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Searching for Value-based Care Solutions in Rural Pennsylvania


A CMMI-backed program transitions rural hospitals to a value-based, global budgeting model to evaluate outcomes and cost savings.

A new value-based care initiative for rural hospitals in Pennsylvania aims to leverage the latest in healthcare analytics to facilitate a transition to a population health-focused environment.

An initial group of 6 rural hospitals in the state are participating in the Pennsylvania Rural Health Model, an effort that combines a global budget payment model with the latest population health management techniques and technology in order to create what organizers hope will be a sustainable pathway forward for hospitals in rural areas and beyond.

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Karen Murphy, RN, PhD, executive vice president and chief innovation officer at Geisinger Health and the former Secretary of Health for the State of Pennsylvania (pictured), said the program offers an opportunity for rural hospitals to rethink the way they deliver care, and to focus on outcomes.

“In a fee-for-service, or volume-driven reimbursement model, it’s about what you do and how many times you do it, not how well you do it,” she told Healthcare Analytics News™. “With the rural health initiative what the state is saying to rural hospitals is to really rethink what your community needs.”

One Geisinger hospital will be among the initial half-dozen participating in the program. Organizers hope to eventually have 30 rural hospitals in the program.

In the global budgeting model, historical payment data would be used to calculate each hospital’s share of the coming year’s revenue. That prospectively calculated revenue would then be split up into 12 parts, with the participating hospitals paid 1/12 of the total revenue each month.

With that predictable income, hospitals could begin to construct locally tailored programs. She noted that some rural areas have been hit hard by the opioid addiction crisis. In those communities, a value-based model would give hospitals more of a financial incentive to design programs to specifically address that problem.

The model could also encourage hospitals to undertake a diabetes care management program, she said, which would be financially beneficial not because of the number of services it provides, but rather because it would theoretically reduce overall spending. Murphy noted one Geisinger program that actually provides fresh healthy food to patients with diabetes, because better access to fresh food was identified as a need in some communities.

Underpinning the program are data -- claims data to support the prospective budgeting component of the initiative, and population health data to track and improve patient outcomes.

Murphy said modern data analytics make the program feasible in a way it might not have been in decades past.

The Center for Medicare and Medicaid Innovation (CMMI), part of the Centers for Medicare and Medicaid Services (CMS), helped to design the model in Pennsylvania, which is also informed by a similar program in Maryland. CMS has pledged $25 million over 5 years to help the State of Pennsylvania fund a Rural Health Redesign Center to support the rural health initiative and spread and facilitate best practices.

While Geisinger has earned a national reputation for its embrace of technology to rewrite the rules of the business of healthcare, Murphy said the Rural Health Redesign Center can serve as a hub to ensure all participating hospitals benefit from the program.

Murphy said it’s been a challenging time for rural hospitals, so she believes they will be ready to embrace change if given a clear path forward. She noted that 83 of the country’s 2,244 rural hospitals closed in the past 7 years, and she noted that a 2016 study from iVantage Health Analytics identified another 673 hospitals that are financially “vulnerable.”

“It takes time to think about moving from volume to value,” she said. “[I]t’s my understanding that there is a fairly good response to the idea and I think rural hospitals all over the country are looking for an answer.”

If it works at the rural level, she said it could also become a model for larger healthcare systems.

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