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Pennsylvania Rural Health Model to use global capitation to pay for inpatient, outpatient care

Participating critical access and acute care hospitals will receive a fixed amount of money that is funded by all participating payers.

Susan Morse, Senior Editor

Building on all-payer models in Maryland and Vermont, the Centers for Medicare and Medicaid Services this week announced a new global capitation model for rural hospitals in Pennsylvania.

Participating critical access hospitals and acute care hospitals will receive all-payer global budgets for a fixed amount of money that is set in advance and funded by all participating insurers, to cover inpatient and outpatient services, CMS said.

In addition, other commercial health plan payers in the state are eligible to participate by paying participating rural hospitals through global budgets.

"Rural hospitals will use this predictable funding to deliberately redesign the care they deliver to improve quality and meet the health needs of their local communities," CMS said.

CMS is giving Pennsylvania $25 million, which is a portion of the funding, to begin implementing the Pennsylvania Rural Health Model.

The Pennsylvania Department of Health and CMS will jointly administer the model. The state will be responsible for data analytics, quality assurance, and technical assistance.

The model seeks to increase rural Pennsylvanians' access to care while also reducing the growth of hospital expenditures across payers, including Medicare, to increase the financial viability of the state's rural hospitals, CMS said.

"The Pennsylvania Rural Health Model presents a historic opportunity for rural hospitals," said Patrick Conway, MD, CMS principal deputy administrator and chief medical officer. "The model will help rural hospitals remain financially viable and continue to provide essential services to the people in their communities."

The Pennsylvania Rural Health Model was done in agreement with the state and signed by Governor Tom Wolf and Pennsylvania Secretary of Health Karen Murphy.

[Also: HRSA awards $16 million to expand telehealth, other rural healthcare services]

It aims to build on CMS' partnerships with states on healthcare delivery. CMS has partnered with 38 states and territories through state innovation models. Pennsylvania participated in the State Innovation Models Initiative as a Round 2 Design State, which helped support the development of the Pennsylvania Rural Health Model, CMS said.

Since 2014, the agency has partnered with Maryland on an all-payer model to shift hospital payments to global budgets that reward value over volume.

In October 2016, CMS announced the Vermont All-Payer Accountable Care Organization Model, which built on the Maryland All-Payer Model.

[Also: Vermont all-payer ACO model approved, will count for MACRA]

"The Pennsylvania Rural Health Model will provide valuable insight for other opportunities for CMS to participate in state-driven, all-payer payment and care delivery transformation efforts that address the challenges faced by rural providers," CMS said.

CMS said the Pennsylvania Rural Health Model is possible as a result of the Affordable Care Act, which created the CMS Innovation Center.

A new administration led by President-elect Donald Trump and Republicans in the House and Senate, are currently working to repeal, and potentially replace,  the ACA.

Twitter: @SusanJMorse

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