Pennsylvania to test new payment model for rural hospitals: 8 things to know

CMS and Pennsylvania are joining forces on a new model designed to improve health and healthcare is rural areas of the state.

Here are eight things to know about the model.

1. The Pennsylvania Rural Health Model, announced Tuesday, is a new initiative by CMS, through the CMS Innovation Center, and Pennsylvania. CMS and the state's health department will administer the model together.

2. The goal of the model is not only to improve health and healthcare in rural areas of Pennsylvania, but also to reduce the growth of hospital expenditures across payers — including Medicare — and improve the financial viability of the state's rural hospitals, according to CMS.

3. The model is broken up into seven performance years, according to CMS. It is scheduled to begin Jan. 12, 2017, and end Dec. 31, 2023.

4. CMS said Pennsylvania rural hospitals participating in the model will receive 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," the agency added.

5. Pennsylvania, during each performance year, will prospectively set the all-payer global budget for each participating hospital, CMS said. The all-payer global budget will primarily be based on hospitals' historical net revenue for inpatient and outpatient hospital-based services from all participating payers, according to CMS.

6. Participating hospitals will also detail a plan to improve care quality by preparing a Rural Hospital Transformation Plan that must be approved by Pennsylvania and CMS.  

7. CMS said it will provide Pennsylvania with $25 million, which is a portion of the funding to begin implementing the model.

8. Any critical access hospital or acute care hospital in rural Pennsylvania may participate in the model.

More information on the model is available here.


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