Cut through the noise, find the signal: Intelligence for serious healthcare leaders
The ACO REACH Model (Accountable Care Organization Realizing Equity, Access, and Community Health) is an advanced, full-risk accountable care initiative operating under the CMS Innovation Center (CMMI) authorized by Section 1115A of the Social Security Act. The model's core design premise is that the fragmentation of Original Medicare's fee-for-service (FFS) delivery system produces redundant diagnostic testing, conflicting treatment plans, and inadequate care coordination—particularly for beneficiaries managing multiple chronic conditions. REACH ACOs are assembled coalitions of primary care physicians, specialists, hospitals, and other providers who formally accept financial risk tied to the total cost and quality of care for their aligned Medicare beneficiaries.
ACO REACH is a direct evolution of the Global and Professional Direct Contracting (GPDC) Model, which ran for two performance years (PY 2021–PY 2022). CMS redesigned and renamed the program as ACO REACH effective January 1, 2023, with the model scheduled to run for four performance years through PY 2026. The redesign added critical provider governance requirements—specifically, beneficiary advocates on ACO governing boards—and strengthened participant vetting, monitoring, and transparency obligations that the GPDC Model lacked.
The model offers participating beneficiaries tangible care delivery improvements: help navigating the health system, enhanced care coordination across provider types, and access to expanded benefits including telehealth visits, post-discharge home visits, care management home visits, and skilled nursing facility (SNF) 3-day rule waivers. It also allows ACOs to offer beneficiary engagement incentives (BEIs) such as chronic disease management rewards and cost-sharing support for Part B services.
ACO REACH represents the highest-acuity, highest-risk tier of CMS's accountable care portfolio. Unlike the Medicare Shared Savings Program (MSSP), which allows ACOs to remain in one-sided risk arrangements for extended periods, ACO REACH requires all Participant Providers to accept capitation from their first year of participation, with minimum claims reduction percentages escalating annually—from 10% in PY 2023 to 100% in PY 2025 for Primary Care Capitation participants. This design philosophy places REACH squarely in the category of "advanced" alternative payment models (APMs) under MACRA.
The model's financial scale underscores its market weight. In PY 2024, 115 ACOs generated $2.511 billion in gross savings against retrospective benchmarks, representing a 6.7% gross savings rate. Net savings to CMS reached $988.3 million (2.6%), while net savings to ACOs totaled $1.522 billion (4.2%). The model covers approximately 2.5 million beneficiaries across all 50 states, the District of Columbia, and Puerto Rico, with $36.5 billion in total dollars under risk in PY 2024. These figures make ACO REACH one of the largest risk-based payment reform models ever tested by CMMI.
For health system executives and ACO leaders, the model's cohort performance data provides critical strategic intelligence. The PY 2021 cohort—the most experienced participants—generated $758.5 million in net savings at a 6.5% net savings rate in PY 2024, compared to a 2.4% net savings rate for the PY 2023 cohort. This experience curve effect is a defining feature of the model: ACOs that entered earliest have optimized their care management approaches, provider engagement strategies, and population health infrastructure over multiple years, creating a compounding performance advantage.
The emergence of Management Services Organizations (MSOs) as the dominant organizational form within ACO REACH is a signal that should not be overlooked by health system strategists. In PY 2023, MSOs led more than one-third of all REACH ACOs, and approximately 75% of all participating ACOs worked with an MSO in some capacity. MSOs function as the operational backbone for otherwise unaffiliated independent physician networks, providing population health analytics, actuarial support, and care management infrastructure. Health systems that have not yet developed robust MSO capabilities—or that have not established MSO partnerships—face a competitive disadvantage in recruiting independent physicians into value-based arrangements.
High Needs Population ACOs achieved a 14.0% net savings rate in PY 2024, the highest of any ACO type, compared to 8.6% for New Entrant ACOs and 4.2% for Standard ACOs. This performance differential reflects both the higher baseline spending of their complex beneficiary populations (creating greater opportunity for savings) and the intensity of care management programs these ACOs deploy, including PACE-like care models and home-based primary care.
ACO REACH is a Biden-era program that launched under former CMS Administrator Chiquita Brooks-LaSure in 2023. The model now operates under the Trump administration's CMS leadership, including Administrator Dr. Mehmet Oz and CMMI Director Abe Sutton. The current administration has not terminated ACO REACH, and the program is proceeding through its final performance year, PY 2026, with announced methodology changes and new benefit innovations.
The PY 2026 updates—including an adjusted financial methodology informed by the PY 2023 Evaluation Report findings—signal that the Trump-era CMMI leadership has accepted the model's core architecture while refining its financial sustainability. The introduction of the Substance Access Beneficiary Engagement Incentive (BEI) in PY 2026, which allows participating ACOs to counsel patients about eligible hemp products (funded entirely at the participant's expense, available only in states where such products are legal), reflects the new administration's comfort extending beyond traditional Medicare benefit structures—a philosophically notable departure from prior CMS conventions.
Critically, ACO REACH is not accepting new applications for the remaining model duration, meaning PY 2026's 74 ACO participants represent a closed, final cohort. Any organization not currently participating cannot enter the model. Strategic decision-making must therefore pivot toward determining the successor landscape—whether ACO REACH transitions into a permanent program, is succeeded by a next-generation model, or is absorbed into an expanded MSSP framework.
The NORC evaluation's PY 2023 findings reveal meaningful quality improvements alongside a nuanced spending picture. Standard ACOs achieved significant gross spending reductions in PY 2023, with dually eligible beneficiaries and those with more chronic conditions seeing the largest spending reductions. However, net Medicare spending increased for Standard ACOs in PY 2023 after accounting for shared savings payouts—a pattern that reflects the model's deliberate front-loading of infrastructure investment and the benchmark-setting methodology's current structure.
The model has catalyzed measurable changes in care delivery infrastructure. The number of safety net facilities—FQHCs, rural health centers, and critical access hospitals—more than doubled from 420 in PY 2022 to 871 in PY 2023, with ACOs with at least one safety net facility in their networks growing from one-quarter to nearly one-third of participants. This expansion represents a structural shift in how safety net providers are integrated into risk-bearing arrangements.
The Timely Follow-Up (TFU) measure demonstrates the clearest quality signal: REACH ACO participants posted a 77.14% TFU rate in Q3 PY 2025 versus 74.02% for non-REACH ACO TINs, a statistically significant difference. The UAMCC score (unplanned admissions for patients with multiple chronic conditions) shows consistent statistically significant improvement: 30.60 for REACH ACOs versus 33.46 for non-REACH TINs in Q3 PY 2025. These gains on the specific metrics tied to the model's financial incentives confirm that the payment design is successfully redirecting clinical behavior.
ACO REACH organizes participants into three distinct ACO types, each with different eligibility requirements, minimum beneficiary thresholds, and care model expectations.
| ACO Type | Eligibility Criteria | Min. Aligned Beneficiaries (PY 2023 → PY 2026) | Alignment Methods | Key Characteristics |
|---|---|---|---|---|
| Standard ACO | Prior experience serving Original Medicare; may include former MSSP, NGACO, or Pioneer ACO participants; new provider organizations with existing Original Medicare experience also eligible | 5,000 (stable across PYs) | Claims-based and voluntary | Largest ACO type (80% of PY 2023 participants); broad primary and specialty care networks |
| New Entrant ACO | No traditional experience serving Original Medicare population; may rely primarily on voluntary alignment in early PYs | 2,000 (PY 2023) → 5,000 (PY 2026) | Primarily voluntary; claims-based also used | Includes organizations with MA or Managed Medicaid experience; eligible for reclassification to Standard once thresholds are met |
| High Needs Population ACO | Serves Original Medicare beneficiaries with complex needs; must use care model designed for complex populations (e.g., PACE-like models) | 500 (PY 2023) → 1,250 (PY 2026) | Claims-based and voluntary | Beneficiaries must meet specific High Needs eligibility criteria including HCC risk score ≥3.0, frailty indicators, or 90+ days of home health in prior 12 months |
High Needs eligibility criteria include: HCC risk score ≥3.0 (Aged/Disabled) or >0.35 (ESRD prospective); HCC score ≥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 per ICD-10-CM codes; SNF services for ≥45 days in prior 12 months; or home health services for ≥90 days in prior 12 months.
Participation dynamics across the model's history:
| Performance Year | Total ACOs | Standard | New Entrant | High Needs |
|---|---|---|---|---|
| PY 2021 (GPDC) | 53 | 32 | 15 | 6 |
| PY 2022 (GPDC) | 99 | 78 | 13 | 8 |
| PY 2023 | 132 | 105 | 13 | 14 |
| PY 2024 | 115 | 104 | 4 | 14 |
| PY 2025 | 100 | — | — | — |
| PY 2026 | 74 | — | — | — |
The declining ACO count from 132 in PY 2023 to 74 in PY 2026 reflects model attrition, selective exits by underperformers, and the closure of the application process. In PY 2023, ACOs exiting the model cited operational and data challenges, financial losses, and unexpected differences between ACO REACH and other ACO models in which they had previously participated.
Both Participant Providers (used for beneficiary alignment and quality scoring) and Preferred Providers (not used for alignment but contractually engaged for care coordination purposes) participate in the network. In PY 2023, ACOs included a total of 133,309 providers. Standard ACOs accounted for 92% of all Participant and Preferred Providers. High Needs ACOs had notably high average numbers of Preferred facilities—four High Needs ACOs managed by the same MSO maintained networks averaging approximately 900 home health agencies and 400 hospices each.
Two risk-sharing tracks are available:
| Risk Option | Shared Savings/Losses Rate | Available Capitation Mechanisms | PY 2024 Participation | CMS Discount Applied |
|---|---|---|---|---|
| Professional | 50% savings / 50% losses | Primary Care Capitation (PCC) only; Advanced Payment Option (APO) available | 19 of 122 ACOs | None |
| Global | 100% savings / 100% losses | PCC or Total Care Capitation (TCC) | 103 of 122 ACOs | 3% discount applied to benchmarks (3.5% in PY 2025) |
The 3% discount applied to Global track ACO benchmarks is the primary mechanism by which CMS secures savings: 95% of PY 2024 CMS net savings were driven by this discount. ACOs in the Global option generate savings for CMS before they realize any net savings themselves, since benchmarks are set 3% (PY 2024) or 3.5% (PY 2025) below expected spending.
Capitation payment mechanisms function differently from Medicare Advantage capitation. CMS retains responsibility for adjudicating all claims. Providers submit claims normally; CMS reduces payment amounts for services covered under capitation arrangements; and CMS pays ACOs directly via capitation. ACOs then compensate their Participant and Preferred Providers through pre-arranged contracts, allowing payment in flexible non-FFS structures and investment in care management staff not reimbursable under traditional FFS.
| Capitation Mechanism | Coverage | Provider Participation | Minimum Claims Reduction by PY |
|---|---|---|---|
| Primary Care Capitation (PCC) | Primary care services only (specific set defined in Financial Operating Guide) | Participant Providers required; Preferred Providers optional | PY 2021: 1–100%; PY 2022: 5–100%; PY 2023: 10–100%; PY 2024: 20–100%; PY 2025: 100% |
| Total Care Capitation (TCC) | All covered services rendered by participating providers | Participant Providers required at 100% fee reduction; Preferred Providers may choose up to 100% | 100% for all Participant Providers |
| Advanced Payment Option (APO) | Eligible non-primary care services (supplement to PCC under Professional or Global track) | Optional | Varies |
In PY 2025, 85 of 100 ACOs elected PCC while 15 elected TCC. Total capitation payments represented 2.71% of total PY 2025 benchmark dollars, with approximately 97.55% of capitation payments spent on Medicare-covered services (year-to-date through December 2025), leaving roughly 2.45% available for practice infrastructure and care innovation investment.
Benchmark Methodology: The Performance Year Benchmark is calculated using historical claims data with adjustments for risk, national/regional spending trends, and retrospective trend corrections. The average per-beneficiary-per-month (PBPM) benchmark in PY 2025 was approximately $1,361. Financial reconciliation occurs via provisional and final settlement processes. In PY 2024, the full-year benchmark across all ACOs totaled $36.538 billion in total dollars under risk.
Financial settlement key figures:
| Metric | PY 2022 | PY 2023 | PY 2024 |
|---|---|---|---|
| Total ACOs | 99 | 132 | 115 |
| Avg. Aligned Beneficiaries | 1,728,087 | 1,924,155 | 2,376,618 |
| Total Dollars Under Risk | $23.3 billion | $27.5 billion | $36.5 billion |
| Gross Savings Rate | — | 3.6% | 6.7% ($2.511B) |
| Net Savings to CMS | $371.5M | — | $988.3M (2.6%) |
| Net Savings to ACOs | — | $948.2M | $1.522B (4.2%) |
| Per-Beneficiary-Per-Month Gross Savings | — | — | $88.04 (+24% YoY) |
| ACOs with Net Savings | — | — | 96 of 115 (83%) |
REACH ACOs are evaluated on a small set of claims-based quality measures, with CAHPS beneficiary experience surveys as a supplemental performance dimension. Beginning in PY 2023, all claims-based measures shifted from pay-for-reporting to pay-for-performance, directly affecting financial settlement through the quality withhold mechanism.
Claims-based measures by ACO type:
| Measure | Standard ACOs | New Entrant ACOs | High Needs ACOs |
|---|---|---|---|
| All-Condition Readmission (ACR) — % of hospital admissions resulting in unplanned readmission within 30 days (lower = better) | ✓ | ✓ | ✓ |
| Unplanned Admissions for Multiple Chronic Conditions (UAMCC) — unplanned hospital admissions per 100 person-years (lower = better) | ✓ | ✓ | ✓ |
| Timely Follow-Up (TFU) — % of acute events with follow-up in non-emergency outpatient setting within recommended timeframe (higher = better) | ✓ | ✓ | ✗ |
| Days at Home (DAH) — % of days spent at home among adults with complex, chronic disease (higher = better) | ✗ | ✗ | ✓ |
Quality performance benchmarking data (Q3 PY 2025, 12-month period ending September 2025):
| Measure | REACH ACO Score | Non-REACH ACO TINs Score | Statistical Significance |
|---|---|---|---|
| ACR | 15.41% | 15.43% | Not significant |
| UAMCC | 30.60 | 33.46 | Significant (favoring REACH) |
| TFU | 77.14% | 74.02% | Significant (favoring REACH) |
Total Quality Score (TQS) is reported on a scale of 0–100%. In PY 2024, the average TQS was 80.4% for Standard/New Entrant ACOs (up from 78.6% in PY 2023) and 86.2% for High Needs ACOs (down marginally from 86.7%). 21 of 115 ACOs earned a perfect TQS of 100% in PY 2024.
High Performers Pool (HPP): Introduced in PY 2023, the HPP provides a shared savings bonus to ACOs that meet both the Continuous Improvement/Sustained Exceptional Performance (CI/SEP) criteria and achieve average measure performance at or above the 70th percentile across all applicable claims-based measures. In PY 2024:
Additional TQS bonus opportunities exist for ACOs that report beneficiary-reported demographic and social determinants of health (SDOH) data, demonstrate year-over-year improvement, or achieve high performance across all applicable claims-based measures simultaneously.
Starting in PY 2026, CMS implemented several program modifications:
The model will not extend beyond PY 2026. Organizations currently participating must plan for transition to successor vehicles—most likely the MSSP, emerging CMMI primary care models, or any next-generation accountable care model the Trump-era CMMI designs as a successor initiative.