Many individuals consider that the US is a fee-for-service system and plenty of European nations are extra seemingly to make use of international 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 international capitation declare that strategy results in lowered 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 international capitation.
One instance of worldwide capitation cost within the US is the Pennsylvania Rural Well being Mannequin (PARHM). How does this system work? A latest 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). In the end, the mannequin will take a look at whether or not international 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.
Below the worldwide cost, members obtain the historic internet affected person income for inpatient and outpatient hospital providers for every taking part payer. A part of the curiosity in international capitation was Maryland’s adoption of a worldwide price range mannequin for 10 of its rural hospitals in 2010. This method changed the earlier fee-for-service primarily based system.
A report evaluating the primary 12 months 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 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 further hospitals joined the Mannequin for PY2 (2020), and 5 extra hospitals joined the Mannequin for PY3 (2021). Thus far, all members stay the Mannequin for PY3 (2021). Taking part business payers embody 4 Pennsylvania-based payers and one nationwide insurer.
How had been the hospitals doing earlier than PARHM was carried out 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 might have negatively impacted monetary efficiency throughout the baseline interval…
[After the adoption of PARHM] Biweekly funds underneath the worldwide price range addresses variability in funds on account of seasonality and quantity shifts. Hospitals perceived this as an vital Mannequin characteristic. Throughout PY1 (2019), previous to closing reconciliation of Medicare reimbursements, interim international price range funds exceeded the interim Medicare reimbursement quantity the Cohort 1 hospitals would have been paid underneath FFS and cost-based reimbursement strategies.
In brief rural hospitals seem like a bit higher off financially underneath PARHM. Will probably be attention-grabbing to see how PARHM operated in a extra dynamic setting of the COVID-19 pandemic, the place prices and utilization are a lot tougher to foretell underneath a pandemic. On the one hand, international capitation might 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 offered sufficient compensation to help COVID-19 pandemic associated actions.
