Pilot Program Throws Lifeline to PA Rural Hospitals

John Commins, January 18, 2017

State and federal officials in the Keystone State this month unveiled the Pennsylvania Rural Health Model. The question to be answered is whether a predictable, fixed funding source will provide sufficient stability to financially stressed rural hospitals.

Gov. Tom Wolf
Gov. Tom Wolf

Pennsylvania has become the latest state to take action to address the plight of rural healthcare.

Gov. Tom Wolf and state and federal stakeholders this month unveiled the Pennsylvania Rural Health Model, a comprehensive, statewide pilot project to improve access to care delivery and population health outcomes.

Under the seven-year pilot project, which went into effect last week and ends in December, 2023, as many as 30 rural critical access and acute care hospitals across the state that opt in will be paid a fixed all-payer global budget that is set in advance for inpatient and outpatient services.

They will also receive monthly Medicare fee-for-service payments and payments from commercial plans.

The Pennsylvania model is the latest in a string of innovative all-payer pilot projects designed by states with the support of the Centers for Medicare & Medicaid Services.

In 2014, Maryland launched an all-payer model that transitions to global payments rewarding value over volume. Last October, Vermont unveiled an all-payer accountable care organization model. CMS has designated Pennsylvania as a Round 2 Design State that could serve as a model for other states considering an all-payer project.

The question to be answered in this pilot program is whether this predictable, fixed funding source will provide sufficient stability to financially stressed rural hospitals that will allow them to transition into a value-based care delivery model designed to meet the specific needs of the communities they serve.

Jeffrey Bechtel, senior vice president for health economics and policy at the Pennsylvania Hospital & Health System Association, calls the model "a paradigm shift, and a move away from fee-for-service with the benefit of a predictable budget."

"The thought here is to transform the way that hospitals operate," he says.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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