Roughly 5% of the total population accounts for 50% of annual spending, while 1% accounts for ~25% of annual spending. In these high-cost high-need populations, Accountable Care Organizations (ACOs) are better positioned to generate margin, deliver higher-touch care to patients, and bend the cost curve. For these reason and the track’s relative success in REACH, CMMI should continue testing a High Needs model.

The High Needs track in ACO REACH was relatively successful, decreasing gross Medicare spending, increasing hospice spending, and decreasing SNF spending, while serving ~21K beneficiaries. Additionally, nearly all High Needs ACOs were network of individuals practices led by Management Services Organizations (MSOs) or physicians practices. This provider participation indicates strong interest in the program from individual practitioners, whose behavior drives care delivery reform.

Primary Components

High Needs ACOs primarily differ from traditional ACOs in that their beneficiaries have more complex care needs. Beneficiaries eligible for alignment to a High Needs Population ACOs must meet one or more of the following criteria:

1. Impairment of Mobility or Neurological Condition: Beneficiary has developmental, inherited, or congenital neurological conditions (e.g., cerebral palsy, cystic fibrosis, muscular dystrophy) impairing mobility or neurological function.
2. Chronic or Serious Illness: The beneficiary has a significant chronic illness with a risk score of 3.0 or greater for Aged & Disabled (A&D) and .35 or greater for End-Stage Renal Disease (ESRD).
3. Hospital Admissions: Two or more unplanned hospital admissions in the previous 12 months
4. Frailty Indicators: The beneficiary shows signs of frailty based on claims for specialized medical equipment like hospital beds or transfer equipment for home use.
5. Extended Care Needs: Skilled nursing facility (SNF) care for at least 45 days within the last 12 months; home health services for at least 90 days within the last 12 months

High Needs ACOs also differ from other REACH ACOs in the following ways:

• Minimum population starts at 250 beneficiaries in Performance Year (PY) 1 of an ACO’s participation in the model and ends with 1,400 beneficiaries in PY4.
• PY benchmarks are often based on regional expenditures for New Entrant and High Needs ACOs. If the population is greater than 3k, then the High Needs ACO will follow Standard ACO benchmarking methodology. Using regional expenditures provides a more predictable and stable financial benchmark, especially for these high-cost, complex populations.
• Quarterly alignment checks are specific to the High Needs ACOs in REACH. This process allows beneficiaries who meet additional eligibility criteria for alignment to be re-assessed quarterly.

The Program of All-Inclusive Care for the Elderly (PACE) program is similar to High Needs, except the High Needs program is for Traditional Medicare patients (who may also have a Medicaid plan), and PACE is exclusively for dually-eligible beneficiaries. The first PACE program started in 1971.

• PACE is a permanent, fully-integrated duals program, for patients 55+ needing nursing home level care, helping them to continue living in institutional, community settings as along as medically and socially feasible. PACE requires participants to dis-enroll from other Medicare/Medicaid plans, with the risk bearing entity essentially acting as its own health plan.
• PACE is only available in select geographies, requiring a three-way agreement between PACE, CMS, and the state. As of 2024, 78K people are enrolled in PACE nationwide. 82% of these are dually-eligible for Medicare and Medicaid, 17% are Medicaid only. There are roughly 2.2M individuals eligible for PACE, demonstrating the program’s growth potential.
• Stringent regulations and other complexities have inhibited the growth of the PACE program (e.g., restrictions on marketing, enrollment caps, and state-by-state regulation differences).
• Patients spend a lot of their time in “day centers,” which have a primary care clinic and an activities room. It costs roughly $7M to set up one of these center.
• In many ways, PACE plans are like a payvidor with a fully-integrated dual special needs plans (FIDE-SNP).