Many individuals imagine that the US is a fee-for-service system and plenty of European nations are extra probably to make use of world capitation reimbursement for suppliers. Those that dislike fee-for-service declare it incentivize over-treatment and disincentives prevention and use phrases like “waste” and “too costly”. Those that dislike world capitation declare that strategy results in diminished entry to care and longer wait instances for care and phrases used embody “rationing” and “queuing”. Nonetheless, the U.S. is dipping its toe in experimenting with world capitation.
One instance of worldwide capitation fee within the US is the Pennsylvania Rural Well being Mannequin (PARHM). How does this system work? A current paper by Scanlon et al. (2022) explains:
The Pennsylvania Rural Well being Mannequin is a $25 million, 6-year demonstration funded by the Middle for Medicare and Medicaid Innovation (CMMI). Finally, 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.
Underneath the worldwide fee, individuals obtain the historic web affected person income for inpatient and outpatient hospital companies for every collaborating payer. A part of the curiosity in world capitation was Maryland’s adoption of a world finances mannequin for 10 of its rural hospitals in 2010. This technique changed the earlier fee-for-service primarily based 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, industrial payers, industrial payers’ Medicaid managed care and Medicare Benefit plans.
Which hospitals have joined this system?
On the time of the Mannequin announcement (2017), 67 rural hospitals, together with 15 [critical access hospitals] CAHs, had been eligible to take part within the Mannequin. 5 hospitals joined the Mannequin for PY1 (2019), eight extra hospitals joined the Mannequin for PY2 (2020), and 5 extra hospitals joined the Mannequin for PY3 (2021). To this point, all individuals stay the Mannequin for PY3 (2021). Collaborating industrial payers embody 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 underneath the worldwide finances addresses variability in funds attributable to seasonality and quantity shifts. Hospitals perceived this as an necessary Mannequin characteristic. Throughout PY1 (2019), previous to closing reconciliation of Medicare reimbursements, interim world finances funds exceeded the interim Medicare reimbursement quantity the Cohort 1 hospitals would have been paid underneath FFS and cost-based reimbursement strategies.
Briefly rural hospitals seem like a bit higher off financially underneath PARHM. It will likely 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 more durable to foretell underneath a pandemic. On the one hand, world capitation could present hospitals monetary stability from dropping income from elective surgical procedures which had been deferred; however, it’s unclear if PARHM–with out different monetary help–would have offered sufficient compensation to help COVID-19 pandemic associated actions.
