- A new healthcare payment model aims to stabilize the finances of struggling rural hospitals.
- The new model could incorporate versions of existing global budget models or accountable care organizations.
- HHS will push to the limit of its regulatory authority to permanently expand telehealth.
President Donald Trump issued an executive order Monday for a new payment model to "enable rural healthcare transformation."
The Aug. 3 executive order requires the U.S. Department of Health and Human Services (HHS) within 30 days to announce a new model to test “innovative payment mechanisms” for rural healthcare providers. The model will include:
- Flexibilities from existing Medicare rules
- Predictable payments
- Mechanisms that promote high-quality, value-based care
HHS also will be required to submit to the White House coming policy initiatives that would:
- Increase rural access to healthcare by eliminating regulatory burdens that limit the availability of clinical professionals
- Prevent disease and mortality by developing rural-specific efforts to drive improved health outcomes
- Reduce maternal mortality and morbidity
- Improve mental health in rural communities
Driving the need for a new model, according to the executive order, was the closure of 129 rural hospitals since 2010 and the 22% average occupancy rate of rural hospitals that closed from 2015 through 2017.
"When hospitals close, the patient population around them carries an increased risk of mortality due to increased travel time and decreased access," the order states.
What will the model look like?
The rural healthcare model reportedly has been under discussion in the White House for several years, and it remains unclear what the final approach will include.
Healthcare policy watchers said it could include components of existing models like:
- The global budget, all-payer hospital model in Maryland
- The global budget model for rural hospitals in Pennsylvania operated by the Center for Medicare and Medicaid Innovation
- Accountable care organizations (ACOs)
Although the Maryland and Pennsylvania models have shown promise, those approaches are very state-specific and may not work nationally, said Aisha T. Pittman, vice president of policy at Premier. For instance, the Pennsylvania model was led by Geisinger, which operates hospitals and health plans and was able to get other health plans to participate.
Another possibility is a modified version of the ACO Investment Model (AIM), which uses prepaid bonuses to encourage new ACOs to form in rural and underserved areas.
The three payment streams for AIM participants are:
- Upfront, fixed payments
- Upfront payments based on preliminary numbers of prospectively assigned beneficiaries
- Monthly payments based on preliminary numbers of prospectively assigned beneficiaries
An ACO-type approach may work for rural hospitals if CMS eliminates many of the cuts and withholds that it has traditionally used, Pittman said. Those provisions would prove too difficult for rural hospitals to accommodate.
A better approach than trying to achieve savings based on benchmarks set by CMS might be global budgets that aim to keep spending static from the previous year, Pittman said. The rural hospitals that Premier works with on value improvement have said they would prefer such an approach.
Telehealth expansion also mandated
The executive order also directed HHS within 60 days to issue a proposed regulation to extend “temporary measures put in place” during the public health emergency (PHE). Specific extensions would affect:
- The expansion of Medicare telehealth services
- "Flexibilities" offered to rural Medicare providers around "services, reporting, staffing and supervision"
The order notes that the initiatives are subject to "the availability of appropriations" from Congress.
During the PHE, CMS has allowed telehealth payment for 135 additional services such as emergency department visits, initial inpatient and nursing facility visits, and discharge-day management services, according to the agency.
HHS Secretary Alex Azar wrote in a July 31 opinion piece that the administration aims to make the "telehealth revolution a permanent part of American medicine."
Azar plans to use data from the recent emergency expansion of telehealth to guide regulatory reforms. He acknowledged that many changes would require congressional action and said he was working with members of Congress on legislation.
The permanent expansion of telehealth in Medicare should not be stopped by concerns that it will drive up healthcare utilization and Medicare’s budget or strain the healthcare system, Azar wrote. "That kind of static thinking is one of the biggest problems in American healthcare."