The financial problems facing rural healthcare 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 in the final recommendations published by the American Hospital Association’s Rural Health Care Future Task Force 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, health departments, emergency and maternal care.
In general, 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 initial results appear to be favorable.
in favor of the model. But implementing the model is not without challenges, including stakeholder alignment and a lack of experience among rural hospitals that are new to risk management.
The public-private financing model for basic services
It is clear that the traditional fee-for-service model is not working for rural hospitals. Rural populations are declining And as a result, the margins are not what they used to be for hospitals in these areas, Timothy Moore, president and CEO of the Mississippi Hospital Association and a member of the AHA task force, said in a telephone interview.
With declining margins come widespread hospital closures. From January 2013 to February 2020, 101 rural hospitals have closed, according to the Government Accounting Office.
“Yes [patient] the volume is not large enough to check and make [core] feasible services down the road, then there has to be some way to offset those costs, ”Moore said. “That’s where this [model] comes into play. “
The model involves payers and providers who identify and agree on basic and essential services and quality measures for the care of beneficiaries. Payers provide funds to a group that will cover these services by population, rather than a fee for service.
Although 2020 left rural hospital finances in shambles, payers saw strong returns, Moore said. Thus, there is a clear opportunity for payers to partner with each other and with providers to ensure a reliable line of financing for key services.
Hospitals participating in the model will need to hire a care coordinator or navigator to ensure that patients have access to services while avoiding overuse. Hospitals will also be responsible for complying with negotiated quality measures related to basic services. If not met, payers can reduce future allocations to the pool.
For the model to work, taxpayers must commit to three years of participation. Any payer who chooses to leave within that time period must pay a predetermined penalty to the fund.
With its focus on population health, rather than patient volume, the model can help rural hospitals not only keep traditional services alive, but also allow them to address the social determinants of health, said Brock Slabach. , Vice President of Member Services for the National Rural Health Association. , in a telephone interview.
Transportation, for example, was identified by the AHA task force as one of the most essential services in rural areas. Rural hospitals generally don’t have enough money to provide transportation even though it is one of the biggest barriers to care in these regions, Slabach said. This is where the model could help, as it institutes a funding system that allows hospitals to prioritize the services most needed by the communities they serve.
Real-world examples of the model in operation
Versions of the joint financing model for basic services are already being tested.
One is the Pennsylvania Rural Health Model, which aims to transition rural fee-for-service hospitals to global budget payments. Led by the PA Rural Health Redesign Center Authority, the model was implemented in January 2019 in partnership with the Medicare & Medicaid Innovation Center.
Under 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 outpatient services through a global budget that it is established in advance.
CMMI aims to have 90% of a participating hospital’s net patient income covered by the global budget, Gary Zegiestowsky, executive director of the PA Rural Health Redesign Center Authority, said in a telephone interview. The remaining care is still reimbursed on a fee-for-service basis.
“The benefit [of the model] it’s that it gives hospitals a fixed budget to operate, ”Zegiestowsky said. “So for rural hospitals struggling to survive … it gives them the financial stability to operate and focus on what they can do to transform and align their services to better meet the needs of their community.”
The payers and providers participating in the model set the budget together, along with the help of 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 represents care that shouldn’t be provided in a hospital, but does, Zegiestowsky said. Savings go into the budget to pay for that avoidable utilization.
The model is in the third year of a six-year demo program, and feedback from participants has been positive so far.
“We did a recent vendor survey and 92% of all hospital executives in the program believe that the global budgeting model is helping them become more financially stable as well as providing a solid path to transform their organizations,” he said. Zegiestowsky.
In addition, the model appears to help reduce costs. An independent evaluation of the Maryland version of an all-payer global budget program, conducted by CMMI in 2017, suggests that he braked Total hospital expenses for Medicare beneficiaries.
As a result, other states have been inspired to consider the global budget as a possible financial solution for their rural facilities.
Dr. William Ferniany, executive director of the University of Alabama Health System at Birmingham and a member of the AHA rural health task force, has tried to implement a similar flexible funding model in his state for years.
Ferniany is currently working with a consortium that includes leaders from Blue Cross Blue Shield of Alabama and the Alabama Hospital Association, as well as the state Medicaid commissioner and Alabama’s chief of public health to identify such a model, he said in an interview. telephone. . And CMS ‘ Access to community health and rural transformation, or GRAPHIC, the payment model has piqued your interest.
Launched last August, CHART includes two tracks: the community transformation track and the responsible care organization transformation track. 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 federally funded care. The second will involve CMS selecting 20 ACOs focused on rural areas to receive advance payments as part of joining the Medicare Shared Savings Program.
The UAB Health System has requested the model and is waiting for CMS to announce the participants in the fall of this year.
“The global budget as 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 in the way of implementation
Although these payment models point to an innovative future in rural healthcare, it is important to remember that they come with their own challenges.
From a payer’s perspective, while a funding pool or global budget could help rural hospitals survive, a major hurdle is the liability factor, said Von Nguyen, Durham’s senior vice president and chief medical officer. Blue Cross and Blue Shield of North Carolina, in a telephone interview.
A member who purchases a Blue Cross plan is entitled to a particular set of services, which may be different from what a competitor offers. It is up to each payer to be responsible for the care they have promised their members when they collectively decide the basic services to be financed through the common fund, he said.
“Your [may] lose that responsibility when you actually raise the funds, “he added.
Aside from the issue of member liability, Nguyen believes that not all hospitals are ready for certain value-based models, including those that involve capitated payments such as the pooling system.
“You need a lot of capacity to handle a patient in a capitated model because you get [a certain amount of money on the front end] and if you need to provide services and it costs more than what you get in capitated payment, the hospital is in a tight spot for that, so it’s quite risky, ”Nguyen said.
Risk management is a capacity hospitals must develop, and rural facilities can struggle with that. This is where businesses like Kansas City, Missouri Caravan health Go ahead.
The public-private funding pool model is a great idea in theory, but rural providers struggle 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 values-based models of care.
“We bring them technology, we give them experience and training, and we become partners with them and we share the risk of these contracts,” Gronniger said in a telephone interview.
Another source of struggle for both providers and payers in this model is alignment, said Slabach of the National Rural Health Association.
Bringing together different stakeholders with varied interests and finding common ground can be challenging, especially when it comes to financing. It may require an unprecedented level of collaboration for everyone in the room to agree to the same terms regarding cost and quality measures, he said.
But if executed as planned, the model and its different versions could transform the way rural healthcare works and is financed.
For Ferniany of UAB Health System, the joint funding model keeps the ultimate goal of the healthcare industry front and center: caring for the general public.
“I used to see health care as a right,” he said. “Now I see it as a public good. It has to be available to everyone, just as drinking water is a public good … And if we start to think about [healthcare] as a public good, [we] It will pay for it in a way that benefits the public. “
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