selects a REACH provider via Medicare.gov or a CMS-approved form). The evaluation excluded Prospective Plus voluntary alignment beneficiaries from impact analyses because that alignment process could not be replicated in comparison group methodology.

As of PY 2023, the model included 133,309 total providers (Participant and Preferred). Standard ACOs accounted for 92% of all Participant and Preferred Providers. The median Standard ACO had 235 Participant practitioners (range: 23–4,408). High Needs ACOs had a median of 115 Participant practitioners, with a notably high concentration of advanced practice providers — nurse practitioners, physician assistants, and other APPs — comprising 74% of High Needs ACO Participant practitioners. Safety net facility participation more than doubled from 420 in PY 2022 to 871 in PY 2023, with FQHCs, RHCs, and CAHs reaching 1,042 facilities by PY 2024.

Providers participating in ACO REACH are classified as either Participant Providers (used for beneficiary alignment and included in quality measure scoring) or Preferred Providers (not used for alignment or quality scoring, but formally contracted into the ACO network to manage referral patterns and cost accountability). Participant Providers are required to accept claims reductions under capitation; Preferred Providers may elect to participate in capitation.

Payment Methodology

ACO REACH uses a capitation-plus-settlement payment framework that is fundamentally different from MSSP's shared-savings-only structure. The model does not replace FFS Medicare — CMS retains responsibility for adjudicating and paying all claims — but it does reduce FFS payments to participating providers and compensates ACOs through capitation payments and settlement.

Risk-Sharing Options:

Track	Shared Savings/Losses	Capitation Options	Discount Applied to Benchmark
Professional	50% of savings and losses	PCC only (with optional APO for non-primary care services)	Lower discount
Global	100% of savings and losses	PCC or TCC	3.5% discount in PY 2025 (3% in prior years)

Capitation Payment Mechanisms:

Primary Care Capitation (PCC): Monthly risk-adjusted payment covering primary care services provided by participating primary care providers. In PY 2025, all Participant Providers were required to take 100% claims reduction under PCC (up from 20–100% in PY 2024, 10–100% in PY 2023, and 5–100% in PY 2022).
Total Care Capitation (TCC): Monthly risk-adjusted payment covering all services — including specialty care — provided to aligned beneficiaries by participating providers. TCC requires 100% fee reduction for Participant Providers.
Advanced Payment Option (APO): Available to Professional risk ACOs under PCC; extends monthly capitation payments to eligible non-primary care services.

In PY 2025, capitation (PCC and TCC combined) accounted for 2.71% of the total performance year benchmark across all 100 ACOs — meaning 97.29% of Medicare payments to aligned beneficiaries were not impacted by capitation. This illustrates that ACO REACH capitation is structurally narrower than MA capitation. Approximately 97.55% of capitation dollars in PY 2025 were spent on Medicare Covered Services, with approximately 2.45% available for practice infrastructure and care innovation.

Benchmark and Settlement:

The Performance Year Benchmark is constructed using historical claims, risk adjustment, and retrospective trend adjustments. For PY 2025, the average PBPM benchmark across all 100 ACOs was approximately $1,361. The Global risk option benchmark is subject to a 3.5% discount (applied in PY 2025 data), ensuring CMS captures the first tranche of savings from Global ACOs before net settlement. 95% of PY 2024 CMS net savings were attributable to this 3% discount mechanism applied to Global track ACO benchmarks.

The quality withhold reduces the ACO benchmark; ACOs earn back withhold amounts based on quality performance. In PY 2024, the quality withhold net of High Performance Pool payouts reduced CMS payouts by $56.7 million.

Financial Operating Data by Performance Year:

Performance Year	ACO Count	Aligned Beneficiaries	Total Dollars Under Risk	Reduction vs. Benchmark	Net Savings to CMS
PY 2021 (partial, Apr–Dec)	53	338,938	$3.51 billion	1.7%	$70.4 million
PY 2022	99	1.73 million	$23.31 billion	2.3%	$371.5 million
PY 2023	132	1.92 million	$27.53 billion	3.6%	$694.6 million
PY 2024	115	2.38 million	$36.54 billion	4.35%	$988.3 million
PY 2025 (full year, preliminary)	100	2.18 million	$35.54 billion	4.04%	Not yet final

Performance Measures and Quality Requirements

ACO REACH uses a pay-for-performance quality system beginning in PY 2023 (prior years were pay-for-reporting for most measures). Quality performance directly affects benchmark calculation and financial settlement.

Claims-Based Quality Measures by ACO Type:

Measure	Standard ACOs	New Entrant ACOs	High Needs ACOs
All-Condition Readmission (ACR) within 30 days	✓	✓	✓
Unplanned Admissions for Patients with Multiple Chronic Conditions (UAMCC)	✓	✓	✓
Timely Follow-Up (TFU) after hospitalization	✓	✓	—
Days at Home (DAH) for adults with complex, chronic disease	—	—	✓

CAHPS beneficiary experience surveys are also a component of quality measurement across all ACO types.

The Total Quality Score (TQS) is reported on a 0–100% scale. In PY 2024, the average TQS was 80.4% for Standard and New Entrant ACOs (up from 78.6% in PY 2023) and 86.2% for High Needs ACOs (down slightly from 86.7%). 21 of 115 ACOs achieved a TQS of 100% in PY 2024. The share of ACOs meeting Continuous Improvement/Sustained Exceptional Performance (CI/SEP) criteria increased from 55.3% in PY 2023 to 87.83% in PY 2024.

High Performers Pool (HPP): Introduced in PY 2023, the HPP provides a shared savings bonus to ACOs that meet CI/SEP criteria and achieve average measure performance at or above the 70th percentile across all applicable claims-based measures. In PY 2024, 49 of 115 ACOs (42.61%) qualified for HPP bonuses — up from 18.18% in PY 2023.

PY 2025 Quality Performance (Q3 trailing data):

Measure	REACH ACO Performance	Non-REACH Benchmark	Statistically Significant?
ACR (lower = better)	15.41%	15.43%	No
UAMCC (lower = better)	30.60 per 100 person-years	33.46	Yes — REACH significantly better
TFU (higher = better)	77.14%	74.02%	Yes — REACH significantly better

The UAMCC and TFU advantages have been sustained across all performance years with statistical significance, while ACR performance has been directionally neutral relative to non-REACH comparison populations.

Timeline and Model Lifecycle

Milestone	Date
GPDC Model launch	April 1, 2021
GPDC PY 2021 (partial year)	April–December 2021
GPDC PY 2022	January–December 2022
ACO REACH PY 2023 begins	January 1, 2023
ACO REACH PY 2024	January 1 – December 31, 2024
ACO REACH PY 2025	January 1 – December 31, 2025
ACO REACH PY 2026 (final year)	January 1 – December 31, 2026
PY 2026 adjusted financial methodology effective	January 1, 2026
Substance Access BEI available	PY 2026
Model closes; no new applications accepted	Ongoing
3rd Evaluation Report released (covering PY 2023)	July 2026
PY 2024 Financial and Quality Results released	July 9, 2026

PCC minimum claims reduction progression:

Performance Year	PCC Minimum Claims Reduction
PY 2021	1–100%
PY 2022	5–100%
PY 2023	10–100%
PY 2024	20–100%
PY 2025	100% (mandatory)

This ratcheting structure reflects CMS's progressive tightening of capitation requirements, pushing ACOs toward full claims-risk internalization. Coupled with the increasing Global discount rate (now 3.5% in PY 2025), the model is structurally designed to increase CMS savings capture as participant experience deepens — a design logic directly relevant to any successor model evaluation.

Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH)

Model Summary