Federal Legislation Aims to Make it Easier for Rural Hospitals to Form ACOs

Bipartisan legislation would increase reimbursements for rural ACOs

October 24, 2019

U.S. Sens. Catherine Cortez Masto (D-Nev.) and Pat Roberts (R-Kan.) have introduced legislation aiming to spur more value-based payments for rural health care providers. Their legislation, introduced Oct. 22, would increase payments for rural Accountable Care Organizations (ACOs) by changing how the Centers for Medicare and Medicaid Services (CMS) formulates shared savings.

Per CMS, ACOs are groups of health care providers (including doctors, hospitals, and other providers) who voluntarily come together to give coordinated high-quality care to Medicare patients. ACOs share in the savings they create by providing more cost-effective health care as calculated by CMS. The current calculation includes the cost of an ACO’s beneficiaries when comparing per-patient ACO spending to the overall spending of the region where an ACO is located. That means as an ACO reduces costs for its own beneficiaries, it also reduces the region’s average cost, thereby deflating its potential shared savings. This is less problematic in urban areas with a high number of patients outside of an ACO compared to rural areas where a patient mix may be dominated by an ACO.

The Rural ACO Improvement Act introduced by Cortez Masto and Roberts would improve payments for ACOs by strictly comparing an ACO’s per-patient cost to the non-ACO per-patient cost within its same region. While the change will benefit all ACOs, it is designed to particularly aid rural areas with a patient mix that has a high level of ACO participation.

With Wisconsin’s long track record of nation-leading health care quality coupled with its below average Medicare reimbursement, WHA has long advocated for finding ways to allow Medicare to better reward Wisconsin providers for highvalue, high-quality health care. WHA is currently analyzing this legislation to determine its impact on Wisconsin and encourages members to contact Jon Hoelter or WHA Vice President of Policy Development Laura Rose with any feedback or questions.

This story originally appeared in the October 24, 2019 edition of WHA Newsletter