CMS Launches Rural Healthcare Innovation Model in Pennsylvania to Prevent Clinic Closures

Across countries worldwide, high-quality medical resources are often concentrated in economically developed urban areas. The difficulty rural residents face in accessing healthcare is a common issue across nations, and the United States is no exception.In fact, the operational status of most rural healthcare institutions in the United States is far from optimistic.

According to a report released by iVantage Health Analytics in early 2016, 67 rural hospitals across the United States closed and 283 faced the risk of closure between 2010 and 2015. At the beginning of 2016, iVantage had already identified 673 rural hospitals at risk of closure, among which 210 had a very high risk index.

Although the United States is one of the most industrialized countries in the world, approximately 15% of its population (about 46 million people) still resides in rural areas and engages in agriculture-related production and services. Residents in these regions also require medical care; if rural healthcare facilities are inadequate, they must seek treatment at hospitals in nearby cities, significantly increasing their medical expenses.

The rural population in the United States tends to be older, have lower incomes, and often lack health insurance—More than 60% of uninsured U.S. citizens live in rural areas of states that have not expanded Medicaid eligibility under the Affordable Care Act (ACA).. Therefore, if rural areas represent the greatest challenge to the U.S. healthcare system, they also present its greatest opportunity. By expanding affordable healthcare services beyond urban centers, it is possible to develop a new model for rural healthcare applicable across the United States.

On January 12, 2017, the U.S. Centers for Medicare & Medicaid Services (CMS) announced that the rural healthcare model in Pennsylvania had officially been implemented. What are the innovative aspects of this model, and what lessons can be drawn from it? VCBeat (WeChat ID: vcbeat) has compiled the core content, which may offer insights for China’s primary-level medical insurance system.

Dr. Patrick Conway, Principal Deputy Administrator and Chief Medical Officer of the Centers for Medicare & Medicaid Services (CMS), stated, “The Pennsylvania Rural Health Model presents a historic opportunity for rural hospitals. We believe this initiative will enhance the quality of care delivered to patients and help address the primary healthcare needs of populations in rural communities. This model will support the financial sustainability of rural hospitals, enabling them to continue providing essential services to their communities.”

Specifically,CMS to Provide $25 Million in Funding to Pennsylvania to Support Implementation of Rural Healthcare ModelsThis model aims to increase access to high-quality medical services for the rural population in Pennsylvania, improve their health outcomes, reduce expenditures for various healthcare payers—including Medicare Advantage plans—boost the financial revenue of the state’s rural hospitals, and ensure that local residents can continue to receive nearby medical care.The Pennsylvania Department of Health will co-administer the model with CMS.

Under this model, the core concept isPayers participating in the project will provide rural hospitals with a fixed global budget to prepay for all inpatient and outpatient services delivered.. Rural hospitals will use this predictable funding to redesign the healthcare services they provide, with the aim of improving medical quality and meeting the healthcare needs of the local community population.

Currently, this model is oriented towardOpening of Critical Access Hospitals and Acute Care Hospitals in Rural Pennsylvania. In addition, other payers within the federal scope that cover individual health insurance business (including Medicaid and various commercial health plans) are eligible to participate in this model.The Pennsylvania Rural Health Model aims to establish a partnership between the state government and the federal Centers for Medicare & Medicaid Services (CMS) to provide high-quality, innovative healthcare services to rural residents.

Currently, the Centers for Medicare & Medicaid Services (CMS) is collaborating with 38 states and territories through its State Innovation Models Initiative to improve healthcare quality and population health, while fostering state-led institutional innovation.Since 2014, the Centers for Medicare & Medicaid Services (CMS) has collaborated with Maryland on the “All-Payer Model for Affordable Care,” shifting hospital payments to global budgets to incentivize and advance value-based care.; In October 2016, CMS announced that it would replicate the Maryland model in Vermont.

Pennsylvania is the second state to participate in this innovative model program, which will provide CMS with valuable practical information to help challenge other healthcare service transformation efforts aimed at addressing the challenges faced by rural healthcare providers. Both The Philadelphia Inquirer and the Pittsburgh Post-Gazette have cited a survey by the Western Pennsylvania Healthcare Council, reporting that hospitals in Pennsylvania with fewer than 100 beds incurred a total loss of $10.4 million in the third quarter of 2016, with an operating profit margin of -4.84%. The situation is indeed grim.

Furthermore, the plan stipulates that the growth rate of rural Medicare expenditures in Pennsylvania shall not exceed the national rural Medicare expenditure ratio. According to the CMS fact sheet, the model also establishes an agreement to keep the all-payer expenditure growth rate at or below 3.38%, a rate consistent with the national compound annual growth rate from 1997 to 2015.

The initiative was officially launched on January 12, 2017, and is scheduled to conclude on December 31, 2023, spanning a total of five years. Pennsylvania has committed to generating $35 million in Medicare savings over the course of the program. As part of the upfront funding to establish this model, the Centers for Medicare & Medicaid Services (CMS) plans to provide Pennsylvania with $25 million. These funds will be allocated to operational activities, including data analytics, quality assurance, and technical assistance, to help participating rural hospitals develop and implement the program, enhance care quality, and address the most prevalent healthcare needs within their respective communities.

Democratic Governor Tom Wolf praised the initiative, describing it as “a model designed to address the challenges facing rural hospitals and facilitate the transition toward higher-quality, value-based care.” In a press release, Wolf stated, “Healthcare in Pennsylvania’s rural areas is facing significant challenges, particularly with regard to opioid and heroin abuse. This model will improve healthcare delivery in these regions… Rural hospitals serve as economic engines for their communities, and the success of rural healthcare will impact every Pennsylvanian.”

Republican State Representative Matt Baker also recognized the importance of this initiative in helping residents address substance use disorders. In a press release, Baker stated, “The rising number of patients struggling with opioid and heroin addiction or overdose has led to a year-over-year increase in patient burden in rural areas. This undoubtedly places additional strain on rural healthcare systems that are already stretched thin in many respects.”

Geisinger Health System, a key player in rural healthcare in Pennsylvania, has also expressed strong support for the launch of this new model. David Feinberg, CEO of Geisinger, stated, “Pennsylvania’s transformation of rural healthcare has pioneered an innovative payment model that will create a path toward sustainable development for struggling rural hospitals.”

The Pennsylvania rural health model is feasible because the Affordable Care Act established the CMS Innovation Center to test innovative payment and service delivery models aimed at reducing program expenditures while maintaining or improving the quality of care for Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). The purpose and core of this innovation are to reimburse hospitals and clinicians based on the quality, rather than the quantity, of patient care. Furthermore, CMS collaborates with Maryland and Vermont on all-payer models.

The financial incentive targets of this model have not yet been disclosed; they are speculated to be linked to healthcare quality objectives, aiming to increase rural populations’ access to care and narrow the urban–rural healthcare disparity by improving chronic disease management and reducing drug overdose deaths.

The Pennsylvania rural healthcare model initiative will include six rural hospitals in 2018, expand to at least 18 hospitals in 2019, and ultimately reach 30 hospitals in its final phase.

This article is from MedCity News, authored by Andis Robeznieks, and compiled and edited by VCBeat.