Rural Hospitals and Doctors Get HHS Assistance with New Payment Model

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On August 11, 2020, the CMS Innovation Center, the office within HHS with authority to create and test healthcare payment systems, announced a new payment model – the Community Health Access and Rural Transformation (CHART) Model. The CHART Model establishes two options for rural communities who desire to participate: the community transformation track and the accountable care organization transformation track. Under the community transformation track, rural communities could receive funds from CMS to redesign their health care systems. In the alternative accountable care organization transformation track, rural providers in accountable care organizations (ACOs) can coordinate care and be financially rewarded for keeping beneficiaries healthy. Rural hospitals, doctors, and communities are able to volunteer to participate in one of the new systems and then offer feedback.

Community Transformation Track

With respect to the community transformation track, CMS’s plan is to invest up to $75 million into 15 communities to enable them to rethink how they deliver care. Each community will be led by an organization, a Lead Organization, which could be the state Medicaid agency, local public health department, academic medical center, or other entity. The Lead Organizations and their community partners will receive upfront funding, potential additional funding as well as financial, regulatory and operational flexibilities. The participating communities can expand telehealth, provide transportation services, and give beneficiaries gift cards.

With the “community transformation model,” hospitals that choose to operate as rural outpatient departments with emergency rooms can also be reimbursed by Medicare as hospitals. This model will pay fixed amounts for Medicare beneficiaries in the area, and state Medicaid agencies will need to be members such that the state-run health programs can mirror the federal Medicare program and pay for low-income beneficiaries at a similar fixed amount. An entire state can apply for this model. Commercial health insurers can participate as well.

With the “hub and spoke” model, a community could set up a large hospital system that opens clinics in rural areas. When patients need higher levels of care, they could be connected back to the large system. Similarly, an academic medical center could partner with a hospital to transition to providing maternity and primary care. The two could then configure a system for transportation as well as telehealth.

The communities awarded this money will be announced in the spring of 2021, and the model will start in summer 2021.

Accountable Care Organization Track

The second option, the accountable care organization track, involves an ACO that works to coordinate care among participating groups of rural doctors, hospitals, and providers. The ACOs will receive advanced payments so they can invest in telehealth, care coordinators, and more. Up to 20 of such ACOs will be able to participate, and each ACO will be responsible for a maximum of 10,000 beneficiaries.

The providers will take on financial risk for their patients and be responsible for the cost of their patients’ use of care beyond the payments. However, if the patients use less care than the payments, providers will get to retain a portion of the savings.

With this five-year model, the ACOs will receive a one-time $200,000 payment plus $36 per beneficiary. The ACOs will be able to get advanced payments of at least $8 per beneficiary per month for up to 24 months. However, the accountable care organization track will not start until 2022 because participating ACOs will also be participating a similar program, the Medicare Shared Savings Program (MSSP), which begins in January of each year. However, once the accountable care program begins, participating organizations will also be eligible for the waivers in MSSP including those around telehealth and beneficiary incentives.

The CMS Innovation Center Fact Sheet for the CHART Model is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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