Pennsylvania plans to launch an experiment in which participating health insurers will fund global budgets to care for residents served by selected rural hospitals.

The program seeks to preserve access to care in rural parts of the state by stabilizing the financial health of struggling rural hospitals.

According to a Pennsylvania Department of Health news release,

The Rural Health Model is an alternative payment model, transitioning hospitals from a fee-for-service model to a global budget payment. Instead of hospitals getting paid when someone visits the hospital, they will receive a predictable amount of money. Payment for the global budget will include multiple-payers, including private and public insurers.

The global budgeting project is a joint venture of the state’s Department of Human Services, Department of Health, Insurance Department, the Pennsylvania Office for Rural Health, the federal Center for Medicare and Medicaid Innovation, and the participating hospitals and health insurers.

The five hospitals that will participate in the model’s launch are Barnes-Kasson County Hospital, Endless Mountain Health Systems, Geisinger Jersey Shore Hospital, UPMC Kane, and Wayne Memorial Hospital.  The five participating insurers are Gateway Health Plan, Geisinger Health Plan, Highmark Blue Cross and Blue Shield, UPMC, and the state’s Medicaid program.  The state hopes to bring additional hospitals and additional insurers into the program in the future.

The federal government’s Center for Medicare and Medicaid Innovation is investing $25 million over five years to fund a rural health redesign center to support the project’s launch.

The project is needed, according to the state, because “Nearly half of all rural hospitals in Pennsylvania are operating with negative margins and are at-risk of closure.”

Learn more about this initiative from this Pennsylvania Department of Health news release.