Testing the Rural Health Model

Pennsylvania Rural Health Model, a state specific model now being tested  https://innovation.cms.gov/initiatives/pa-rural-health-model (PARHM), by the CMS Innovation Center https://innovation.cms.gov, seeks to increase rural Pennsylvanians’ access to high quality care and improve their health.

The goal is to reduce the growth of hospital expenditures across payers, and also increase the financial viability of rural Pennsylvania hospitals. The Model is open to both critical access hospitals and acute care hospitals in rural Pennsylvania.

CMS https://www.cms.gov within HHS, and the Pennsylvania Department of Health https://www.health.pa.gov are partners in administering the Model. Participating payers will pay rural hospitals on a global budget which is a fixed amount of revenue set in advance, to cover all inpatient and hospital-based outpatient services.

Participating payers include Medicare, Medicaid, and certain commercial plans. CMS intends to make available up to $25 million to help the State implement the Model. Pennsylvania will use the funding to oversee the Model, aggregate and analyze data,  compile and submit reports, propose and administer global budgets, approve Rural Hospital Transformation Plans, conduct quality assurance, and provide technical assistance to participant rural hospitals as they redesign the care they deliver.

This Model will enable CMS and other participating payers to pay participating rural hospitals on a global budget, which is a fixed amount that is set in advance. The budget will need to cover all inpatient and hospital-based outpatient items and services.

Pennsylvania’s Model is testing whether the predictable nature of global budgets will enable participating rural hospitals to invest in quality and preventive care and then tailor services to better meet the needs of their local communities.

The first step is for participating rural hospitals to prepare Rural Hospital Transformation Plans, outlining their proposed care delivery transformation to be approved by the state of Pennsylvania and CMS.

The Model began January 2019 and will continue to 2024. During this period, the participating rural hospitals will be paid based on all-payer global budgets and will implement their Rural Hospital Transformation Plans.

In addition, the State Model must meet financial targets including population health outcomes and access and quality measures to achieve $35 million in Medicare hospital savings over the course of the model plus achieve payer and rural hospital participation scale targets.

Population health targets may tie financial incentives for participating rural hospitals to Pennsylvania’s performance to increase access to primary and specialty care, reduce rural health disparities through improved chronic disease management, and decrease deaths from substance use.

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