Background
The Pennsylvania Rural Health Model (PARHM) is a novel alternative payment model (APM) that began in 2019 and is slated to run through 2024. It is designed to test whether hospital global budgets and transformation plans can improve the financial viability of rural hospitals and the health of their patients. The expectation is that, when hospitals operate on a prospective budget, they have an incentive to reduce potentially avoidable hospitalizations (PAH) to control costs. Therefore, our objective was to assess the early impacts of PARHM on PAH for ambulatory care sensitive conditions.

Methods
We conducted a retrospective cohort study using a difference-in-differences (DID) with multiple time periods approach. Hospitals joined PARHM in three cohorts at different points in time (January 2019, 2020, and 2021), creating a natural policy experiment to study this program’s effects. The treated group included HSAs of 18 treated hospitals and the control group included HSAs of 43 eligible but not participating hospitals. We used visit-level inpatient discharge data from the Pennsylvania Health Care Cost Containment Council between 1/1/2016 and 5/31/2022. We measured PAH using the Agency for Healthcare Research and Quality Prevention Quality Indicators algorithm. Analyses were conducted at the hospital service area (HSA)-quarter level. We fit models using a doubly robust DID estimator that accounted for staggered treatment timing. All models were weighted using propensity scores and population size in each HSA.

Results
The introduction of PARHM was associated with 9.71 fewer PAHs per 100k residents per quarter (95% CI: 0.21 to 19.21) overall. This represents a 2.25% relative reduction in treated vs. control HSAs. However, when cohorts were analyzed separately, only PARHM Cohort 1 HSAs consistently a showed statistically significant (p<0.05) relative decreases in PAHs across overall, acute, chronic, and diabetes composite measures for PAH compared to changes in the control group. Results were similar across sensitivity and subgroup analyses.

Conclusion
Our findings on the early impacts of PARHM suggest that it is associated with fewer PAHs. Although, heterogeneous treatment effects by cohort were observed. This study addresses an important gap in the current literature regarding the impact of PARHM on health care utilization. Findings can be used to evaluate the success of PARHM and inform the development and implementation of future APMs across rural settings.

Pennsylvania Rural Health Model: Early Impacts on Potentially Avoidable Hospitalizations

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