Exploring the ACO REACH Model: A Path to Better Outcomes and Cost-Effective Care

As healthcare continues to shift from fee-for-service models to value-based care, the ACO REACH (Accountable Care Organizations Realizing Equity, Access, and Community Health) model plays a crucial role in shaping the future of care delivery. This model, developed by the Centers for Medicare & Medicaid Services (CMS), aims to improve healthcare outcomes while reducing costs, with a special focus on addressing health disparities and improving access to care for underserved populations. Healthcare providers participating in ACOs under the ACO REACH model are tasked with managing a population's health through coordinated, quality-driven care, while also assuming financial risk to achieve cost savings.

This article provides an in-depth overview of the ACO REACH model, outlining its fundamental principles, benefits, and challenges. Whether you're part of an ACO or an independent provider considering participation, this guide offers valuable insights into how ACO REACH can impact care delivery and provide opportunities for better outcomes in value-based healthcare.

What is the ACO REACH Model?

The ACO REACH model is an advanced healthcare delivery and payment model developed by CMS. It builds on previous ACO models but adds a greater emphasis on addressing health inequities, improving access to care, and ensuring that vulnerable populations receive the necessary support.¹ ACO REACH encourages healthcare providers to focus on preventive care, reduce unnecessary hospitalizations, and coordinate services across a range of providers to improve patient outcomes while controlling costs.

Under the ACO REACH model, participating organizations assume financial responsibility for the care provided to their Medicare beneficiaries. This shared financial responsibility is key to incentivizing healthcare providers to deliver high-quality, efficient care that focuses on long-term health outcomes rather than service volume.

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Types of ACO REACH participants and risk-sharing options

The ACO REACH model offers flexibility for different types of healthcare organizations, allowing them to participate based on their experience with Medicare populations and their capacity for managing patient care. Participants fall into three categories:¹

• Standard ACOs – Established organizations with experience serving Medicare beneficiaries, including dually eligible individuals. These groups may have previously participated in CMS shared savings models.

• New Entrant ACOs – Organizations new to serving Original Medicare beneficiaries. These ACOs rely more on voluntary patient alignment in their initial years of participation.

• High Needs Population ACOs – Groups specializing in caring for high-risk Medicare beneficiaries with complex medical needs. These ACOs use intensive care coordination strategies, similar to those found in Programs of All-Inclusive Care for the Elderly (PACE).

Risk-sharing options

ACO REACH participants can choose from two financial models, balancing risk with potential rewards:¹

• Professional option: A lower-risk model where ACOs share in 50 percent of savings and losses, with payments structured as Primary Care Capitation, a fixed monthly amount per patient for primary care services.

• Global option : A full-risk model where ACOs assume 100 percent of savings and losses. Payments can be structured as either Primary Care Capitation or Total Care Capitation, covering all services, including specialty care.

How the ACO REACH Model works

The ACO REACH model operates under a value-based care framework, where healthcare providers are reimbursed based on the quality of care delivered, not the quantity of services provided. Here’s an overview of how it functions:

1. Risk-sharing arrangements

ACO REACH participants are responsible for managing the cost of care for their patient populations. These organizations share in the savings generated by reducing unnecessary healthcare expenditures, as well as the risk of exceeding cost benchmarks.² This incentivizes ACOs to focus on preventive care and efficient management of chronic conditions to reduce avoidable costs.

2. Emphasis on care coordination

A critical aspect of ACO REACH is the coordination of care across various providers. By working together, healthcare teams can reduce unnecessary hospital admissions, prevent duplication of services, and ensure that patients receive the appropriate care at the right time. This improves patient outcomes and optimizes resource utilization.¹

3. Health equity focus

The ACO REACH model places a significant focus on health equity, particularly for underserved and vulnerable populations. Participating organizations must implement strategies to address health disparities, increase access to care, and ensure that culturally competent services are available to diverse patient groups.³

4. Value-based payments

The ACO REACH model enhances financial incentives to reward high-quality, efficient care. By aligning reimbursement with quality benchmarks and responsible healthcare spending, the model encourages providers to focus on long-term patient outcomes and preventive care.⁴ Additionally, risk adjustment strategies ensure that reimbursements fairly reflect patient needs, supporting providers in delivering personalized, cost-effective care while maintaining financial sustainability.

Goals and objectives of the ACO REACH Model

The ACO REACH model was designed with several specific objectives in mind, all of which are aligned with improving healthcare delivery and reducing costs:

1. Improving health outcomes

The model aims to improve the health outcomes of Medicare beneficiaries by prioritizing preventive care, better management of chronic conditions, and coordinated efforts across healthcare providers.

2. Reducing healthcare costs

By focusing on efficiency and reducing unnecessary services, the ACO REACH model seeks to lower overall healthcare expenditures. The financial incentives for achieving savings encourage providers to take a proactive approach to care delivery.

3. Addressing health disparities

One of the most distinctive features of the ACO REACH model is its focus on addressing health disparities. By targeting underserved populations, the model aims to improve access to care and reduce the inequities that exist in healthcare outcomes, ensuring that all individuals, regardless of their background, have access to high-quality care. To support this goal, ACO REACH requires all participants to develop and implement a Health Equity Plan, outlining targeted initiatives to identify and address disparities within their patient populations.³

4. Promoting value-based care

The model encourages a shift away from traditional fee-for-service care to a value-based approach, where reimbursement is tied to patient outcomes rather than the volume of services delivered. This shift promotes sustainability and better long-term health management.

5. Improving care coordination

The ACO REACH model promotes better collaboration among healthcare providers, ensuring that patients receive comprehensive and coordinated care that improves their overall health outcomes. To achieve this, ACO REACH requires participating providers to focus on reducing care fragmentation by strengthening coordination between primary and specialty providers, helping to streamline care delivery and enhance patient experiences.¹

Benefits of the ACO REACH Model

While the ACO REACH model requires healthcare providers to assume financial risk, it also offers several significant benefits:

1. Improved care for Medicare beneficiaries

By focusing on coordinated care and preventive services, ACO REACH helps improve health outcomes for Medicare beneficiaries, particularly those with chronic conditions or complex health needs.

2. Financial savings

ACO REACH encourages efficiency, reducing unnecessary services and hospitalizations. By focusing on cost-effective care delivery, ACOs can achieve significant savings, which are shared between the organization and CMS. Additionally, CMS monitors financial performance and transparency to ensure that savings are achieved without compromising patient care.¹

3. Focus on health equity

The model’s emphasis on health equity ensures that underserved populations have access to necessary healthcare services, addressing disparities that have long plagued the system.

4. Long-term health improvements

The ACO REACH model emphasizes preventive care and proactive management of chronic conditions, leading to long-term health improvements for patients. By focusing on these areas, the model helps reduce the need for expensive interventions in the future.

5. Satisfaction for providers

Healthcare providers benefit from ACO REACH by having more control over care delivery. This model reduces administrative burdens associated with traditional fee-for-service models and allows providers to focus on patient care rather than service volume.

Challenges of the ACO REACH Model

Despite its potential benefits, the ACO REACH model also presents several challenges for providers:

1. Financial risk

While the model encourages savings, there is an inherent risk for organizations that fail to meet cost or quality benchmarks. The financial burden of exceeding those benchmarks can be significant, especially for smaller ACOs with limited resources.

To address these risks, CMS has adjusted financial methodologies for 2025, including changes to benchmark calculations and risk-sharing arrangements. For example, CMS’s decision to maintain a benchmark blend of 55 percent historical expenditures and 45 percent regional expenditures provides some predictability but may limit financial flexibility for high-performing ACOs looking to leverage regional efficiencies.⁴ While this change may provide some financial stability, it could also limit the ability of high-performing ACOs to benefit from regional cost efficiencies.

2. Operational complexity

Implementing the necessary infrastructure for care coordination, data sharing, and performance tracking can be challenging. Healthcare organizations need robust IT systems and administrative support to meet the requirements of the model.

CMS has introduced stop-loss reinsurance adjustments to help mitigate financial uncertainty,⁴ but managing these mechanisms adds an additional layer of operational complexity—particularly for high-needs ACOs that must balance financial protections with the administrative burden of compliance.

3. Provider engagement

Engaging healthcare providers and ensuring they are aligned with the goals of the ACO REACH model is essential. Some providers may be hesitant to adopt risk-based models without clear financial protections, making engagement and alignment a key challenge.

4. Data integration

Effective data integration is essential for tracking performance, managing care coordination, and improving patient outcomes. However, many ACOs face significant challenges with interoperability between electronic health records (EHRs), payer systems, and other healthcare platforms, which can hinder the success of the model.

A national survey of ACOs in the Medicare Shared Savings Program found that only 9 percent operate on a single EHR system, while 77 percent rely on six or more.⁵ As the number of EHR systems increases, so do difficulties in aggregating data, maintaining reporting accuracy, and ensuring seamless care coordination.

As CMS expands its commitment to episode-based care, the TEAM Model CMS introduces a mandatory surgical episode payment framework that complements ACO REACH by emphasizing coordinated care and cost control across surgical procedures.

Leveraging Digital Solutions to Support ACO REACH Success

The ACO REACH model represents a significant shift in how Medicare beneficiaries receive care. By focusing on value-based care, care coordination, and health equity, the model offers numerous opportunities for healthcare providers to improve patient outcomes and reduce costs. However, to succeed under this model, providers must embrace new care delivery methods, overcome operational challenges, and effectively manage the financial risks associated with shared savings and penalties.

With the right strategies in place, ACO REACH has the potential to create a more sustainable, equitable, and efficient healthcare system, where the focus is on long-term health outcomes and improved patient care.

For ACOs aiming to align care coordination with financial incentives, examining other bundled payment models like BPCI Advanced offers additional insight into strategies that support risk-sharing and improved outcomes across episodes of care.

As ACOs work toward improving patient outcomes, reducing costs, and enhancing care coordination, integrating digital health solutions can streamline these efforts. Medbridge’s white-labeled digital MSK solution equips ACOs to deliver evidence-based care pathways for MSK conditions, fall prevention, and post-surgical recovery—reducing costs while improving patient outcomes.

By leveraging scalable digital tools, ACOs can expand access to self-guided MSK care, optimize care team efficiency, and keep patients engaged in their recovery. With 73 percent of users experiencing lower pain levels,⁶ Medbridge’s digital MSK solution empowers ACOs to drive better adherence, improve functional outcomes, and reduce unnecessary interventions. These solutions not only enhance patient engagement but also align with ACO REACH’s mission to deliver high-quality, cost-effective, and equitable healthcare.

References

1. https://www.cms.gov/priorities/innovation/innovation-models/aco-reach

2. https://www.cms.gov/newsroom/fact-sheets/accountable-care-organization-aco-realizing-equity-access-and-community-health-reach-model

3. https://medicareadvocacy.org/nejm-on-aco-reach/

4. https://www.cms.gov/aco-reach-model-performance-year-2025-model-update-quick-reference

5. https://pubmed.ncbi.nlm.nih.gov/35049264/

6. Internal Medbridge Data