A bipartisan pair of senators on Tuesday introduced a bill to fix the so-called "rural glitch" in the CMS' reimbursement formula for accountable care organizations and potentially increase reimbursement rates for ACO providers under the Medicare Shared Savings Program.
The Rural ACO Improvement Act, sponsored by Sens. Catherine Cortez Masto (D-Nev.) and Pat Roberts (R-Kan.), aims to increase reimbursement rates for rural ACO providers by changing how the CMS calculates them. Currently, the agency compares the per-patient costs of a region's ACO with the operating expenses of its non-ACO competitors.
But because rural ACOs are the only significant provider in their area, they often end up with a lower spending benchmark than ACOs in suburban and urban areas that have more non-ACO providers. That cuts into the savings bonuses that rural ACOs receive from Medicare through the MSSP.
"CMS' current policy undermines efforts to further alternative payment models in rural America," said Clif Gaus, president and CEO of the National Association of ACOs.
The bill would address the issue by removing an ACO's beneficiaries from the calculation of a region's per-patient costs, which should boost the spending benchmarks for ACOs and make it easier for them to show cost savings. The move would help all ACOs, but rural ACOs would benefit the most.
Fifteen healthcare organizations, including the American Hospital Association and the American Medical Association, sent a letter to Cortez Mastro and Roberts expressing their support for the legislation, saying that the bill would "level the playing field" for rural ACOs.
"This important legislation will ensure that our members are not penalized for being efficient providers," said Dr. Jerry Penso, president and CEO of AMGA, a trade association for medical groups.
ACOs are regional groups of healthcare providers, including doctors and hospitals, that coordinate patient care to boost quality and cut costs. Under Medicare's MSSP, ACOs get financial rewards for slashing healthcare spending if they can maintain or improve health outcomes for original Medicare's fee-for-service population. Last year, ACOs saved Medicare $739 million.
They're one of several alternative payment models that tie healthcare quality to spending. Healthcare experts see them as transitional step in the move to value-based payments.