Home Front end The transformation of health care in rural areas will require an overhaul of funding. Here is one way to do it.

The transformation of health care in rural areas will require an overhaul of funding. Here is one way to do it.


The financial problems facing rural health care are undeniably complex and, as such, require out-of-the-box solutions. One solution being tested today is a new financing system in which public and private insurers pool funds to pay for a defined set of services to a specific community.

Put forward final recommendations published By the American Hospital Association’s Future of Rural Health Care working group in May, the solution would give participating hospitals access to funds from the pool, which they would use to provide agreed upon basic services, such as primary care, emergency services and maternal care.

Overall, rural health experts who spoke to MedCity News agree that this type of model would be viable. Versions of it are already being tested in Pennsylvania and Maryland, and early results appear to be favorable. in favor of the model. But implementing the model is not without challenges, including stakeholder alignment and the lack of expertise among rural hospitals new to risk management.

The public-private funding model for basic services
It is clear that the traditional fee-for-service model does not work for rural hospitals. Rural populations are shrinking and, as a result, the margins are not what they used to be for hospitals in those areas, said Timothy Moore, president and CEO of the Mississippi Hospital Association and a member of the AHA task force, during a telephone interview.

The decline in margins is accompanied by widespread hospital closures. From January 2013 to February 2020, 101 rural hospitals closed, according to the Government Accountability Office.

“Yes [patient] the volume is not large enough to justify and do [core] possible services in the future, then there has to be a way to offset those costs, ”Moore said. “This is where that [model] join the game.”

The model involves payers and providers to identify and agree on essential essential services and quality measures for recipient care. Payers provide funds to a pool that will cover these services on a population basis rather than a fee-for-service basis.

Although 2020 left rural hospital finances in tatters, payers recorded strong returns, Moore said. Thus, there is a clear opportunity for payers to partner with each other and providers to ensure a reliable line of funding for key services.

Hospitals participating in the model will need to hire a care coordinator or navigator to ensure patients have access to services while avoiding overuse. Hospitals will also be responsible for complying with negotiated quality measures related to basic services. If these are not met, payers can reduce future allocations to the pool.

For the model to work, payers must commit to three years of membership. Any payer who chooses to leave during this period must pay a predetermined penalty to the fund.

By focusing on the health of the population rather than the volume of patients, the model can help rural hospitals not only to keep traditional services alive, but also enable them to address the social determinants of health, a said Brock Slabach, vice president of member services for the National Rural Health Association. , during a telephone interview.

Transport, for example, has been identified by the AHA working group as one of the most essential services in rural areas. Rural hospitals typically don’t have enough money to provide transportation, although that’s one of the biggest barriers to care in those areas, Slabach said. This is where the model could come in handy as it institutes a funding system that allows hospitals to prioritize the services most needed by the communities they serve.

Real examples of the model at work
Versions of the pooled funding model for basic services are already being tested.

One is the Pennsylvania Rural Health Model, which aims to shift rural hospitals from fee-for-service to global budget payments. Managed by the PA Rural Health Redesign Center Authority, the model was implemented in January 2019 in partnership with the Center for Medicare and Medicaid Innovation.

According to the model, the Centers for Medicare & Medicaid Services and other participating payers, including state Medicaid agencies and commercial insurers, pay participating rural hospitals for all inpatient and inpatient outpatient services through an overall budget defined by the model. ‘advanced.

The CMMI aims to have 90% of a participating hospital’s net patient income covered by the overall budget, Gary Zegiestowsky, executive director of the PA Rural Health Redesign Center Authority, said in a telephone interview. The remaining care is always reimbursed on a fee-for-service basis.

“Earnings [of the model] does that give hospitals a fixed budget to operate, ”Zegiestowsky said. “So for rural hospitals that are struggling to survive… it gives them financial stability to operate and focus on what they can do to transform and align their services to best meet the needs of their community. “

Payers and providers participating in the model jointly budget, with assistance from the Rural Health Redesign Center Authority.

There are provisions to adjust the budget if necessary. For example, there is a “potentially avoidable utilization factor,” which explains care that shouldn’t be provided in a hospital but is, Zegiestowsky said. Savings are built into the budget to pay for this avoidable use.

The model is in the third year of a six-year demonstration schedule, and participant feedback has been positive so far.

“We recently conducted a vendor survey and 92% of all hospital leaders participating in the program believe the global budget model helps them be more financially stable and provides them with a solid path to transform their organizations,” said said Zegiestowsky.

In addition, the model seems to help reduce costs. An independent evaluation of the Maryland version of a global budget program for all payers, conducted by CMMI in 2017, suggests he braked total hospital expenses for Medicare beneficiaries.

As a result, other states were inspired to view global budgeting as a potential financial solution for their rural amenities.

Dr William Ferniany, CEO of the University of Alabama Birmingham Health System and a member of the AHA Rural Health Working Group, has been trying for years to implement a similar flexible funding model in his state.

Currently, Ferniany is working with a consortium that includes leaders from the Blue Cross Blue Shield of Alabama and the Alabama Hospital Association as well as the State Commissioner of Medicaid and the Alabama Chief of Public Health to identify such a model. , he said in a telephone interview. . And CMS ‘ Access to community health and rural transformation, or CHART, the payment model piqued their interest.

Launched last August, CHART has two components: the community transformation component and the responsible care organization transformation component. In the first, CMS will select 15 organizations, including state Medicaid agencies, local public health departments, and independent practice associations, to work with participating hospitals to implement new models of care with funding. federal. The second will involve CMS selecting 20 rural-focused ACOs to receive advance payments as part of joining Medicare’s shared savings program.

UAB Health System has applied for the model and is expecting CMS to announce participants in the fall of this year.

“Global budgeting like in Pennsylvania or Maryland, or the CHART model, [are] much better ways for rural hospitals [to get paid than fee-for-service],” he said.

Obstacles to implementation
While these payment models point to an innovative future in rural health care, it is important to remember that they come with their own challenges.

From a payer’s perspective, while a funding pool or a global budget can help rural hospitals survive, a major hurdle is the accountability factor, said Von Nguyen, senior vice president and chief medical officer of Durham. . North Carolina Blue Cross and Blue Shield, during a telephone interview.

A member who purchases a Blue Cross plan is entitled to a particular set of services, which may be different from those offered by a competitor. It is up to each payer to be responsible for the care they have promised to their members when they collectively decide what basic services will be funded by the pool, he said.

“You [may] lose that responsibility when you really pool the funds, ”he added.

Member accountability aside, Nguyen believes that not all hospitals are ready for some value-based models, including those that involve capitation payments like the pooled funding system.

“It takes a lot of skill to manage a patient in a capitalized model because you get [a certain amount of money on the front end] and if you have to provide services and it costs more than what you get in the capitation payment, the hospital is responsible for that – so it’s quite risky, ”Nguyen said.

Risk management is a capability that hospitals need to develop, and rural facilities may struggle with this. This is where companies like Kansas City, Missouri Health Caravan Come in.

The public-private funding pool model is a great idea in theory, but rural providers are struggling to take advantage of innovative new strategies, said Tim Gronniger, president and CEO of Caravan Health.

Caravan supports rural facilities and those that disproportionately serve a low-income population to implement and operate value-based models of care.

“We bring them technology, we bring them expertise and coaching, and we become partners with them and share the risk of these contracts,” Gronniger said in a telephone interview.

Another source of struggle for providers and payers in this model is alignment, said Slabach of the National Rural Health Association.

Bringing together different stakeholders with varying interests and finding common ground can be difficult, especially when it comes to funding. It can take an unprecedented level of collaboration for everyone in the room to agree to the same terms when it comes to cost and quality metrics, he said.

But if executed as planned, the model and its different versions could transform the way rural health care works and is financed.

For Ferniany of UAB Health System, the pooled funding model keeps the ultimate goal of the health sector at the forefront: caring for the general public.

“I used to think of health care as a right,” he said. “Now I see it as a public good. It must be accessible to all, just as drinking water is a public good … And if we start to think about [healthcare] as a public good, [we] will pay for it in a way that benefits the public.

Photo: Claudenakagawa, Getty Images


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