Some $25 million in funding from CMS will help implement a new model for rural hospitals in Pennsylvania designed to improve access to care in less-populated areas and put struggling hospitals on more solid financial footing.

The model is based on “all-payer global budgets.” Amounts will be set in advance for inpatient and outpatient services, paying participating hospitals monthly, with hospitals expected to “redesign” care delivery to improve quality and “meet the health needs of their local communities” by investing and promoting preventive care. 

“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,” the CMS press release said.

The model will be open to critical access and acute care hospitals in rural parts of the state, as well as Medicaid and commercial insurance plans. Beginning immediately, hospitals can submit “Rural Hospital Transformation Plans” describing how they’ll improve quality, create savings and change delivery of care in performance years running from 2018 to 2023.

CMS hopes six hospitals will participate in 2018, expanding to 18 in 2019 and at least in the remaining years of the program.

In financial terms, the model’s goal is to achieve $35 million in total savings for Medicare, while limiting annual hospital spending growth on hospital-based services in participating areas to 3.38 percent.

One health system appears to be on board, with Geisinger CEO David Feinberg praising the model in a press release from the Pennsylvania’s governor’s office.

“The Pennsylvania Rural Health Transformation is an incredibly innovative payment model that will strengthen hospitals across the commonwealth by creating a path to sustainability for struggling rural hospitals,” Feinberg said.