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AAMC Joins Letter Supporting ACO Bill to Fix the “Rural Glitch”

October 25, 2019

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PRESS CONTACTS
Gayle Lee, Director, Physician Payment & Quality
Phoebe Ramsey, Sr. Regulatory Analyst, Quality & Payment Policy

The AAMC, along with other national hospital and medical associations including the American Hospital Association (AHA), the American Medical Association, and the National Association for ACOs (NAACOS), sent a letter Oct. 22 to Sens. Cortez Masto (D-Nev.) and Roberts (R-Kan.) supporting their introduction of the Rural ACO Improvement Act (S.2648). The bill seeks to fix a glitch in the shared savings formula in the Medicare Shared Savings Program (MSSP) that measures accountable care organization (ACO) performance compared to the ACO’s market that discourages efficient providers from participating in the program.

Currently, the Centers for Medicare and Medicaid Services (CMS) applies a regional adjustment to the ACO benchmark to determine whether the ACO has achieved savings. In calculating the regional adjustment, CMS includes the ACO’s own beneficiaries. This systematically disadvantages ACOs that are the dominant health care provider in their markets, especially ACOs in rural areas, without non-ACO regional peers to compare spending to, and artificially lowers the spending benchmark the ACO must meet to share in savings. This bill would amend Title XVII of the Social Security Act to improve the benchmarking formula for MSSP ACOs to fix this flaw by excluding the ACO’s beneficiaries when calculating the regional adjustment to the ACO’s benchmark.

The AAMC has previously commented on CMS’s approach to the regional adjustment with concerns that the regional cost data could be skewed by the inclusion of the ACO’s patients in the calculation of expenditures due to the ACO’s efforts to coordinate care and reduce expenditures for the ACO’s patients. The AAMC has urged CMS to remove the ACO’s patient population from the regional adjustment calculation so that an ACO’s performance is compared to the broader fee-for-service patient population instead of the ACO population.

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