Darwin's Our Take 7.20.26: CMS releases new ACO REACH data

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CMS releases new ACO REACH data, proposes updates to MSSP, MIPS, and physician pay rates

ACO REACH, which will sunset at the end of this year, generated almost $1 billion in savings in performance year 2024, according to results released last week by CMS.

The program generated gross savings of $2.5 billion in 2024. After accounting for the benchmark discount and shared savings paid to participants, Medicare retained $988.3 million of that total.

CMS’ savings have increased considerably over the last few years, from $70.4 million in PY 2021 to $371.1 million in PY 2022 and $694.6 million in PY 2023.

In all, 115 ACOs (covering 2.5 million seniors) participated in the REACH program in 2024. Among them, 96, or 83%, earned net savings, while 19 posted a net loss for the year.

Starting in 2023, CMS offered the High Performers Pool, through which participants that maintained high performance on quality metrics could earn additional financial benefits. In 2024, 49 ACOs qualified for those extra benefits.

CMS will replace ACO REACH with a 10-year model called Long-Term Enhanced ACO Design, or ACO LEAD, which starts on Jan. 1, 2027.

Meanwhile, CMS is planning significant changes to the Medicare Shared Savings Program, according to a July 14 press release. The agency said MSSP has generated savings for Medicare for eight consecutive performance years.

In PY 2024, three-quarters of the 476 ACOs that participated in MSSP earned shared savings payments totaling $4.1 billion. The program generated net savings of approximately $2.5 billion for Medicare.

The proposed changes, according to CMS, would increase opportunities for certain participants to share savings; create new financial incentives for first-time participants; establish more predictable spending targets; reduce administrative burden; and allow ACOs to reduce or eliminate beneficiary out-of-pocket costs for certain items and services.

Along with the ACO program change, CMS is proposing to sunset traditional Merit-based Incentive Payment System (MIPS) reporting in 2029.

The agency plans to transition clinicians toward specialty-focused MIPS Value Pathways (MVPs), each with a limited list of measures and activities. Three new MVPs would focus on diabetes, hypertension, and hospital-based care.    

CMS is also proposing new MIPS Core Measures that would be introduced next year. Under this plan, “every clinician would report at least one measure considered fundamental to their specialty and patient population,” CMS said, with the goal of improving consistency and generating more meaningful quality data.

Additionally, the agency is proposing reforms to the way it pays APM incentive payments, as well as updates to the Physician Fee Schedule “to better reflect modern medical practice and support the Trump administration’s goal of shifting from sick care to healthcare.”

Although the proposed rule includes statutory payment increases for physicians, baseline payment rates would decrease overall for 2027 because a temporary 2.5% pay increase approved by Congress for 2026 will expire at year-end.

Under the proposal, next year’s base rates would decrease 1.19% to $33.17 for participants in advanced payment models and 1.68% to $32.84 for other clinicians.

The American Academy of Family Physicians said in a press statement the reductions would “further destabilize physician practices and limit investment in primary care.”

The organization called for Medicare payment reform, noting that “Medicare physician payments have declined 33% from 2001 to 2025 when adjusted for inflation, even as practice expenses have increased.”

“Without a reliable annual inflationary update tied to the Medicare Economic Index, primary care practices will continue to face financial pressures that further strain the primary care workforce and threaten patient access to care.”

Comments on the 1,592-page proposed rule will be accepted through Sept. 14.

OUR TAKE: Physicians have been calling for reforms to Medicare pay rates for decades, and understandably so. The Sustainable Growth Rate formula enacted in 1997 resulted in the need for Congress to pass annual “fixes” to avoid drastic pay cuts; it was eliminated in 2015.

Programs that replaced the SGR, including MIPS and alternative payment models (such as ACOs), have faced substantial criticism as well — MIPS for its burdensome reporting requirements and APMs for the additional financial risk they expose providers to.

Currently, metrics for both MIPS and APMs focus predominantly on primary care practices. The proposed transition to MIPS Value Pathways would, at least theoretically, address that shortcoming and expand participation opportunities. According to CMS, “If finalized, the MVPs inventory would provide a relevant reporting option for approximately 98% of specialties.”  

In general, stakeholders appear to be in favor of the proposed changes designed to streamline reporting requirements and expand ACO participation through a variety of financial incentives and program updates. Most agree, though, that the physician fee rule and other payment policies still need work.

We are working on a brief that will review all the newest value-based models and the estimated impact on providers, payers and manufacturers. We’ll make it available to Our Take readers soon.

HCR #212: The State of Value-Based Health Care, with John Marchica

After a year of interviews about value-based care, the same things keep coming up. Fee-for-service is still the problem. Payers want to pay less, providers want to bill more. And twenty years in, the people who helped build value-based care are grading it a C-minus. In his first supplemental episode, host John Marchica goes back through the transcripts and pulls out what guests agree on: the problems value-based care is trying to fix, the fixes they keep proposing — mandatory participation, full-risk capitation, payer-provider integration — how it's going so far, and where the real progress is likely to come from. Find the episode on Spotify, Apple, and elsewhere.

What else you need to know

The Federal Trade Commission and CVS Caremark reached a settlement Tuesday in an antitrust case initiated in 2024 involving insulin prices. In the lawsuit, the FTC claimed CVS Caremark, Express Scripts, and Optum Rx favored higher-cost insulin in their formularies so they could receive higher rebates, which in turn increased insulin prices.

To comply with the settlement agreement, CVS Caremark said in a press release that it would incorporate several elements in its standard offering to commercial clients, such as aligning members’ cost sharing more closely with the net cost of drugs after rebates; promoting point-of-sale rebate passthrough as a standard option; delinking manufacturer compensation from drug list prices; and offering plan sponsors simplified pricing structures without rebate guarantees or spread pricing.

In addition, CVS Caremark is prohibited from interfering with pharmacies’ ability to work with hub service providers. The FTC estimated that over the next decade the settlement would save consumers as much as $8.5 billion and unlock up to $4.5 billion in point-of-sale rebates. Express Scripts agreed to a settlement in February, and Optum Rx is in the process of finalizing a consent agreement.

Memorial Hermann Health System is closing its commercial health insurance business. The decision affects HMO and PPO plans, as well as Memorial Hermann Health Solutions, which serves as a third-party administrator for self-insured employer plans. It does not include the health system’s Medicare Advantage HMO.

A notice on Memorial Hermann Health Plan’s website said current coverage remains in place and termination dates will vary by employer group. A Q&A response on the website stated: “In light of the sustained headwinds facing the health insurance industry, it has become clear it will be difficult for the MH commercial health plans to achieve the scale required to sustainably provide value for enrollees.”

UST is integrating Anthropic’s Claude into CarePath, a platform healthcare providers and payers use to manage claims processing, care coordination, and member services. Claude connects CarePath directly to claims and care management systems, Anthropic said in a news release, turning “scattered health data into clear next steps for care teams.” Recommended actions are routed to a person for approval before they reach members, according to Anthropic.

Separately, Anthropic is partnering with Optum “to responsibly bring AI to healthcare,” multiple outlets reported. Sandeep Dadlani, CEO of Optum Insight, wrote in a social media post that Optum would use Claude to reduce administrative burden and make everyday interactions clearer for those the company serves. Specific details of the partnership were not provided.

The FDA approved Merck’s Lipfendra (enlicitide), making it the first PCSK9 pill to be approved in the U.S. The once-daily drug, a macrocyclic peptide, is indicated as an adjunct to diet and exercise to reduce low-density lipoprotein (LDL) cholesterol in adults with life-threatening high cholesterol, including heterozygous familial hypercholesterolemia. In a Phase III trial, Lipfendra reduced LDL cholesterol by 56% compared with placebo at week 24, Merck said in a press statement.

Other approved PCSK9 inhibitors are injected and, according to an RBC Capital Markets analyst, cost $500 to $600 per month. A Merck spokesperson told Biopharma Dive the list price for a 30-day supply of Lipfendra will be $315. A potential drawback with the pill (versus injectable PCSK9s) is that patients should fast for eight hours before taking Lipfendra and then wait another 30 minutes before eating, according to Fierce Pharma.

Lipfendra was approved through an accelerated review process under the FDA’s voucher program. The RBC analyst, Trung Huynh, believes peak annual sales could exceed $5 billion. AstraZeneca is also developing an oral PCSK9 candidate.  

Sanofi’s subcutaneous Sarclisa (isatuximab-irfc) Escena received FDA approval as the first anticancer treatment administered using an on-body injector. The therapy is to be used in combination with standard-of-care regimens for patients with multiple myeloma across all indications of the intravenous formulation of Sarclisa.

The automated, hands-free on-body injector, branded as CirCLIQ, is “designed to deliver subcutaneously high-volume medicines with the push of a button,” Sanofi noted in a press release. A Phase III non-inferiority study showed Sarclisa Escena provided similar efficacy, pharmacokinetics, and safety when compared with the IV version of Sarclisa, with a significantly shorter treatment time and fewer infusion-related reactions, according to Sanofi.

What we’re reading

CARA: How LEAD Finally Pulls Specialists Into Accountable Care. Innovacer, 7.13.26

On Screen Time And Adult Health: Physicians, Researchers, And Policy Makers Can Act Now. Health Affairs, 7.17.26

Savings Under Most-Favored-Nation Pricing for Prescription Drugs in Medicaid. JAMA, 7.15.26