The Pennsylvania Rural Health Model is part of a national and worldwide search for better ways to pay for health care.
Participating hospitals develop a global budget for all care and get regular monthly payments from Medicare, Medicaid and insurance companies.
The Pennsylvania plan is one of three dozen “innovation models” for new payment and delivery systems listed on the Center for Medicare and Medicaid Innovation’s website.
The model is unique because of its targeted population, said Karen Murphy, chief innovations officer for Geisinger Health System, headquartered in Danville, Montour County.
“It is the first national model that transforms payments for rural hospitals,” Murphy said.
Murphy was secretary of the state Department of Health when the Rural Health Model was being developed. She said it was envisioned to transform how health care is delivered by allowing hospitals to expand services that don’t rely on “heads in beds” to make money.
The CMS Innovations Center list also includes the Maryland Total Cost of Care Model and its predecessor, the Maryland All-Payer Model.
The success of the Pennsylvania and Maryland programs both rely on the global budget model for financing health care.
Their success in improving care and reducing health costs helped provide the groundwork for the national Community Health Access and Rural Transformation Model, a voluntary program for rural hospitals.
The CHART model is currently enrolling participants, which will be announced in May.
Global budgets represent one type of value-based payment model being studied.
Another example is the capitation model, or population-based payment, in which hospitals are paid a certain fee for each patient to provide all health care services. Like the global budget model, the capitation model is meant to reduce costs and encourage wellness.
Value-based payment models are being explored to replace the traditional fee-for-service systems in which providers get paid for each exam, test and procedure.
A fourth model is the bundled-payment model, in which doctors and hospitals are paid based on the diagnosis or procedure for all treatment across the entire care cycle. The pre-set payment for heart failure, as an example, would cover all the services, procedures, drugs, tests and devices to treat a patient.
As the nation moves toward more value-based payment models, demonstration projects such as the Pennsylvania Rural Health Model are vital, the federal Health Resources and Services Administration says on its Rural Health Information Hub website.
“Most early adopters of new care models have been large, urban-based integrated delivery systems,” the website says. “Less is known about how these changes and environmental factors will affect rural health care delivery systems. Because rural health care providers are often paid outside of the traditional prospective payment systems and fee schedules, there is less known about how new and emerging models might function in rural communities.
“As a result, policymakers and rural providers need to better understand the implications of new and emerging models for low-volume rural settings.”