As rural hospitals continue to face huge financial pressures with many forced to close, some medical facilities are looking to buck the current fee-for-service reimbursement structure in order to better serve their communities.

Last year, the Centers for Medicare and Medicaid Services and the Commonwealth of Pennsylvania announced the launch of a program that provides rural hospitals with the opportunity to transition from fee-for-service reimbursement to a multi-payer global budget payment approach that’s intended to improve population health outcomes and quality of care while lowering costs.

Such approaches can incentivize providers to use services empowered by information technology to deliver preventive care more cost effectively, proponents say. The tenets of the Pennsylvania program was outlined in a hearing Thursday before the Senate Finance Committee.

Global budgeting departs from fee-for-service reimbursement by assuring a hospital receives a prospectively set amount of revenue over the course of the year, creating an incentive to reorganize care delivery and invest in services to address preventable health conditions.

Under the Pennsylvania Rural Health Model, participating rural hospitals will be paid based on all-payer global budgets—a fixed amount that is set in advance for inpatient and outpatient hospital-based services, and paid monthly by Medicare fee-for-service and all other participating payers.

According to CMS, the model will “test whether the predictable nature of the global budgets will enable participating rural hospitals to invest in quality and preventive care, and to tailor the services they deliver to better meet the needs of their local communities.”

According to Karen Murphy, Geisinger’s chief innovation officer, this innovative payment model for rural hospitals will provide a “glide path” to improving health and healthcare delivery in rural communities by transitioning them to higher quality, integrated and value-based care. Under global budgets, these organizations can plan for a set amount of revenue and invest in “outside the walls” initiatives to reduce hospital utilization.

“Rural hospitals are encouraged to move from traditional care models delivered directly onsite to innovative care models that are enabled by technologies such as telehealth, video conferencing and remote monitoring,” testified Murphy on Thursday before the Senate Finance Committee.

Murphy told lawmakers the hope is that “rural hospitals will invest in care coordination, such as reaching out to patients who frequently use emergency room services and connecting them with a provider” as well as “population health and preventative care services, such as chronic disease prevention programs and behavioral health initiatives—including those targeting substance abuse disorder—with the expansion of medical health homes to include medication-assisted treatment programs.”

She added that “utilizing and leveraging those technologies allow patients to receive healthcare services and remain in their communities” without requiring them to travel what can be long distances to receive in-person care at rural medical facilities. “It’s unrealistic to think that everything is going to be present in rural communities,” Murphy said. “We need to leverage those technologies to enable quality healthcare in a cost-effective way that keeps people in their communities—to the (greatest) extent possible.”

Also See: CMS plan to improve rural care includes greater use of IT

Geisinger, the Danville, Penn.-based health system, is among six rural hospital organizations that are participating in the initial phase of the Pennsylvania Rural Health Model. The program ultimately is expected to expand to 30 facilities across the state, which has the third largest rural population in the U.S.

CMS has entered a cooperative agreement to provide Pennsylvania as much as $25 million over five years to support the creation of a Rural Health Redesign Center that will administer the model to “provide a way to deploy capabilities to support all participating hospitals,” said Murphy.

She pointed out that the approach of replacing fee-for-service with a multi-payer global budget based on hospitals’ historic net revenue was first successfully introduced in Maryland in 2010. However, unlike the Maryland All-Payer Model, the Pennsylvania Rural Health Model needed “to develop a new methodology, since Maryland has the authority to establish hospital rates (and) Pennsylvania does not,” Murphy added.

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