The Center for Medicare and Medicaid Services (CMS) recently issued a notice announcing changes to the ACO REACH for Performance Year 2026. The ACO REACH currently is projected to conclude at the end of 2026, but there is ongoing speculation around a potential expansion. CMS’ intent of these changes is to improve model sustainability by adjusting the financial methodology based on preliminary performance results from Performance Year 2023.

Below are 6 key changes and what they mean for current ACO REACH participants:

1. Risk Score Growth Caps
CMMI is implementing an additional 3% cap on risk score growth from 2019-2026 to contain risk score growth from the earlier years of the model. For High Needs ACOs, CMMI is increasing the ceiling on the Coding Intensity Factor (CIF) from 1% to 2%.

2. Reduction in the Regional Component of the Benchmark for All REACH ACOs
For Standard ACOs: The weighting will change by 5% from 55%/45% blended historical and regional expenditures in PY 2024 and PY 2025 to 60%/40% in PY 2026.

For New Entrant and High Needs ACOs: The weighting will change by 5% from 50%/50% blended historical and regional expenditures in PY 2025 to 55%/45% in PY 2026.

3. For ACOs in Global Risk Option, CMS is Narrowing Risk Corridors
The first risk corridor is being changed from 25% to 10%, meaning that shared savings and losses above 10% of the benchmark are shared with CMS. Essentially, CMS shares in savings earlier.

4. Increase Quality Withold from 2% to 5%
The Quality Withold represents a portion of the benchmark that is held “at risk,” and ACOs can “earn back” the withhold based on quality performance. This increase from 2% to 5% increases the portion of the benchmark at risk. Simultaneously, CMMI is introducing a High Performers Pool (HPP) Bonus, which ACOs can access through quality performance. The HPP Bonus is funded through quality withholds not captured – therefore, the increase in the Quality Withold essentially increases the HPP Bonus.

5. Update of Risk Adjustment Model
CMS is continuing with implementing the revised 2024 risk adjustment model (V28) and will increase the weight on the new V28 prospective HCC model to 100% from 67%.

6. Adjustment of PY 2024 Expenditures for Significant, Anomalous, and Highly Suspect (SAHS) Billing
Two HCPCs codes associated with a level of billing that represents a “significant claims increase either in volume or dollars…with national or regional impact…and represents a deviation from historical utilization trends that is unexpected and is not clearly attributable to reasonably explained changes in policy or the supply or demand for covered items or services” are being removed from 2024 expenditures.

What These Changes Mean:
Bottom line, these changes will restrict the shared savings/losses and overall incentive structure within the ACO REACH model. While the model’s future is uncertain past 2026, REACH ACOs must model and prepare for the impact of these changes on shared savings in 2026.

As the industry continues to evolve, the need for reliable, strategic partnerships has never been greater. Let’s discuss how COPE Health Solutions (CHS) can help your organization build a sustainable, provider-driven value-based care strategy—one that puts you in control. We would love to hear from you, potentially become your MSSP or ACO REACH partner, and accelerate your broader value-based care journey. Please do not hesitate to reach out at info@copehealthsolutions.com or 213-259-0245.