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Analysis

Congress Looks to Fix ACA's 'Rural Glitch'

By John Commins  
   December 02, 2019

The bill would fix a regional calculation that forces accountable care organizations to measure their performance against themselves and disproportionately impacts rural providers.

Rural healthcare stakeholders are rallying around bipartisan legislation newly introduced in Congress that would eliminate an inadvertent methodological flaw known as the Affordable Care Act's "rural glitch."

The Accountable Care In Rural America Act, H.R. 5212, introduced by Republican Rep. Jodey Arrington of Texas and Democrat Rep. Suzan DelBene of Washington, would amend Title XVIII of the Social Security Act to improve the benchmarking process for the Medicare Shared Savings Program.

The bill's Senate sponsors are Republican Sen. Pat Roberts of Kansas and Democratic Sen. Catherine Cortez Masto of Nevada.

Since 2017, a glitch in the ACO reimbursement formula has inadvertently punished rural health care providers, even as they reduce costs, according to the bill's sponsors. That's because, under the current formula, reimbursement rates are based on a comparison of the per-patient costs of a region's ACO with the operating costs of non-ACO regional peers.

In many rural areas, an ACO may be the major provider with no peers for comparison. As a result, rural ACOs that have a lower spending benchmark often get a smaller savings bonus than do their urban counterparts that compete against more providers.

The bill would fix the glitch by excluding the ACO's beneficiaries when calculating the per-patient costs of a region.

"Fixing the rural glitch is a practical and meaningful change that will make the program fairer, especially for rural providers who can be disproportionately impacted by the current benchmark methodology," DelBene said.

"This change will also make it fairer for providers who are already delivering efficient care like those in Washington state," she said. "I believe fixing the rural glitch will encourage more providers to participate in the ACO program which will be a benefit to seniors and taxpayers alike."

Brock Slabach, senior vice president for member services at the National Rural Health Association, says the bill stands a good chance of passing because it has bipartisan support, is budget neutral, faces no organized opposition, and "it's an easy correction."

"This is commonsense legislation, so opposition would be negligible. I don't know how anyone could oppose this because all it does is make the process fair," he said.

The bill has the support of 13 stakeholder groups, including the American Hospital Association and the American Medical Association, who complained that the glitch makes it harder for rural providers to achieve savings even when they improve quality and reduce costs on par with their urban colleagues.

"No ACO should be placed in a less favorable financial position due to their geography alone, and design flaws that discourage ACOs from operating in rural areas should be eliminated," the stakeholders said in a letter to the Congressional sponsors.

"Today, the regional adjustment includes an ACO's own beneficiaries in the regional calculation," the letter said. "While this has minimal impact for ACOs in urban areas with a lot of provider competition, the impact is significant in rural areas where an ACO covers a large number of the region's fee-for-service beneficiaries."

“This is common sense legislation, so opposition would be negligible.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

Photo credit: Illustration by Adria Fruitos


KEY TAKEAWAYS

The bill has the support of 13 stakeholder groups, including the American Hospital Association and the American Medical Association.

The stakeholders complained that the glitch makes it harder for rural providers to achieve savings.

The bill would require CMS to remove an ACO's assigned patients from the regional comparison group.


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