One federal payer buys an essential floor through four payment methods matched to cost structure rather than to who owns the building: a reference fee schedule, capacity payment for standby capability, capitation with reinsurance, and hospital global budgets. Delivery stays plural and regional — private practices, nonprofit systems, public hospitals, tribal systems, and a standing public arm of federally chartered Regional Health Authorities, aggregated from entities that already run multi-site operations. Every county is assigned to exactly one Authority, so deserts are attached rather than built. Inside the floor there is no prior authorization, no network denial and no balance billing. A regulated supplemental sits above it, separately priced.
Catchments are planning and accounting units, not closed networks. Every qualified provider can treat every enrollee, and there is no out-of-region penalty.
When someone is treated outside their home catchment, the receiving authority is paid at the national fee schedule and the cost settles against the home authority. The patient does nothing and notices nothing.
Capacity payment and capital do not settle. They flow from the payer directly, so an authority losing patients is never prevented from building the capability that would keep them.
A global budget set on catchment population becomes unfunded work the moment an outside patient walks in. Without a settlement rule the receiving authority is punished for treating someone and the sending authority pays nothing for failing them — exactly backwards.
Settlement reverses both. The receiver is paid for work done. The sender bears the cost of its residents leaving, which gives it a reason to fix why they leave.
The exclusion of capacity payment and capital from settlement is the part that matters most and is easiest to get wrong. Route those through the authority's own budget and the poorest catchments are trapped: paying out for care elsewhere, unable to fund the capacity that would end the outflow. That is the trap current territorial funding already creates.
Residence assigns the catchment, and nothing else is required. Someone who lives in one region and works in another is treated at either and the flow settles routinely; commuter corridors show persistent one-directional settlement, which is the system working rather than an exception needing adjudication. No second enrollment, and no employer link of any kind.
Referral out of region divides in two. **Designed referral** — transplant, complex oncology, rare disease, high-complexity surgery — is the tertiary structure working as intended, and the floor covers medically necessary travel and lodging because the referral is clinically required. The VA already runs beneficiary travel on this basis. **Elected travel**, where a patient chooses a distant institution for care available locally, is supplemental or direct pay.
That distinction leaves a real equity problem, and the clinical evidence supplies the answer. Volume-outcome relationships are well established for complex surgery: a patient who can afford the flight to a high-volume centre is buying better odds, not a nicer room. So complex, low-volume, high-stakes procedures route to designated centres of excellence as a clinical pathway rather than as a matter of means — designation by volume and outcome, referral automatic, travel covered. The wealthy patient's choice becomes the default for everyone with the same condition, and the equity gap closes as a side effect of doing the clinically correct thing.
Territories enter on the same terms as any state, with the capped-Medicaid structure ended rather than adjusted. Portability is immediate: someone who moves to the Bronx in March is enrolled in the Bronx catchment in March. This matters more for Puerto Rico than anywhere else, because the movement is structural rather than incidental.
- Global budgets
- Settlement is what lets a fixed catchment budget coexist with free patient movement. Canadian provinces settle reciprocal billing the same way.
- Capacity payment
- Excluded from settlement by design, so outflow never blocks the build that would reduce it.
- Catchment assignment
- Observed flow governs reassignment on the review cycle. If a county sends most of its care to a neighbouring authority, the assignment was wrong.
Settlement data will be read as a league table, and authorities will compete on reputation rather than outcomes.
It would be, and that is the misuse to refuse in advance. Outflow measures where people go, and people go for parking, familiarity, marketing and referral habit as readily as for results. An authority losing patients to better outcomes and one losing patients to better advertising look identical in the settlement data. Flows are published by service line and direction alongside risk-adjusted outcomes, and never as a composite score.
Honesty about gaps. Distributed Healthcare has more unresolved specification than other Engines because operational complexity is higher; the items below are flagged for v10.2 specification or for outside expert review.
- Settlement rate. The national fee schedule is the obvious answer, but a centre absorbing heavy inflow carries capacity costs the schedule does not cover — a volume threshold above which capacity payment adjusts may be needed.
- Which procedures are subject to mandatory centre-of-excellence routing. Volume thresholds exist in the literature and are contested at the margins.
- Seasonal residence. Retirees splitting the year between two catchments are a large population and neither residence rule is obviously right.
- International care — border communities, expatriates, and medical tourism. Not addressed anywhere, and the last is politically live.