Delaware Public Media

Nanticoke hospital denied planned payment reform by federal gov't

Feb 6, 2019

Sussex County’s Nanticoke Health Services had planned to completely overhaul the way it gets paid for providing health care, but the cost-saving measure was recently denied by the federal government.


Nanticoke received a $250,000 federal grant funneled through the state in December to conduct a study on how to implement global budgeting.

Under this new system, Nanticoke would no longer be paid for the number of services it provides. It would instead set annual goals for expenses and either share in the savings when goals were met or be penalized by health care payers for going over budget. This is meant to improve patient health and reduce costs by avoiding duplicative tests and limiting emergency department visits.

Nanticoke went ahead with the study, but the Centers for Medicare and Medicaid Services later said Nanticoke could not switch to global budgeting.

“At the last minute they decided not to do it,” said Nanticoke President and CEO Steven Rose. “So we’re very disappointed actually.”

Maryland and Pennsylvania each have rural hospitals using the global budgeting system. One is Maryland-based Peninsula Health Systems. Nanticoke has since signed a letter of intent to affiliate itself with Peninsula.

Delaware’s Director of Healthcare Reform Steven Constantino says there may be some potential for Nanticoke to piggyback off of Peninsula’s payment model.

“We’d like to examine that potential, but obviously that’s going to take some serious discussion and negotiation,” said Constantino.

Constantino adds it’s not clear why the Centers for Medicare and Medicaid Services denied Nanticoke’s initial plan to adopt global budgeting.

“I get a stronger sense, and what I’ve heard, is that they were kind of looking to review the models that are in existence and come up with more of a national program,” he said.

CMS has yet to respond to Delaware Public Media with a reason for its decision to reject Nanticoke’s global budgeting plan.