SHIP Frequently Asked Questions

Frequently asked questions fall into the following categories. Click a link to jump to that category:

Program Basics and Eligibility Requirements

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Program Priorities: HCAHPS, ICD-10

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Special Innovation Project (SIP)

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SHIP Coordinator Guidance: Budget

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SHIP Coordinator Guidance: Hospital Applications

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Examples of Training and/or Investment Activities

Program Basics and Eligibility Requirements

What is SHIP?

SHIP, the Small Rural Hospital Improvement Grant Program, is a program run through the Health Resources and Services Administration’s Federal Office of Rural Health Policy. Through SHIP, small rural hospitals that meet certain eligibility requirements are able to apply for funding to assist in the implementation of activities related to:

  • Value-Based Purchasing (VBP)
  • Accountable Care Organizations (ACOs)/Shared Savings
  • Payment Bundling (PB)/Prospective Payment System (PPS)

SHIP is authorized by section 1820(g)(3) of the Social Security Act.

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Should we use HRSA’s Rural Health Grants Eligibility Analyzer for rural designation?

Yes. Use HRSA’s Rural Health Grants Eligibility Analyzer to verify hospital and rural designation.

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How do hospitals apply for SHIP funding?

Direct federal funding for SHIP is secured through the State Office of Rural Health in states with eligible hospitals. States solicit applications from their SHIP eligible hospitals. Eligible hospitals within territories that do not have access to a SORH must apply to the SHIP program individually and should contact the FORHP SHIP Program Coordinator.

 

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Who has been awarded SHIP Funding?

Current SHIP recipients can be found on the HRSA Data Warehouse

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Who is eligible for SHIP?

Eligible small rural hospitals are non-federal, short-term general acute care facilities located in a rural area of the United States and the territories, including faith-based hospitals. They may be for-profit, not-for-profit or tribal organizations.

1) "eligible small rural hospital" is defined as a non-Federal, short-term general acute hospital that: (i) is located in a rural area as defined in 42 U.S.C1395ww(d) and (ii) has 49 available beds or less, as reported on the hospital's most recently filed Medicare Cost Report;, 

2) "rural area" is defined as either: (1) located outside of a Metropolitan Statistical Area (MSA); (2) located within a rural census tract of an MSA, as determined under the Goldsmith Modification or the Rural-Urban Commuting Areas (RUCAs) or (3) is being treated as if being located in a rural area pursuant to 42 U.S.C. 1395(d)(8)(E); and, 

3) Eligible SHIP hospitals may be for-profit or not-for-profit, including faith-based. Hospitals in U.S. territories as well as tribally operated hospitals under Title I. and V. of P.L. 93-638 are eligible to the extent that such hospitals meet the above criteria. 

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Which states participate in SHIP?

All states participate in SHIP, except Delaware, New Jersey, Connecticut, and Rhode Island, which have no SHIP eligible hospitals.

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What is the SHIP application and award process?

The State Office of Rural Health (SORH) submits a grant application to the Federal Office of Rural Health Policy (FORHP) within the Health Resources and Services Administration (HRSA) on behalf of eligible hospital applicants in their state. The SORH is the official grantee of record and serves as the fiscal intermediary for all eligible hospitals within the state. The SORH receives the federal funds, verifies hospital eligibility, makes awards to eligible hospitals, and ensures appropriate use of funds. At the end of the grant period, the SORH submits a financial report to the HRSA Division of Grants Management Operations (DGMO). Eligible hospitals within territories that do not have access to a SORH must apply to the SHIP program individually and should contact the FORHP SHIP Program Coordinator. 

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How do hospitals qualify as rural?

Hospitals can qualify as rural, even though they are not in non-Metro counties or eligible Census Tracts, by being designated as rural, either by statute or regulation by the State government. All critical access hospitals are rural by definition and qualify for SHIP.

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Can SHIP hospitals, affiliated with large health system and who no longer file cost reports, attest that they are still operating with 49 beds or less?

Yes, they can attest to the number of beds from the hospital administrator.

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Can hospitals be eligible for SHIP if they have more than 49 beds on their hospital cost report but actually staff 49 beds or less? 

Yes, if a hospital reports a licensed bed count greater than 49, but staffs 49 beds or fewer, eligibility may be certified by submitting a written statement to the SORH that includes: 1) the number of staffed beds at the time of the most recent cost report submission, 2) the cost reporting period of the most recently filed cost report and 3) the signature of the certifying official of the hospital. The staffed number is reported in the State SHIP Spreadsheet.

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Can a SHIP eligible hospital affiliated with a large hospital system, use the combined cost report information for the system?

Yes, hospitals can submit an attestation from the Chief Executive Officer or Chief Financial Officer indicating they are operating at 49 beds or less.

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What is the specific language in the Guidance for how SHIP funds can be used?

This program supports eligible hospitals in meeting value-based payment and care goals for their respective organizations, through purchases of hardware, software and training. SHIP also enables small rural hospitals: to become or join accountable care organizations (ACOs); to participate in shared savings programs; and to purchase health information technology (hardware and software), equipment, and/or training to comply with quality improvement activities, such as advancing patient care information, promoting interoperability, and payment bundling.

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If two or more rural hospitals with 49 beds or less each are merged under a single tax ID such that the bed count is now combined and over 49, are the hospitals still eligible?

If the merger occurs, under a single tax ID with 50 beds or more, SHIP rural Hospital would be ineligible for SHIP funding.

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Program Priorities: HCAHPS, ICD-10

For Fiscal Year (FY) 2021 and FY 2022, the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) reporting priority for SHIP is suspended due to the COVID-19 pandemic and the impact on small rural hospitals. It is uncertain what the SHIP priorities, if any, will be in FY20223 The International Classification of Diseases, Tenth Revision (ICD-10) coding priority item is suspended due to most hospitals having completed the conversion to the ICD-10 system for accurate billing. It is uncertain what the SHIP priorities if any, will be in FY2023.

 Without the "Priority" for HCAHPS and Coding/Billing training,  can states continue to do those activities so that hospitals continue to participate?

Yes, HCAHPS and ICD-10 related activities will remain on the Allowable Investment Menu and hospitals may continue to select activities within these categories. In lieu of a funding priority, FORHP recommends that hospitals utilize funding to support quality improvement and/or healthcare finance requirements such as, but not limited to:

  • Develop or implement training, hardware/software that supports the application and expansion of telehealth and/or telemedicine
  • Comply with CMS’s Price Transparency rule by January 1, 2021, which requires hospitals operating in the United States to provide clear, accessible online pricing information on the hospital services.

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 Since HCAHPS is no longer a priority for SHIP, does this mean HCAHPS is no longer a requirement to participate?

Yes, that is correct for FY 2021 and FY 2022. Previously, HCAHPS has been a priority in SHIP to support the Flex Medicare Beneficiary Quality Improvement Project work for CAHs, and quality improvement for all hospitals. However, with the impacts of COVID-19, FORHP aims to relieve reporting burden for all small rural hospitals during the COVID-19 pandemic, so while it is highly encouraged to continue reporting for CAHs and other small rural hospitals, FORHP has suspended the HCAHPS priority for FY2021 and FY2022 SHIP.

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 Since HCAHPS and ICD-10 are not priority items for 2021, does that mean those hospitals who are ineligible because they do not meet the HCAHPS requirement are eligible in 2021 and 2022?

Yes, the hospitals may participate in FY2021 and FY2022, if they meet the SHIP eligibility criteria.

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 Will hospitals be required to retroactively report (HCAHPS) for FY 2021 or FY 2022?

For SHIP, it will not be required for hospitals to retroactively report HCAHPS in 2021 or 2022. For questions related to HCAHPS reporting under MBQIP please contact MBQIP@hrsa.gov.

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Are hospitals allowed to use "real-time surveys" instead of HCAHPS?

No, SHIP Hospitals cannot invest funds in real-time surveys in lieu of HCAHPS whether HCAHPS is funding priority or not. HCAHPS vendors need to be CMS certified.

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Are hospitals still allowed to use SHIP funds to pay the recurring costs for HCAHPS and ICD-10 vendors?

Yes.

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What is the best way to determine whether a hospital has fully implemented HCAHPS and is reporting to Hospital Compare?

"Fully implemented" means that the hospitals are reporting to Hospital Compare for at least one quarter during the most recent SHIP budget period.

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What does a hospital need to do to get our HCAHPS scores displayed on Hospital Compare?

If a hospital is using a vendor for HCAHPS, the vendor should be able to walk the hospital through the process of ensuring all the necessary pieces are in place to allow data to appear on Hospital Compare. This will include at a minimum completing a vendor authorization and the Hospital Inpatient Quality Reporting Notice of Participation, both through QualityNet.

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Does our HCAHPS vendor have to be CMS certified?

Yes, your HCAHPS vendor must be CMS certified.

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What if a hospital has completed the necessary steps to allow for our HCHAPS data to appear on Hospital Compare, but due to low volumes, the data is suppressed? Is the hospital allowed to choose a different investment activity from the SHIP Purchasing Menu?

Yes, so long as the hospital has taken all the necessary steps to allow for HCAHPS data to appear on Hospital Compare, the hospital can select a different investment from the SHIP Purchasing Menu.

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Special Innovation Project (SIP)

What is a Special Innovations Project?

Network/consortia development has been a long-standing program priority to assist resource and knowledge sharing throughout the SHIP. SHIP Coordinators can support hospital networks or consortia in the development of a Special Innovations Project (SIP) to operate through the Project Period with streamlined reporting and a final report to provide additional feedback on best practices and lessons learned. For the purposes of this model, innovation is the process of evaluation, selection, development, and implementation of new or improved services and/or programs. Within the SHIP investment menu guidelines, the SIP can be a process and/or quality innovation.

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What are the requirements for the Special Innovations Project?

The applicant requirements are as follows:

  • Network/consortia membership (existing or newly formed) will include three or more SHIP hospitals and/or provider-based rural health clinics.
  • Cohort will stay intact during the Project Period, with minimal (if any) change in the participating hospitals and no change in annual SHIP investments.
  • All participating hospitals must continue to meet HCAHPS and ICD-10 requirements.
  • Existing networks/consortia may choose to participate.

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Is there any additional money available for SIP?

There is no financial incentive for participating in a SIP.

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Can we divide up the money so that SIP participating hospitals get more?

No. All hospitals must receive equal funding.

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If we are not doing the SIP, do we need to include a "Not Applicable" attachment since it is attachment 7 and the hospital worksheet is attachment 8?

Yes. You may submit a page to indicate Attachment #7 is not applicable.

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SHIP hospitals can still be involved in network focused activities without participating in the SIP - is that correct?

Yes. Hospitals can engage in network activities without participating in the SIP option.

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What methodology will we need to use to summarize the network/consortia activities for the Special Innovations Project?

For all hospitals within a SIP Project: include activities on the work plan for the entire period of performance (FY 2019-2022) for network/consortia (three or more SHIP hospitals (inclusive of provider-based rural health clinics) that will invest SHIP funds in one – two activities to be monitored, tracked, and evaluated for the entirety of the period of performance. Include baseline measures and goals for improvement. Cohorts will stay intact for the period of performance, but projects must be for a minimum of 2 years, and may be changed after successful completion, reporting once thereafter for the remainder of the period of performance with SORH approval. A sample of a SIP Project can be found on the Grant Guidance page. List the goal(s) and objective(s) for each budget period and the associated evaluative method(s) and measures that will indicate success.

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SHIP Coordinator Guidance: Budget

Does the same amount of funding have to be provided to all hospitals?

Yes, all hospitals must receive the same amount of money. Pooling of funds in the form of networks or consortia is encouraged to increase purchasing power of hospitals pursuing similar activities.

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SHIP funds were used for a different category than what the hospital initially asked for so what should I do?

Remind the hospital of their agreement, monitor, evaluate progress and likelihood of it happening again and if it does, exclude them from future participation. They should seek prior approval from SHIP Coordinator/State Office of Rural Health before changing activities.

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Can SHIP funds be used to support provider-based rural health clinic (RHC) investments?

Yes, SHIP funds can be used to support RHC investments if they are aligned with the SHIP menu. Additional guidance and examples of RHC investments are provided in the SHIP Allowable Investments.

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Can a hospital spend leftover money on another activity on the SHIP purchasing menu?

Hospitals that have realized a cost savings can spend leftover activities on other SHIP investments. The State Office of Rural Health must approve any change in use of funds.

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What can the State Office of Rural Health do if hospitals do not spend all funds?

State Offices should contact their Federal Office of Rural Health Policy Project Officer for guidance. Funds cannot be transferred to another participating hospital.

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Can state SHIP Program staff salaries be paid with SHIP funds?

Yes, personnel costs are allowed only for award oversight; this does not include hospital personnel. Remember, SHIP is primarily a pass-through for hospital improvement, so budgets will be scrutinized for reasonable costs.

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Can indirect costs be included in the SHIP budget?

Yes, indirect costs up to the lesser of 15% of the award total or the State’s federally negotiated indirect rate can be allocated for the State Office of Rural Health.

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Is the indirect cost included with or in addition to the amount per hospital?

All costs, including Indirect costs, must be deducted from the award total. Budgets for more than the number of hospitals multiplied by  the amount per hospital, the maximum allowable, will not be considered.

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If not taking any indirect, do we still have to include the indirect cost agreement?

No. The indirect cost rate agreement is not required if you are not taking indirect costs.

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Is there a limit to the personnel costs percentage-wise?

See Section 4.1.iv Budget – Salary Limitation of HRSA’s SF-424 Application Guide for additional information. There are no SHIP-specific limitations beyond HRSA’s requirements.

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Do hospitals have to allocate 100% of funds to one category?

No, hospitals may split funding between different SHIP Investments categories. 

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Can hospital staff salaries be paid with SHIP funds?

No, SHIP funds cannot be used for salaries at the hospital.

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Can travel be paid for with SHIP funds?

SHIP funds may be used to cover travel where specifically approved as part of the contractor's training costs. SHIP funds may not be used to cover travel costs for grantees and SHIP hospital staff.

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Is it possible for hospitals to pool SHIP funds on a shared activity?

Yes, pooling SHIP funds amongst hospitals is a great way to make efficient use of resources. The State Office of Rural Health must be involved in establishing any such projects.

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SHIP Coordinator Guidance: Hospital Applications

What are the SHIP Allowable Investments?

In 2013, in order to ensure effective use of SHIP funding and increase program integrity, the Federal Office of Rural Health policy instituted a SHIP Allowable Investments from which eligible SHIP hospitals select investments. Investment activities are broken into three categories: Value-Based Purchasing, Accountable Care Organizations (ACOs)/Shared Savings and Payment Bundling (PB)/Prospective Payment System (PPS). Activity priorities are set each year based on current industry trends.

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Can the State Office of Rural Health alter the hospital application to include more questions or requirements?

Yes, as long as all the information needed for the State Spreadsheet of SHIP Applicants is gathered, the form can be altered to meet state needs. This includes requiring hospitals to submit additional documentation needed at the state level.

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Are states required to submit individual hospital applications to the Federal Office of Rural Health Policy or do they keep them on file again?

States should keep hospital applications on file for the fiscal year for which they are applying. As part of integrity oversight and monitoring, FORHP may randomly ask States to provide signed applications.

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 On the Grant Guidance page, there are two forms of the application: Hospital Application A and Hospital Application B. What is the difference between hospital application A and hospital application B?

Hospital Application A is the short-form version and doesn’t have all of the data points needed for the State SHIP Programs to complete the NCC Attachments, but can be used if they already have the information (address, contact information, hospital type, and beds) from prior reporting/applications. Hospital Application B is the long-form version and has all of the data points and fully match Attachments #2 and #4. Either application can be used as long as the State grantee provides all the necessary information for Attachments #2 and #4.

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Are electronic signatures acceptable for the hospital applications?

The Federal Office of Rural Health Policy has indicated that electronic signatures are acceptable from their perspective. State Office of Rural Health will want to ensure their application process aligns with any state requirements for signatures.

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Are there electronic versions of the hospital application templates that State SHIP Programs can use to send to their hospitals?

Yes, the SHIP TA team creates an electronic version of the hospital application templates that can be sent upon request to states who have their own SurveyMonkey subscription. If you would like copies of the templates, please send a request to ship-ta@ruralcenter.org and be sure to include your SurveyMonkey username.

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The hospital application requires that hospitals agree to select investments for which they will be able to demonstrate measurable outputs/outcomes and to report those measures and progress to the State Office of Rural Health (SORH) upon request and at the end of the program year. What kinds of measures should the hospitals be tracking and what is the SORH supposed to do with that information?

At this time there is no standard set of measures for SHIP investments; however, program integrity is of utmost importance and therefore states are encouraged to maintain communication with their hospitals regarding use of their funds and outcomes from their SHIP activities. SORH’s can use what they learn in this regard to inform future projects at other hospitals and to identify opportunities for pooling of resources to maximize SHIP investment.

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How many years are we required to hold the SHIP hospital applications on file?

It is generally best practice to keep federal grant records for three years. Grantees may want to keep records for the entirety of the period of performance or according to their organizational policies.

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Are hospitals allowed to change their investment after they have submitted their application?

The State SHIP Coordinator has discretion to determine if a change in investment can/should be made. In an effort to ensure program integrity, coordinators may want to monitor hospitals that make such requests closely. Some coordinators have implemented deadlines for hospital changes to investments.

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The application asks if the applicant hospital is participating in various Centers for Medicare and Medicaid Services (CMS) programs. Where can I find out more about these programs?

Click on the links below to find out more about each of the CMS programs included on the hospital application:

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How is hospital bed count determined?

For purposes of SHIP, hospitals report the number of beds on Line 14 of the Medicare Cost Report. If that number is 49 or less (staffed, not licensed), the hospital meets the bed count requirement to participate in SHIP. "Eligible small rural hospital" is defined as a non-Federal, short-term general acute care hospital that: (i) is located in a rural area as defined in 42 U.S.C. 1395ww(d) and (ii) has 49 available beds or less, as reported on the hospital’s most recently filed Medicare Cost Report. Cost report instructions define staffed beds as, "the number of beds available for use by patients at the end of the cost reporting period. A bed means an adult bed, pediatric bed, birthing room, or newborn bed maintained in a patient care area for lodging patients in acute, long term, or domiciliary areas of the hospital. Beds in labor room, birthing room, post anesthesia, postoperative recovery rooms, outpatient areas, emergency rooms, ancillary departments, nurses' and other staff residences, and other such areas which are regularly maintained and utilized for only a portion of the stay of patients (primarily for special procedures or not for inpatient lodging) are not termed a bed for these purposes." Source: Cost Report Data

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Are the detox beds included on line 14 of the cost report?

If the detox beds are part of the hospital licensure and are available for acute care PPS, then the beds are included on line 1, column 2 on Worksheet S-3 Part I. The beds are also included in the total on line 14, column 2. If the detox beds are custodial beds and not available for acute care, then they are in a non-reimbursable cost center and not included in line 14. If the detox beds are a DPU and not available for acute care, then they have a separate sub-provider number and the beds are reported below line 14.

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What methodology will we need to use to summarize the network/consortia activities for the Special Innovations Project?

You will need to summarize how the network/consortia will:

  • Efficiently leverage SIP funds for overall hospital improvement.
  • Demonstrate how SIP activities will collective affect participants.
  • Demonstrate resourceful application of the consortium to improve quality improvement, financial improvement, shared savings, etc.

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What is the difference between an ACO and a Medicare Shared Savings Program (MSSP)?

An ACO can be eligible for a MSSP. To be eligible for the Medicare Shared Savings Program (MSSP), an ACO must agree to participate for at least 3 years, meet other program requirements such as establishing a governing body, to establish processes to promote evidence-based medicine, promote patient engagement, and to internally report on quality and cost measures and coordinate care.

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Can I change the prepopulated Budget Total under Section A: Budget Summary and Section B: Budget Category in Electronic Hand Books (EHB)? 

You may have encountered an error while trying to change the prepopulated Budget Total under Section A: Budget Summary and Section B: Budget Category on your NCC application. If your program's number of hospitals has changed, increased, or decreased, from the previous NOA, EHB shows an error and will not allow changing the total amount. 

To bypass this issue, please leave the Total Amount that is listed on Section A and B as is. On the next section, the Budget Narrative Section, you are required to attach a line-item budget breakdown with a detailed explanation of costs for the upcoming FY. Include on the attachment your new total, and number of hospitals x the amount per hospital, with the correct breakdown for the budget cycle. For example, if you need to make changes to the indirect or personnel line item due to a reduction in the number of hospitals, include a budget breakdown and justification for each category based on the number of hospitals you now have. 

When reviewing your NCCs, your PO will make the appropriate changes using the information on the attachment to reflect the changes on your NOA. Additionally, please email your PO if you have experienced this issue. 

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Examples of Training and/or Investment Activities

Many of the investment options on the SHIP Purchasing Menu are self-explanatory, while a few are more general in nature. The Allowable Investments Search Tool is recommended to check activities or search broad list of Allowable Activities by SHIP Category. This tool classifies example investment activities as AllowableUnallowable, or PO Pre-Approval. Hospitals should contact the State Office of Rural Health (SORH) with questions regarding the appropriateness or fit of a certain activity. SORHs with similar questions should contact the appropriate Federal Office of Rural Health Policy Project Officer and/or SHIP-TA.

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What are examples of activities for the investment option (C) under the category Value-Based Purchasing (VBP): Efficiency or quality improvement training in support of VBP initiatives?

Consider adopting Six Sigma, Lean, Plan-Do-Study-Act or other such efficiency or quality improvement processes to address performance issues related to VBP initiatives, such as the following:

  • Patient experience of care
  • Clinical care processes and outcomes
  • Patient safety
  • Reducing readmissions
  • Reducing infections
  • Medicare spending per beneficiary

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What are examples of activities for the investment option (D) under the category Accountable Care Organization (ACO) or Shared Savings: Efficiency or quality improvement training in support of ACO/Shared Savings initiatives?

Consider adopting Six Sigma, Lean, Plan-Do-Study-Act or other such efficiency or quality improvement processes to address performance issues related to ACO/Shared Savings initiatives, such as the following:

  • Non-clinical operations
  • Board organization/operations
  • Multihospital/network trainings (traditional and/or non-traditional partners)
  • Emergency Department Transfer Communications
  • Health Information Exchange (with traditional and/or non-traditional partners)
  • Swing bed utilization training
  • Care coordination training
  • Population health training

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What are examples of activities for the investment option (E) under the category Accountable Care Organization (ACO) or Shared Savings: Systems performance training?

Hospitals interested in systems performance training may want to consider adopting a framework approach, such as one of the following:

  • Baldrige
  • Balanced Score Card
  • Logic Model

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What are examples of activities for the investment option (C) under the category Payment Bundling/Prospective Payment System (PB/PPS): Efficiency or quality improvement training in support of PB/PPS initiatives?

Consider adopting Six Sigma, Lean, Plan-Do-Study-Act or other such efficiency or quality improvement processes to address performance issues related to PB/PPS, such as the following:

  • Financial improvement software or training
  • Operational multi-hospital/network trainings
  • Pricing transparency training

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Can SHIP funds be used to pay for a consultant to help them improve quality or pay for a consultant to help them develop the pricing transparency website?

No, SHIP funds cannot be used to cover website development costs.

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Can SHIP funds be used to cover yearly subscription costs for price transparency software?

No, pricing transparency subscription fees are allowable for the first year, but SHIP funds cannot be used to cover this operational cost year after year. Regarding using funds to pay for a consultant or vendor to build a price transparency software, this is NOT allowable. SHIP funds can cover for price transparency training of staff for any software or website done by a consultant, but they cannot cover website development time.

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Can SHIP funds be used for subscriptions?

 

Allowable subscription fees include those for ongoing SHIP quality reporting, HCAHPS, quality improvement training, ICD-10 updates, telehealth platforms (not provider fees), disease registries, population health databases, and ACO fees. Unallowable subscriptions include bank fees, hospital pricing transparency subscriptions, and training unrelated to the SHIP Categories.

Library fees and services that are used strictly for SHIP training access or training manuals or guides and not for ongoing operational access can be an allowable use of SHIP funds but requires PO approval.

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This project is/was supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) under grant number UB1RH24206, Information Services to Rural Hospital Flexibility Program Grantees, $1,560,000 (0% financed with nongovernmental sources). This information or content and conclusions are those of the author and should not be construed as the official position or policy of, nor should any endorsements be inferred by HRSA, HHS or the U.S. Government.