A more pronounced focus on care coordination is taking shape in the EDs at a cadre of rural hospitals that are participating in Pennsylvania’s new global budgeting pilot. The pilot is designed to provide a more secure revenue stream to hospitals that have been operating at a loss or with very small operating margins. However, it also signals a strong shift away from the traditional focus on volume toward value-based care and population health. While the new pilot is still in the early stages of implementation, hospital administrators have much to learn from Maryland, which now has several years of experience with a state-wide global budget system. There, emergency providers and their patients have reaped dividends from new investments in care coordination, but there also have been downsides in terms of crowding, ambulance diversions, and longer lengths of stay.

Following Maryland’s lead, Pennsylvania has become the latest state to test the waters of global budgeting. Under this model, rather than operating under fee-for-service, hospitals receive a fixed monthly payment that is based on historical revenue. The approach is intended to incentivize value over volume. It generally pushes hospitals and EDs to be much more judicious in their decisions regarding inpatient hospitalization.

Like Maryland a few years ago, Pennsylvania is beginning its foray into global budgeting with its rural hospitals, many of which have been operating at a loss or with small operating margins, according to the Pennsylvania Department of Health. The move to a global budget is designed to give these hospitals a stable revenue stream and to preserve healthcare access for rural communities.

However, if what happened in Maryland is any guide, what this transition means for the EDs is a bit of a mixed bag, according to investigators who are monitoring the impact of global budgeting on emergency care in Maryland. On the positive side, there is a fresh supply of capital to invest in care coordination resources. However, there is no denying that more is expected from emergency providers under this model. For instance, borderline patients who might otherwise be hospitalized under fee-for-service models instead tend to receive more intensive services in the ED prior to discharge back into the community. This can mean longer lengths of stay (LOS) in the ED, potentially leading to crowding.

Nonetheless, Maryland, which now uses a global budget approach statewide, has shown a positive financial impact from the model even as it continues to refine its approach. Officials in Pennsylvania are hopeful that it can bank the lessons learned from Maryland and reap similar, if not superior, results from their program.

Shift Focus to Value

The Pennsylvania project is part of a five-year Medicare demonstration program. The Center for Medicare & Medicaid Innovation (CMMI) has provided the state with $25 million to develop the Rural Health Redesign Center (RHRC), an entity that will be focused on supporting rural hospitals that are participating in the effort. The Pennsylvania Department of Health states that a rural health redesign office is currently working closely with each participating hospital to develop a plan that will help facilities transition away from a payment system based on volume to one based on value. Technical assistance provided is being tailored to the needs of each specific hospital. Further, the department notes that the payment model encourages investments that will improve the overall health of the community and will emphasize providing the right care in the proper setting as opposed to providing sick care and receiving payment based on the number of people who present.

Medicare, Medicaid, and several private insurers have indicated that they are participating in the model, and more payers are expected to come on board in the coming weeks. One difference from the approach used in Maryland is that in the Pennsylvania pilot, the state will not be establishing the rates for payers, and payers will not have to disclose their rates publicly. In Maryland, all payers, public and private, adhere to the same rates, which are established by the state and publicly disclosed.

At press time, there were five rural hospitals participating in the Pennsylvania Rural Health Model, including Geisinger Jersey Shore Hospital in Jersey Shore, PA, a critical access hospital covering a two-county service area in the center of the state. Here, the shift to a global budget model means that while the ED will continue to respond to patients who present with strokes, heart attacks, and other acute care needs, there is now a stronger focus on patients who could benefit from better care coordination.

Boost Referrals

Consequently, one of the initial steps the hospital has taken under the new payment model is to hire a care manager for the ED. “One thing we want our care manager to do in the ED is to screen the patients who are there and find those who might benefit from outpatient case managers who can help to coordinate care, educate patients, monitor their chronic diseases, and perform medication reconciliations when the patient transitions from the ED back to the ambulatory care setting,” explains Tammy Anderer, PhD, MSN, CRNP, the chief administrative officer for Geisinger’s north-central region.

Once these patients are identified, the care manager can perform a warm handoff or refer patients to an outpatient case manager, she adds. “We are very focused on introducing needs the patient may have after an ED or an inpatient visit early during the planning for discharge,” Anderer notes. She adds that the hospital is putting resources in place to respond to these needs. “For example, for those patients who have chronic lung diseases, we now have a health coach on our team who can meet with them after discharge and help them with their tobacco cessation efforts,” she explains. “For patients who have diabetes … we are making sure we get them connected with outpatient clinical nutrition [experts] who can help them see food as health and assist them in making choices and plans so that their disease is better managed.”

Anderer acknowledges that these are not new ideas in healthcare, but the new payment model is incentivizing and enabling the hospital to make sure that such steps are hardwired. However, Anderer stresses that the clinician remains the central player in determining what services are required. “We do an interdisciplinary round twice a day on the patients who are in the hospital, and we review their care needs,” she says. “It is actually the clinician who speaks to the patients [about any needed services] and places orders for them. It may be the care manager who actually helps get the connections made, but the clinician is involved every step of the way.”

Establish a Blended Team

For patients who present for care to the ED and do not have a medical home where they can receive follow-up care, the ED-based care manager will attempt to connect them with a primary care provider (PCP) before they leave. “If the patient would like a PCP who is in the Geisinger system, we can make that appointment right then and there so they have that follow-up appointment scheduled with a new provider,” Anderer says. Indeed, the Pennsylvania Department of Health stresses that ensuring access to primary care will play a key role in aligning incentives within the new payment structure.

Since the switch to global budgeting began on Jan. 1, it is still early, but Anderer notes that one of her first priorities has been to strengthen the hospital’s collaborative ties with drug and alcohol recovery resources in the community.

“We have some of those resources available to us today. Not everything in this model is a new start for us, but it does involve maximizing the connectivity between all of these [resources],” she says. “We at Geisinger have an evolving model to do those warm handoffs to drug, alcohol, and behavioral health services. That model has started and will only strengthen by increasing the presence of social workers, for example, in our ED.”

Anderer notes that the hospital has made a strong investment in care management, which includes a blended team of social workers and registered nurses. “The social workers had to have a strong background [in behavioral health], so they may be best suited to [interacting] with that patient population. Registered nurses might be a better fit for patients with heart failure or chronic lung disease,” she says. “We deliberately made an investment in a blended model so that we have both types of expertise in our hospital.”

Maintaining added resources for things like care management clearly is a boon, but finding the trained staff to hire has been a challenge, Anderer acknowledges. “It is no surprise to anyone that there is a shortage of registered nurses in the United States,” she adds.

While it is too early to gauge what the impact of this alternative payment model will be in Pennsylvania, investigators have been closely following Maryland’s global budgeting approach since as early 2011 when that state piloted global budgeting in seven rural hospitals.

“The reason for implementing this in rural hospitals first as a pilot is because they don’t have overlapping service areas, so implementation is just logistically much simpler,” explains Jessica Galarraga, MD, MPH, an attending physician in the department of emergency medicine at MedStar Washington Hospital Center, and a researcher at the MedStar Health Research Institute in Washington, DC. “The moment you start involving hospitals with overlapping service areas, to be fair you have to implement the model across all the hospitals.”

In 2014, that is exactly what Maryland did, expanding the global budget approach statewide. Now, the state has five years of experience with the large-scale implementation of the model. This has resulted in increasing pressure on EDs across the state to admit less often and discharge more frequently as hospitals strive to meet certain revenue targets each year, Galarraga observes. “What we are seeing is that a lot of these gray area or borderline cases such as patients with COPD or CHF [congestive heart failure] that we would typically admit [in the past] we are now keeping them in the ED longer, sometimes increasing the intensity of services provided … and engaging more in care coordination, which I think is a positive to ensure safe transitions,” Galarraga explains. “Care coordination takes time, so this is another factor in addition to sometimes increasing the intensity of services provided in the ED that can contribute to [longer] lengths of stay in the ED.”

Investigators also have observed that ambulance diversion rates across the state have gone through the roof since the global budget model was implemented statewide in 2014.

“Further research is required to sort out what is driving the increase in ambulance diversion, but it is suspected that a part of what is contributing to the increase is what we are seeing in ED lengths of stay,” Galarraga notes. “Qualitatively, a lot of EDs are reporting that boarding is an issue [as well] because there isn’t an incentive to get patients up to the hospital under global budgeting.”

Customize Solutions

There has been considerable diversity in how hospitals have responded to the different incentives of the global budget approach. “Some hospital administrators are very motivated to invest in care coordination staff for the ED,” Galarraga explains.

For instance, some hospitals are increasing the hours of care coordination coverage to evenings and weekends, which has been helpful to emergency providers.

“We are so busy caring for a lot of sick patients that it is often not feasible to sit down and schedule appointments for patients or to do many of the things necessary to facilitate a safe discharge and avoid a hospital admission,” Galarraga laments. “The care coordination staff members have been doing a lot of great work with focusing on creating follow-up appointments for a lot of these gray area cases that might be appropriate for discharge if they are able to be seen by providers within the next two days.”

Galarraga adds that she has seen many innovative interventions and changes that have helped EDs meet the care coordination challenges that they now face under global budgeting. In some cases, care coordinators are directing patients to evaluations for physical therapy or occupational therapy needs while they are still in the ED. If patients meet the criteria, care coordinators are arranging for such services in the home prior to discharge. However, hospitals across the state are not implementing this type of a response uniformly. Each hospital is free to respond to global budgeting in a way that administrators deem most advantageous.

However, it is clear is that global budgeting has resulted in a reduction in ED-based admissions, according to a new study by Galarraga and colleagues. They assessed the impact of the model on ED-based admissions from January 2011 through December 2015 within a single health system that operates hospitals in Maryland as well as in Washington, DC, where global budgeting is not in effect.1

“What this study demonstrated is that there was a shift from inpatient to observation stays [in the Maryland EDs],” Galarraga says. “There was still an overall decrease in hospital stays that essentially exceeded that shift. There was still a net decline in hospital stays.”

As hospital admission rates have decreased, there has been a corresponding increase in non-hospital-based spending under the global budget model. This was expected to some degree, Galarraga notes.

“If you are shifting care toward non-hospital settings, then you would expect for there to be some shift, but it has really ballooned more than we anticipated to the non-hospital side,” she says.

Consequently, the focus of phase two of the global budget model is to rein in the total cost of care across the entire care continuum, including non-hospital care. The challenge here is that Maryland’s Health Services Cost Review Commission (HSCRC), which establishes the rates all payers charge for services in the state, only has statutory authority over hospital payments, Galarraga observes.

“The levers [the HSCRC] uses to influence change in care delivery are purely hospital-based. It doesn’t have authority over individual providers or non-hospital-based care settings,” she says. “The way [the commission] is trying to align the non-hospital sector with the incentives of the model is by creating a total cost of care metric.”

Although the metric only applies to Medicare, hospitals must concern themselves with the care that is provided to their assigned Medicare patients after they are discharged.

“The only way to do that is for hospitals to leverage their referral practices … and to potentially engage in agreements, for example, with post-acute care providers to make sure they are delivering care in an efficient way,” Galarraga notes. “Ideally, what we will see is hospitals creating partnerships with non-hospital providers to provide some shared savings agreements so that those non-hospital providers have the same incentives as the hospitals do to improve outcomes and reduce the total cost of care.”

While the HSCRC is creating incentives designed to push hospitals toward efficiency and value, the commission is leaving it up to the facilities to figure out solutions, Galarraga explains. “We are definitely seeing variations among some health systems and different hospitals on how they are responding,” she says. “Some are much more successful than others, but [the HSCRC] is letting the hospitals figure out how to really align the incentives with the non-hospital providers on their own.”

Learn From Pioneers

What has been the reception by the emergency medicine community in Maryland to the global budget approach and all of the associated changes? Galarraga observes that as with any big shift, one will find some providers who do not like it at all while others are totally enthusiastic, but both views tend to be in the minority.

“The majority [of emergency providers] see the positives with the efforts toward more care coordination, but there is also huge sentiment that this definitely increases the burden of work for ED providers. It certainly is increasing the potential risk for their patients … when ED throughput is compromised,” she explains.

These are areas that require investigation, and Galarraga is in the process of doing just that with her research colleagues.

“We are taking a look at the variation in ED care coordination [practices] that are taking place across the state and also the outcomes associated with ambulance diversion and crowding,” she says. In the meantime, while it is important to note that Maryland’s pioneering approach to global budgeting differs in some respects from the Pennsylvania model, Maryland has left plenty of bread crumbs for its neighbor to the north to follow.

“I suspect that CMMI is seeing Pennsylvania as the next full statewide global budget model,” Galarraga observes. “[Pennsylvania] is following the same footsteps of starting with a rural pilot because it is easier to implement with non-overlapping service areas. If all goes well with the pilot, [regulators] will likely expand it to a statewide global budgeting model.”


  1. Galarraga JE, Frohna WJ, Pines JM. The impact of Maryland’s global budget payment reform on emergency department admission rates in a single health system. Acad Emerg Med 2019;26:68-78.