Many individuals imagine that the US is a fee-for-service system and plenty of European international locations are extra seemingly to make use of world capitation reimbursement for suppliers. Those who dislike fee-for-service declare it incentivize over-treatment and disincentives prevention and use phrases like “waste” and “too expensive”. Those who dislike world capitation declare that method results in decreased entry to care and longer wait instances for care and phrases used embrace “rationing” and “queuing”. However, the U.S. is dipping its toe in experimenting with world capitation.
One instance of world capitation cost within the US is the Pennsylvania Rural Health Model (PARHM). How does this system work? A current paper by Scanlon et al. (2022) explains:
The Pennsylvania Rural Health Model is a $25 million, 6-year demonstration funded by the Center for Medicare and Medicaid Innovation (CMMI). Ultimately, the mannequin will check whether or not world funds for the healthcare wants of a inhabitants will result in care supply transformation and improved high quality of care and decrease prices for rural Pennsylvanians.
Under the worldwide cost, contributors obtain the historic web affected person income for inpatient and outpatient hospital providers for every taking part payer. Part of the curiosity in world capitation was Maryland’s adoption of a world price range mannequin for 10 of its rural hospitals in 2010. This system changed the earlier fee-for-service based mostly system.
A report evaluating the primary yr of this system explains the mannequin in additional element. PARM is multi-payer initiative, which incorporates participation from Medicare, business payers, business payers’ Medicaid managed care and Medicare Advantage plans.
Which hospitals have joined this system?
At the time of the Model announcement (2017), 67 rural hospitals, together with 15 [critical access hospitals] CAHs, had been eligible to take part within the Model. Five hospitals joined the Model for PY1 (2019), eight extra hospitals joined the Model for PY2 (2020), and 5 extra hospitals joined the Model for PY3 (2021). To date, all contributors stay the Model for PY3 (2021). Participating business payers embrace 4 Pennsylvania-based payers and one nationwide insurer.
How had been the hospitals doing earlier than PARHM was applied and the way are they doing afterwards?
The short- and long-term monetary viability of the Cohort 1 hospitals worsened throughout the baseline interval [i.e., prior to PARHM]—a possible motivating issue for his or her participation within the PARHM. Declining inpatient quantity and glued prices could have negatively impacted monetary efficiency throughout the baseline interval…
[After the adoption of PARHM] Biweekly funds beneath the worldwide price range addresses variability in funds resulting from seasonality and quantity shifts. Hospitals perceived this as an essential Model characteristic. During PY1 (2019), previous to ultimate reconciliation of Medicare reimbursements, interim world price range funds exceeded the interim Medicare reimbursement quantity the Cohort 1 hospitals would have been paid beneath FFS and cost-based reimbursement strategies.
In brief rural hospitals look like a bit higher off financially beneath PARHM. It shall be fascinating to see how PARHM operated in a extra dynamic atmosphere of the COVID-19 pandemic, the place prices and utilization are a lot tougher to foretell beneath a pandemic. On the one hand, world capitation could present hospitals monetary stability from dropping income from elective surgical procedures which had been deferred; alternatively, it’s unclear if PARHM–with out different monetary help–would have supplied sufficient compensation to help COVID-19 pandemic associated actions.