Karen Murphy, RN, PhD, chief innovation officer of Danville, Pa.-based Geisinger, testified before the U.S. Senate Committee on Finance regarding the Pennsylvania Rural Health Model May 24.
Dr. Murphy served two and a half years as the secretary of health in Pennsylvania before joining Geisinger in 2017, where she assessed the status of healthcare delivery systems across the state and led the Pennsylvania Rural Health Initiative.
"I learned that, for the most part, hospitals in Philadelphia and Pittsburgh were doing well and did not need my help. However, I was struck by the financial instability of the vast majority of 67 rural hospitals," she said during the hearing, which focused on rural healthcare in the U.S.
To address the issue, Dr. Murphy and her colleagues developed a payment and delivery model for rural hospitals, dubbed the Pennsylvania Rural Health Model, which they presented to the Center for Medicare & Medicaid Innovation in 2015.
The model — which aims to stabilize the financial status of rural hospitals, while also reducing the cost to payers — would replace the current fee-for-service system for participating hospitals with a multipayer global budget based on hospitals' historic net revenue.
The model, which engages Medicare, Medicaid and commercial payers, would encourage participating hospitals to reconfigure or eliminate underused inpatient service lines and invest in community-facing preventive interventions. Under the model, hospitals would be held accountable for the total cost and quality of care.
"The model provides that the hospital budget will be prospectively calculated, and each month the hospital will be paid 1/12 of the total budget amount," Dr. Murphy said. "This approach is expected to provide rural hospitals with a predictable revenue stream."
Pennsylvania plans to engage six hospitals, including Geisinger, in the program's initial performance year, gradually expanding participation to 30 rural hospitals by the third performance year. Pennsylvania expects the program to save Medicare about $35 million over the life of the model.
"We must continue to identify innovative approaches that offer a pathway to that goal," Dr. Murphy said. "This model, if it achieves better quality and lower costs, could potentially be scaled as a model for the nation for rural healthcare delivery."