State initiative targets struggling rural hospitals

Rather than receive payments only when a patient visits the hospital, five rural Pennsylvania hospitals will start getting monthly payments from insurance providers under a new state model.

The hospitals in Susquehanna, Lycoming, McKean and Wayne counties will be the first to adopt what is being called the Pennsylvania Rural Health Model, a payment method that the state Department of Health expects will help rural Pennsylvania communities keep their hospitals.

The current model, known as fee-for-service, pays hospitals every time a patient visits. But that system can be unpredictable for facilities without a regular flow of admissions, said Health Secretary Rachel Levine.

“Many rural hospitals in Pennsylvania are at risk with the current fee-for-service model and are at risk of closing, which would be devastating for access to care and economically since they are often the job creators and economic drivers in their community,” Levine said.

The fixed monthly payments will be based on each hospital’s net revenues for inpatient and outpatient services. Five health insurers have agreed to take part and pay a share to the hospitals under the model.

Each insurer will calculate the average amount of money they pay each hospital annually on a fee-for-service basis. They will then pay those hospitals a fixed monthly portion. The insurers are Gateway Health Plan, Geisinger Health Plan, Highmark Blue Cross Blue Shield, Medicare and UPMC Health Plan.

The participating hospitals include: Barnes-Kasson Hospital in Susquehanna, Endless Mountains Health Systems in Montrose, Geisinger Jersey Shore Hospital in Jersey Shore, UPMC Kane in Kane and Wayne Memorial Hospital in Honesdale.

As a part of the initiative, the rural hospitals have agreed to develop plans to redesign their care to focus more on outpatient and preventive care. Pennsylvania and the Centers for Medicare and Medicaid Services will review the plans to ensure the hospitals are making improvements.

“These insurers are contributing prospective payments to rural hospitals in their service areas, to be used by these providers for value-based care, including important preventive services,” said Jessica Altman, state insurance commissioner. “I plan to continue working to bring other commercial insurers in our state into this program and am hopeful that will happen in the months ahead.”

By 2021, Levine said the state Department of Health is confident that it will grow the model from five hospitals to all of the state’s 30 rural hospitals. To help with that growth, the Centers for Medicare and Medicaid Services said it intends to provide a $25 million grant over four years to the state. The grant will help Pennsylvania oversee the model and analyze participating hospitals to ensure the initiative works as planned.