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A Snapshot of the Pennsylvania Rural Health Model (PARHM)



merging medical savings with quality care

The Pennsylvania Rural Health Model (PARHM) is a pioneering initiative created by the Centers for Medicare and Medicaid Innovation (CMMI) and designed to address the multifaceted challenges faced by rural healthcare systems. Since 2018, the PARHM has been testing the use of global budgets to transition hospitals from fee-for-service to enhance financial sustainability and improve population health in rural communities. In exchange for the global budgets, PARHM hospitals are encouraged to rethink how they deliver care in their communities, transforming from a volume-based deliverya system (FFS) to a value-based delivery system through a formal transformation plan process. 


In addition to key state and federal partners guiding its administration, the PARHM involves diverse participants, each contributing to the model's implementation and success. This includes eighteen participant hospitals. Participant hospitals are stretched across fifteen counties spanning every rural region of the state. Each hospital is surrounded by a different community with unique cultural and geographic characteristics. City population sizes range from 1,129 to 13,532 with the hospitals ranging in sizes from 10-bed capacities to 200.


Preliminary results of the Model show that the Medicare spending per member per month continues to be below the rural spending by beneficiaries for PARHM hospitals compared to the national rural average. In addition, for hospitals where applicable data is available, 80% improved avoidable utilizations, 83% improved HAC scores, and 100% maintained CMS readmission rates. Data being tracked within the program has identified that while cost per beneficiary remains below the national rural average, quality outcomes as assessed by the statewide measures are above average. One of the most notable accomplishments of the Model is no participant hospitals closed despite the impacts of the COVID-19 Pandemic.


Led by the Rural Health Redesign Center (RHRC), this initiative is a key part of broader efforts to tackle the rural health crisis in Pennsylvania. The RHRC, in coordination with current participants and other key stakeholders, is actively working to leverage the lessons learned through the PARHM to create a next-generation solution that will continue to provide high-quality healthcare to rural communities beyond the program's current sunset.


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