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Testing New Approaches

Why Rural-specific Demonstration Projects Are Needed

The healthcare delivery system is undergoing dramatic change, with an emphasis on finding new approaches and organizational frameworks to:

  • improve health outcomes,
  • control costs, and
  • improve population health

Financial incentives are changing from a focus on volume-based services to value-based services. There is a concurrent need to better measure and account for quality of care in all settings and improve transitions of care as patients move from one care setting to another.

Advances in technology and new approaches to organizing care delivery are occurring quickly, with examples like the patient-centered medical home, accountable care organizations, and patient-safety organizations.

Most early adopters of new care models have been large, urban-based integrated delivery systems. Less is known about how these changes and environmental factors will affect rural healthcare delivery systems. Because rural healthcare providers are often paid outside of the traditional prospective payment systems and fee schedules, there is less known about how new and emerging models might function in rural communities. As a result, policy makers and rural providers need to better understand the implications of new and emerging models for low-volume rural settings.

The Centers for Medicare & Medicaid Services (CMS) Innovation Center was established through the Affordable Care Act. The Innovation Center tests new payment and service delivery models that may reduce cost, while also providing care of similar or higher quality. A June 2012 policy brief from the National Advisory Committee on Rural Health and Human Services, Rural Implications of the Center for Medicare and Medicaid Innovation, discusses the potential for CMS demonstrations to address rural needs and offers recommendations specific to rural demonstrations.

The Rural Health Value program, with support from a Federal Office of Rural Health Policy (FORHP) cooperative agreement, examines the rural implications of demonstration projects and other changes to healthcare organization, finance, and delivery. The Rural Health Value website provides analyses of innovations undertaken in a rural setting, as well as resources for organizations interested in undertaking similar programs.

Rural-Specific Demonstrations Being Tested by CMS

  • Pennsylvania Rural Health Model – ongoing
    Designed to improve the financial viability of rural Pennsylvania hospitals and reduce the growth of hospital expenditures across payers, including Medicare. Participating rural hospitals will be paid monthly based on fixed all-payer global budgets and redesign their healthcare delivery system to improve quality and access in rural Pennsylvania communities. Jointly administered by CMS and the Pennsylvania Department of Health, the Model is open to Critical Access Hospitals and acute care hospitals in rural Pennsylvania. A similar model, the Maryland Total Cost of Care (TCOC) Model, is underway for the entire state of Maryland, including rural areas, and sets a per capita limit on Medicare total cost of care in Maryland.
  • Rural Community Hospital Demonstration – ongoing
    Implements cost-based reimbursement in participating small rural hospitals that are not eligible for Critical Access Hospital designation. Designed to assess the impact of cost-based reimbursement on the financial viability of small rural hospitals, and test for benefits to the community. The Report to Congress: Rural Community Hospital Demonstration, issued in October 2018, summarizes findings from the first twelve years of the demonstration.

Rural-relevant demonstrations involving accountable care organizations (ACOs):

Additional rural-relevant demonstrations being tested by CMS:

  • Comprehensive Primary Care Plus (CPC+)
    Focuses on improving the quality, accessibility, and efficiency of primary care through regionally-based multi-payer payment reforms and care delivery transformation. Provides participants with technical assistance and up-front enhanced payments as a way to promote practice building capabilities. Providers participate in one of two tracks depending on their existing care delivery activities. Both available tracks qualify as an Advanced Alternative Payment Model under the Quality Payment Program (QPP).
    • Round One – ongoing
    • Round Two – ongoing
  • Direct Contracting Model Options – announced
    A set of three voluntary payment model options that were introduced to innovate Medicare fee-for-service (FFS) approaches to produce value and high-quality care outcomes. The goal of this model is to reduce burden, support a focus on beneficiaries with complex, chronic conditions, and encourage participation from organizations that have not typically participated in Medicare FFS or CMS Innovation Center models.
  • Emergency Triage, Treat, and Transport (ET3) Model – announced
    Permits ambulance care teams to use alternate models of emergency health care, such as telehealth treatment and transport to alternative destinations, to improve quality and lower costs of care. Rural Medicare-enrolled suppliers or hospital-based ambulance providers without current medical dispatch and/or telehealth are eligible to participate.
  • Health Care Innovation Awards (HCIA)
    Tests a wide range of innovative projects to deliver better health, improved care, and lower costs via Medicare, Medicaid, and the Children's Health Insurance Program (CHIP), particularly for beneficiaries with the highest healthcare needs. Includes projects that serve rural populations.
  • Medicare Diabetes Prevention Program (MDPP) Expanded Model – ongoing
    A structured behavior change intervention that aims to prevent the onset of type 2 diabetes among Medicare beneficiaries with an indication of prediabetes.
  • PACE P3C – proposed
    “Programs of All-Inclusive Care for the Elderly – Person Centered Community Care”
    Adapts the PACE model of care for disabled individuals age 21 and older who are dually eligible for Medicare and Medicaid. The P3C model would allow greater provider choice and regulatory flexibility compared to the traditional PACE program, focusing on community integration to meet the needs of a younger, mobility-impaired population.
  • Primary Care First Model Options – announced
    A set of five voluntary payment model options with the aim of rewarding value and quality through innovative payment structures while emphasizing the doctor-patient relationship supporting advanced primary care. Will be offered in 26 regions for a 2020 start date.
  • State Innovation Models (SIM)
    Support for statewide healthcare system transformation. Aims to create multi-payer models that raise community health status and reduce long term health risks for beneficiaries. Statewide approaches include rural areas, although few include a particular rural focus.
  • Transforming Clinical Practice Initiative (TCPI) – ongoing
    Supports clinician practices in sharing, adapting, and further developing comprehensive quality improvement strategies. The Practice Transformation Networks (PTNs) provide technical assistance and peer-level support. They are required to recruit clinicians serving rural and medically underserved communities and small rural practices. The Support and Alignment Networks will involve national and regional professional associations and public-private partnerships currently working in practice transformation efforts. They will especially support the recruitment of clinician practices serving small, rural, and medically underserved communities. The Federal Office of Rural Health Policy hosted an April 21, 2016 webinar on the TCPI model with representatives from the Centers for Medicare & Medicaid Services and two of the PTNs. The webinar recording and presentation slides are available.

The Rural Impact initiative, a public-private partnership to address rural child poverty that is testing innovative service delivery models:

Completed Rural and Rural-Relevant Demonstrations

  • Medicare ACO Track 1+ Model
    Qualified as an Advanced Alternative Payment Model (APM), sought to encourage more small practices and hospitals to transition to performance-based risk. Incorporated elements of Track 1 and Track 3 of the Medicare Shared Savings Program, and tested a payment design with more limited downside risk than in Track 2 or Track 3. Ended December 31, 2018; participants could elect to extend through June 30, 2019.
  • ACO Investment Model (AIM)
    AIM funding was for accountable care organizations (ACOs) participating or seeking to participate in the Medicare Shared Savings Program. Tested the use of pre-paid shared savings to encourage new ACOs to form in rural and underserved areas and to encourage current Medicare Shared Savings Program ACOs to transition to arrangements with greater financial risk. Ended December 31, 2018.
  • Frontier Community Health Integration Project (FCHIP)
    Developed and tested new models for the delivery of healthcare services in frontier areas through improving access to, and better integration of, the delivery of healthcare to Medicare beneficiaries. Ended July 31, 2019.
  • Frontier Extended Stay Clinics (FESC)
    An enhanced clinic model in frontier areas to address the needs of seriously ill or injured patients who cannot be transferred to a hospital, or who need monitoring and observation for a limited period of time. Ended April 15, 2013.
  • Medical Assistance Facilities (MAF)
    A Montana demonstration program aimed at preserving healthcare access in frontier areas by converting full-service hospitals into low-intensity, short-stay health care service centers. Authorized by the Montana State legislature in 1987, with a Health Care Financing Administration (HCFA, the precursor to CMS) Medicare reimbursement waiver through 1993. For more information:
  • Essential Access Community Hospital/Rural Primary Care Hospital (EACH/RPCH) Program
    Enacted by the Omnibus Budget Reconciliation Act of 1989, this program recognized a limited-service facility, the Rural Primary Care Hospital, and linked each RPCH into a network tied to a larger supporting Essential Access Community Hospital. For more information: