Congress is stepping up to help support rural hospitals find a level playing field with urban counterparts as it relates to capitalizing on shared efficiencies in accountable care organizations (ACO). U.S. Sens. Pat Roberts (R., Kan.) and Catherine Cortez Masto (D., Nev.) introduced the Rural ACO Improvement Act to support rural health care providers that are delivering high quality care as part of ACOs. Currently, rural providers are discouraged from participating in these payment models because their efficiency may be counted against them, according to a release from the senators.

This bill would fix that glitch in the payment system, putting rural providers on a level playing field with their urban counterparts and ensuring that all providers are rewarded equally for their work to deliver value in health care.

“Ensuring Americans living in rural areas have access to quality healthcare is crucial, and a key part of such access is utilizing accountable care organizations to provide high-quality services while reducing costs,” said Roberts. “This legislation incentivizes providers to deliver the same care to rural communities as they do to their urban counterparts with a change in payment structure that would result in equal opportunities for rewards regardless of the region.”

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“Accountable care organizations, which encourage physicians, hospitals and clinics to work together to improve health care quality and lower costs, are at the cutting edge of the shift from volume to value in health care,” said Masto. “The success of ACOs and other payment models is key to improving patient outcomes and saving Medicare millions of dollars each year. Yet, too many of our rural ACOs, which are often the only providers for hundreds of miles, are being short-changed because of a glitch in the current method of calculating reimbursements. I’m proud to introduce legislation that will ensure coordinated care organizations in rural areas are fairly rewarded for their quality and efficiency.”

ACOs are made up of groups of health care providers, including physicians and hospitals that share responsibility for providing coordinated care to patients in order to improve health care quality and reduce unnecessary spending. When ACO providers work together to improve care and lower costs below what Medicare expected to spend, Medicare saves money. The health care providers in ACOs are then able to receive a share of those savings. In fact, ACOs provided Medicare with nearly $800 million in savings in 2019 alone.

This legislation would fix a glitch in the ACO reimbursement formula which inadvertently punishes rural health care providers when they reduce costs. Under current law, ACO reimbursement rates are calculated by comparing the per-patient costs of a region’s ACO with the operating costs of non-ACO regional peers. Yet, in many rural areas, an ACO may be the dominant health care provider. Without peers for comparison, rural ACOs have a lower spending benchmark and often receive less of a savings bonus than their urban counterparts that compete against more providers. This bill would fix the glitch by excluding the ACO’s beneficiaries when calculating the per-patient costs of a region.