Since January 2010, 83 rural hospitals have closed and two more are likely soon. Another 673 additional facilities are vulnerable, representing more than one-third of rural hospitals. Now, more than ever, we need new delivery models and new payment methodologies for rural providers.
It is very important that we approach this as a two-step process to maintain access to care for rural America. First, we must stabilize the current rural healthcare safety net. And second, we must develop, test and implement new delivery and payment models.
Policymakers and rural advocates alike would love to identify the silver bullet, some magical new rural payment model that both secures the current safety net while improving quality and reducing costs for rural hospitals of all shapes and sizes. But alas, flexibility is key for rural communities, and a one-size-fits-all approach to rural policy is destined to fail.
However, three key policy approaches have emerged. When taken together, these approaches have the best potential for securing a lasting future for rural health access:
- Policy leaders need to stop the many cuts in Medicare that rural hospitals have endured for years.
- We need to create an escape route for struggling rural hospitals by allowing them to provide care that makes sense in their communities and receive fair reimbursement for emergency room visits and primary care.
- We need to provide rural hospitals with new funding methodology options so they can provide quality primary care to their patients.
One promising new payment proposal attracting significant national attention is the concept of “global budgeting” for rural hospitals. Outlined by former CMS Innovation Center official Karen Murphy and others in the March 27 issue of JAMA, this new payment concept, known as global budget payment, would seek to empower rural hospitals and their clinicians to innovate and provide the care their communities specifically need.
Simply stated, this new proposal would provide a steady, known revenue stream in exchange for developing a transformational plan for care coordination and a comprehensive community needs assessment. Starting in 2019, the Pennsylvania Rural Health Model will test this concept of global budgeting designed to include Medicare, Medicaid and commercial payers. Given the complexities of these programs and rural healthcare in general, the questions are many and so are the potential pitfalls.
Since 2014, all Maryland hospitals have participated under a global budgeting payment methodology. However, it is important to note that Maryland already had a rate-setting mechanism in place, so there was a blueprint to follow in implementing global budgeting. For Pennsylvania and other states that do not require rate-setting, the concept of global budgeting creates significant operational challenges.
Specifically, how will the data-collection needs be addressed to construct an accurate global budget for the various rural facilities? It is also important to note that Pennsylvania is pursuing a voluntary approach to this payment model.
However, despite many concerns and unknowns, the National Rural Health Association views this new payment methodology as very promising, and there is growing interest among policy leaders in Washington, D.C. A May 24 Senate Finance Committee hearing on rural hospital challenges and opportunities covered this new payment model, as well as other options to ensure continued access to care in rural America.
The hearing to explore these new options, as Senate Rural Health Caucus Co-Chair Pat Roberts (R-Kan.) said, was “long overdue.”
For rural hospital leaders, flexibility in delivery model structure and payment is paramount. The global budgeting approach provides assurances that participating rural hospitals won't “save themselves out of business” when implementing population health strategies. In addition, the approach allows rural hospitals to take on a larger role as a connector in the community.
Bottom line, this discussion is about the economic vitality and long-term sustainability of rural communities. As such, these new payment demonstrations, combined with new delivery model demonstrations, represent a prudent path forward and deserve further exploration.
