Payers

CMS tries new model for rural health in Pennsylvania

The new model calls for participating hospitals to receive fixed, global budgets from participating payers, including Medicare, set in advance to cover the cost of all the inpatient and outpatients services they provide.

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“Still not done,” Andy Slavitt, acting Centers for Medicare and Medicaid Services administrator, tweeted as another item — the launch of the Pennsylvania Rural Health Model — was scratched off of his punch list Thursday.

CMS announced that it “intends to provide” Pennsylvania with $25 million to help fund the implementation of the rural healthcare model. This model calls for participating hospitals to receive fixed, global budgets from participating payers, including Medicare, set in advance to cover the cost of all the inpatient and outpatients services they provide.

The stated purpose is to provide predictable funding to allow rural hospitals to “deliberately redesign the care they deliver.”

Gov. Tom Wolf, a Democrat, praised the program, describing it as “designed to address the challenges faced by rural hospitals and promote a transition to higher quality, integrated and value-based care.”

“This will improve health outcomes in rural areas, which face significant challenges and have been especially hard hit by the opioid and heroin epidemic,” Wolf said in a news release. “Rural hospitals are the economic engines of many of these communities and the success of healthcare in our rural communities impacts every Pennsylvanian.”

Articles in the Philadelphia Inquirer and Pittsburgh Post-Gazette both cited a Healthcare Council of Western Pennsylvania survey that found that regional hospitals with fewer than 100 beds collectively lost $10.4 million and had a negative 4.84 percent operating margin for the third quarter of 2016.

The program started Jan. 12 and is scheduled to end Dec. 31, 2023. Pennsylvania has committed to creating $35 million in Medicare savings over the course of the program.

Also, the initiative is intended to be budget-neutral for Medicare, so the growth rate of rural Pennsylvania’s per-beneficiary Medicare expenditures must not exceed the national rate for rural Medicare spending. An agreement has also been set to keep all-payer spending growth to at or below 3.38 percent — a rate which matches the state’s compound annual growth from 1997 to 2015, according to a CMS fact sheet.

Financial incentives may be linked to quality targets. Those targets haven’t been announced yet, but will be aimed at increasing access to care, reducing rural health disparities by improving chronic disease management, and decreasing substance-abuse deaths.

State Rep. Matt Baker, a Republican whose district abuts New York in the center of the state line, noted the importance of helping residents with drug addiction.

“Rural areas are also seeing an increase in patient load due to the influx of patients addicted to or overdosing on opioids and heroin,” Baker said in a news release. “This is yet another stress on a healthcare system already struggling in many regards.”

The goal is to have six rural hospitals participating next year, and then increase that number to at least 18 for 2019, and then to 30 for 2020 through 2023.

A major player in Pennsylvania’s rural healthcare landscape, Geisinger Health System, applauded the news.

“The Pennsylvania Rural Health Transformation is an incredibly innovative payment model that will strengthen hospitals across the commonwealth by creating a path to sustainability for struggling rural hospitals,” Geisinger CEO Dr. David Feinberg said in the governor’s news release.

CMS has also been partnering with Maryland and Vermont on all-payer models.

For the record, the other items on Slavitt’s punch list before the Obama administration ends Jan. 20 include: coverage of continuous glucose monitoring, data transparency in Medicare Advantage and what Slavitt described as “New data for primary care.”

Photo: Flickr user Jim Hickcox