CMS Initiative to Transform Rural Health


A new reimbursement model intended to address healthcare access and availability in rural communities was introduced by The Centers for Medicare & Medicaid Services (CMS) Innovation Center. The Community Health Access and Rural Transformation (CHART) Model will "provide up-front investments and predictable, capitated payments that pay for quality and patient outcomes," according to CMS. The CHART Model also aims to lighten the regulatory burden faced by rural hospitals and providers.

This CHART Model is in response to an Executive Order issued August 3, 2020 which required that a rural health action plan be launched to (i) build sustainable models for rural communities; (ii) focus on preventing disease and mortality; (iii) leverage innovation and technology; and (iv) increase access to care.

Approximately one in five Americans live in rural areas, and these individuals suffer statistically worse healthcare outcomes and higher rates of preventable diseases than Americans who live in urban areas. More than 130 rural hospitals have closed in the last decade, and approximately half of rural hospitals currently have negative operating margins. The bottom line is that many rural communities can no longer support free-standing hospitals but desperately need the services these facilities provide in the community to maintain healthcare access and economic prosperity. Rural communities that lose hospitals without a well-planned transition frequently lose their primary and preventative care services along with the hospital.

The new Model could provide some relief for rural hospitals that have struggled for the past decade under clouds of recession, reform and retrenchment. According to CMS, the CHART Model will aim to "increase financial stability for rural providers" with "up-front investments and predictable, capitated payments."

The CHART Model also takes aim at regulatory requirements by providing waivers that increase operational and regulatory flexibility for rural providers. CMS wants to protect rural healthcare access by "ensuring rural providers remain financially sustainable for years to come."

Using the CHART Model, CMS "will test whether upfront investments, predictable capitated payments, and operational and regulatory flexibilities will enable rural health care providers to improve access to high-quality care while reducing health care costs."

The project will include a Community Transformation Track and an Accountable Care Organization (ACO) Track.

CMS is providing up to $75 million in funding for the Community Transformation Track in order to allow 15 rural communities the opportunity to participate. CMS will select up to 15 Lead Organizations--such as state Medicaid agencies, State Offices of Rural Health, local public health departments, Independent Practice Associations, or Academic Medical Centers--to work with key model participants to lead the development and implementation of the community's plan to implement healthcare delivery redesign strategy. According to CMS, Lead Organizations and their community partners will receive "upfront cooperative agreement funding, financial flexibilities through a predictable capitated payment amount (CPA) for Participant Hospitals in a community, and operational and regulatory flexibilities."

For the ACO Transformation Track, CMS will select up to 20 rural ACOs to receive advanced payments as part of joining the Medicare Shared Savings Program. CHART ACOs will be eligible to receive a one-time upfront payment equal to a minimum of $200,000 plus $36 per beneficiary to participate in the five-year agreement period in the Shared Savings Program, and will be able to receive a prospective per beneficiary per month payment equal to a minimum of $8 for up to 24 months. Benefit enhancements available for this track include telehealth expansion, a beneficiary incentive program, and waiver of the three-day prior inpatient stay requirement prior to admission in a skilled nursing facility.


The Notice of Funding Opportunity for the Community Transformation Track will be available on the CMS website in September, with the rural communities expected to be announced in early 2021 with the Model starting in summer 2021. The Application for the ACO Transformation Track will be available in early 2021, with the track starting in January 2022.

CMS Administrator Seema Verma said, "The CHART Model represents our next opportunity to make investments that will transform the rural health care system, allowing us to use every lever to support all Americans getting access to high-quality care where they live.

Denise Burke, Kim Looney, Katherine Rippey and Nina Wall practice health care law with Waller.


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