ACO Incentives for Rural Participants Unconvincing

Recent clarification from the Centers for Medicare & Medicaid Services about how rural providers may participate in ACOs has done little to change Gary Tiller's mind about them.

"I just don't think there's any way we're going to play," says Tiller, CEO of  Ninnescah Valley Health Systems in Kingman, Kansas.

That's even with all the exceptions detailed by CMS, which include allowing ACOs with fewer than 10,000 assigned beneficiaries to be exempt from the 2% savings threshold. In addition, CMS is also proposing a sliding-scale confidence interval based on the number of assigned beneficiaries.

In the new fact sheet, "Medicare Shared Savings Program and Rural Providers," CMS says that it "recognizes the unique needs and challenges of rural communities and the importance of rural providers in assuring access to health care."

The clarifications relate to four specific provisions designed to increase rural participation in the Medicare Shared Savings Program: that ACOs in rural communities would be eligible for an exemption from the 2% net savings threshold; that a lower confidence interval would be used to set the minimum savings rate for ACOs; that certain critical access hospitals would be eligible entities to form their own ACO; and that there would be incentives for including federally qualified health centers and rural health clinics in the ACO.

But even with these provisions, Jim Wathen, CEO of Southern Coos Hospital and Health Center in Bandon, Oregon, doesn't sound swayed.   

"We have maybe 1,000 Medicare people that we deal with in our health district, and an ACO would be nonsense based upon that many people," he says. "We don't have the numbers in small, rural communities that you get in large rural communities or in urban areas. As a result, you don't have the volumes that are necessary to make it work out well."

Being a part of a larger entity's ACO is likely the only way that Tiller's organization would likely consider participating in the program, he says, but he's doubtful that would occur.

"If they were to reach out and say, 'be part of our ACO,' we might do that, but boy, I just don't see that happening, either. I think they're going to have their hands full," he says.

Wathen acknowledges that a "network of proper providers in a small rural community can probably do some things that would move the population toward a better level of health," as well as potentially reduce the cost of care. But he adds that he doesn't think bundled revenues or capitation would be beneficial to the rural organizations involved, "regardless of what kind of breaks they might give people."

"It's pretty clear that the smaller you are, the harder it is to spread your costs over the area or the people that you serve," he says.