1. Executive Summary and Strategic Context

ACO REACH is a voluntary accountable care model running from January 1, 2023 through December 31, 2026 (4 performance years), with 103 participating REACH ACOs. Redesigned from the Global and Professional Direct Contracting (GPDC) Model (PY 2021-2022), ACO REACH provides novel tools for healthcare providers to collaborate in ACOs serving Original Medicare beneficiaries, with an explicit focus on health equity, access, and community health.

Starting in PY 2026, ACO REACH implements significant changes including an adjusted financial methodology and operational updates based on PY 2023 evaluation findings. The model represents CMS's most advanced accountable care design, incorporating prospective capitation options, risk-sharing arrangements, and health equity requirements that go beyond MSSP's framework.

1.1 Strategic Significance

ACO REACH is the terminal year model for the direct contracting lineage. CMS has not announced a successor model or extension beyond PY 2026. Organizations currently participating in ACO REACH must plan for transition - likely into MSSP, a new CMMI model, or return to fee-for-service. The PY 2026 financial methodology adjustments signal CMS's evolving thinking about sustainable ACO risk-sharing design. The Substance Access Beneficiary Engagement Incentive added for PY 2026 reflects growing focus on substance use disorder integration.

2. Model Architecture

2.1 Regulatory Framework

Authority: Section 1115A of the Social Security Act.

Performance Years: PY 2023 through PY 2026 (January 1, 2023 - December 31, 2026).

Participants: 103 REACH ACOs as of 2025 (per quarterly transparency report).

Predecessor: Redesigned from GPDC Model (PY 2021-2022).

2.2 ACO Types

REACH ACOs can be formed by diverse provider types including primary care physicians, specialist physicians, hospitals, FQHCs, and other Medicare-enrolled entities. This broader participation base distinguishes ACO REACH from MSSP's historically physician-group-dominated composition.

2.3 Risk Arrangements

ACO REACH offers more aggressive risk-sharing options than MSSP, including:

Professional Capitation: Prospective, per-beneficiary-per-month payments covering Part B professional services. ACOs receive fixed revenue and manage utilization within that budget.

Global Risk: Full upside and downside risk on total cost of care, with stop-loss protections for catastrophic cases.

Retrospective Reconciliation: Traditional shared savings/losses calculation similar to MSSP but with different benchmark methodology.

2.4 Health Equity Requirements

ACO REACH requires participants to develop and implement health equity plans addressing disparities in access, outcomes, and patient experience. Equity-related quality measures influence performance scores and financial reconciliation. This requirement goes beyond MSSP's health equity adjustment, mandating active intervention rather than passive payment modification.

3. PY 2026 Updates

3.1 Adjusted Financial Methodology

Based on PY 2023 evaluation findings (previewed in evaluation report), CMS has adjusted ACO REACH financial methodology for PY 2026 to improve model sustainability. Specific changes include revised benchmark calculations, modified risk adjustment approach, and updated shared savings/loss rates.

3.2 Substance Access Beneficiary Engagement Incentive

New for PY 2026: REACH ACOs can implement beneficiary engagement incentives specifically targeting substance use disorder access and treatment. This aligns with broader Administration priorities on addiction treatment and reflects the high prevalence of substance use disorders among Medicare beneficiaries.

3.3 Evaluation Findings

The PY 2023 evaluation report preview identified both successes and challenges. CMS's methodological adjustments for PY 2026 respond to identified issues including benchmark accuracy, risk selection concerns, and equity measure effectiveness. The full evaluation report provides detailed analysis of spending, utilization, quality, and equity outcomes.