Rural Healthcare: World of Change, News, and Innovation: Part II

EDITOR’S NOTE: This is the second and final installment in a two-part series on the current state of rural healthcare in America. In this installment, the author reports on the Pennsylvania Rural Health Model, a new initiative by CMS being developed through the CMS Innovation Center and the State of Pennsylvania. Read Part I here.

The first month of 2017 is drawing to a close, and change is happening rapidly. President Trump is pledging to put forth a plan offering “insurance for everybody,” and the GOP is trying to find consensus on a Patient Protection and Affordable Care Act (PPACA) replacement. 

Centers for Disease Control and Prevention’s (CDC’s) recent harsh findings regarding rural health and opportunities to address certain matters specific to the population.

One way to counter the issues raised in the CDC findings can be found in the Pennsylvania Rural Health Model, a new initiative by the Centers for Medicare & Medicaid Services (CMS) being developed through the CMS Innovation Center and Pennsylvania. It is a true “joining of forces” to improve health and healthcare in the rural areas of the state.

CMS has said it will provide Pennsylvania with $25 million with a goal to help the State operationalize the model and to ultimately achieve its proposed targets. Under the model, Pennsylvania will use this funding and some of its own in order to aggregate and analyze data, compile and submit reports, propose and administer global budgets, approve rural hospital transformation plans, and provide quality assurance, as well as to provide technical assistance to any participating rural hospitals as they redesign the care they deliver.

Some additional details include the following:

  • Participation is open to any critical access hospital or acute-care hospital in rural Pennsylvania.
  • The goal of the model, according to CMS, covers a wide spectrum of focus:
    • To improve health and healthcare in rural areas of Pennsylvania;
    • To reduce the growth of hospital expenditures across payers (including Medicare); and
    • To improve the financial viability of the state’s rural hospitals.
    • The model is broken up into seven performance years from 2017-2023.
    • Pennsylvania rural hospitals participating in the model will receive the following:
      • All-payer global budgets, funded by all participating payers, to cover inpatient and outpatient services they provide.
      • In exchange, these hospitals will use the money “to deliberately redesign the care they deliver to improve quality and meet the health needs of their local communities.”
  • Also, according to CMS, during each performance year, Pennsylvania will prospectively set the all-payor global budget for each participating hospital.
  • The all-payer global budget will primarily be based on hospitals’ historical net revenues for inpatient and outpatient hospital-based services from all participating payors.
  • All participating hospitals will also need to detail a plan to improve care quality by preparing a rural hospital transformation plan that must be approved by Pennsylvania and CMS.  

Payer Participation Scale Targets

The Commonwealth of Pennsylvania will encourage commercial payers to participate in the model and will also work to achieve Medicaid participation. The latter is necessary for the model to be implemented fully. Additionally, Pennsylvania has committed to having each participating rural hospital’s global budget represent at least 75 percent of that hospital’s net revenue for inpatient and outpatient hospital-based services by 2018, and at least 90 percent for each of the next five performance years.

Rural Hospital Participation Scale Targets

Participation will include at least six rural hospitals participating during 2018, at least 18 rural hospitals during 2019, and at least 30 rural hospitals during the final three years. 

Pennsylvania Rural Health Model Targets

Pennsylvania has agreed to meet targets related to the scale of payer and rural hospital participation in the model, including the model’s financial impact, and its impact on population health outcomes, access, and quality. In turn, these targets will create incentives for Pennsylvania to help hospitals improve quality, enhance healthcare provider collaboration to reduce the growth of hospital expenditures, and improve health for the rural population of Pennsylvania. 

Deliberate Care Design Changes and Hospital Care Delivery Transformation

The aforementioned transformation plans represent a deliberate effort to make meaningful and hopefully sustainable improvements and changes in the quality of care hospitals provide to produce positive impacts and outcomes. As noted, hospitals will develop plans to invest in quality and preventive care, to obtain support and continuous feedback from stakeholders in the community, and to streamline services they provide, tailoring them to the specific needs of their local communities.

Medicare Model Financial Targets

Pennsylvania has committed to achieving $35 million in Medicare hospital savings in the project time. To assist with this, the growth rate of rural Pennsylvania total Medicare expenditures per beneficiary must not exceed the growth rate of the rural national total Medicare expenditures per beneficiary, making this model budget-neutral for Medicare.

All-Payer Financial Target 

Across all participating payers, Pennsylvania has agreed to an all-payer financial target of no more than 3.38 percent (representing the compound annual growth rate for Pennsylvania’s gross state product from 1997 to 2015) in annual hospital spending growth on inpatient and outpatient hospital-based services per resident served by participating rural hospitals.

While this isn’t the first state CMS has partnered with in innovation of care (there is the Maryland All-Payer Model to shift hospital payments to global budgets that reward value over volume and announced the Vermont All-Payer Accountable Care Organization Model), the Pennsylvania plan is expected to build on these by transforming care statewide, beyond the hospital. 

The continuation of the CMS innovation center will be key to rural sustainability transforming healthcare delivery, driving down costs, and creating a larger focus on quality and better patient outcomes.  


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