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

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.