State to Experiment with Global Budgets for Rural Areas

The Commonwealth of Pennsylvania plans to launch an experiment in which participating health insurers will fund global budgets to care for residents served by selected rural hospitals.

The program seeks to preserve access to care in rural parts of the state by stabilizing the financial health of struggling rural hospitals.

According to a Pennsylvania Department of Health news release,

The Rural Health Model is an alternative payment model, transitioning hospitals from a fee-for-service model to a global budget payment. Instead of hospitals getting paid when someone visits the hospital, they will receive a predictable amount of money. Payment for the global budget will include multiple-payers, including private and public insurers.

The global budgeting project is a joint venture of the state’s Department of Human Services, Department of Health, Insurance Department, the Pennsylvania Office for Rural Health, five participating hospitals, and five health insurers.  The federal Center for Medicare and Medicaid Innovation, another partner, is investing $25 million over five years to fund a rural health redesign center to support the project’s launch.

The state hopes to add more hospitals and insurers in the future.

The project is needed, according to the state, because “Nearly half of all rural hospitals in Pennsylvania are operating with negative margins and are at-risk of closure.”  Rural hospitals across the country face similar challenges.

Learn more about this initiative from this Pennsylvania Department of Health news release.

 

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