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Pennsylvania Rural Health Model

A Federally Funded Program

Accelerating Health Care Innovation in Pennsylvania

Model Overview

Fee for serviceThe Pennsylvania Rural Health Model is an alternative payment model designed to address the financial challenges faced by rural hospitals by transitioning them from fee-for-service to global budget payments. This aligns incentives for providers to deliver value-based care and provides an opportunity for rural hospitals to transform the care they deliver to better meet community health needs.

The model was designed in partnership with the Center for Medicare and Medicaid Innovation (CMMI). While the Department of Health, through the newly established Rural Health Redesign Office, is the lead agency in administering the model, the department works closely with DHS and Pennsylvania Insurance Department to do so.

Global budgetPennsylvania is the first state in the country to design and implement a model such as this that is focused entirely on rural hospitals. Over a dozen other states have reached out to the department to learn more. The Hospital and Health Systems Association of Pennsylvania, the Pennsylvania Office of Rural Health, CMMI, four payers and eight hospitals have been closely engaged with the department over the past several years preparing for launch.

The Model to Date

The department announced on March 5, 2019 that five hospitals and five payers would participate in year one of the model.



The Rural Health Redesign Center (RHRC)

The purpose of the Rural Health Redesign Center (RHRC) is to establish an independent entity that will administer the Pennsylvania Rural Health Model.  The RHRC will be able to work to support hospitals more freely then from within the department.

In October 2018 legislation was passed by the Pennsylvania State Senate to create the RHRC. The legislation was not passed by the Pennsylvania State House due to the end of the legislative year.

In February 2019 HB 248, and SB 314 were introduced for consideration and passage by the House and Senate.