Maryland Health Services Cost Review
Commission
New All-Payer Model for Maryland
Population-Based and Patient-Centered Payment
Systems
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Approved New All-Payer Model
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Updated application submitted to CMMI in October
Approved effective January 1, 2014
Focus on new approaches to rate regulation
Moves Maryland
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From Medicare, inpatient, per admission test
To an all payer, total hospital payment per capita test
 Shifts focus to population health and delivery system
redesign
Focus Shifts to Patients
Unprecedented effort to improve health, improve
outcomes, and control costs for patients
Gain control of the revenue budget and focus on
providing the right services and reducing utilization that
can be avoided with better care
•Enhance Patient Experience
Maryland’s All
Payer Model
•Better Population Health
•Lower Total Cost of Care
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Approved Model at a Glance
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All-Payer total hospital per capita revenue growth
ceiling for Maryland residents tied to long term state
economic growth (GSP) per capita
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3.58% annual growth rate for first 3 years
Medicare payment savings for Maryland beneficiaries
compared to dynamic national trend. Minimum of $330 million
in savings
Patient and population centered-measures and targets to
promote population health improvement
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Medicare readmission reductions to national average
30% reduction in preventable conditions under Maryland’s Hospital
Acquired Condition program (MHAC) over a 5 year period
Many other quality improvement targets
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Creates New Context for HSCRC
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Align payment with new ways of
organizing and providing care
Contain growth in total cost of hospital
care in line with requirements
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Better care
Evolve value payments around efficiency,
health and outcomes
Better health
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Priority tasks: Transition to
population/global payment models and
patient-centered performance targets
that are tied directly to payment
Major data and infrastructure
requirements
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Lower cost
Timeline of All-Payer Model
Development
Phase 1 (5 Year Model)
Near Term
(2014)
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Hospital global
model
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Long Term
(2016Beyond)
Mid-Term
(2015-2017)
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Population-based
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Preparation for
Phase 2 focus on
total costs of
care model
Near
Term (FY
2014)
HSCRC All-Payer Model
Development Activities
Bridge Process
 Transition Polices—50% Variable Cost Factor and Volume
Governor
 Implement Global Models for Hospitals
 Monitoring and Compliance
Work Groups
 Revenue Update Process for Global Models
 Quality & Avoidable Utilization
 Alignment Models with Physicians & Post Acute
 Data and Infrastructure
 Vision for Mid-Term
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Creates a New Context for Hospitals
Old Model
Volume Driven
Units/Cases
Rate Per
Unit or Case
New Model
Population and Value
Driven
Revenue Base Year
Updates for Trend,
Population,Value
Hospital Revenue
Allowed
Revenue Target Year
Unknown at the beginning of
year. More units/more revenue
Known at the beginning of year.
More units does not create more
revenue
Opportunities for Success
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Reduce avoidable utilization by improving care
coordination and improving quality
Value based purchasing opportunities—alignment with
new All Payer Model
Manage and monitor revenues within hospital global
budgets
GO FOR “0”—Zero rate of increase for Medicare
revenue per capita in 2014 (Revenue growth/beneficiary
growth)
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Near Term Success Factor: Reduce
Avoidable Utilization By Improving Care
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In order to balance the model, avoidable utilization must
be reduced by improving care and care coordination
 30-
Day Readmissions/Rehospitalizations (includes ER)
 Preventable Admissions (based on AHRQ Prevention
Quality Indicators)
 Nursing home residents—Reduce conditions leading to
admissions and readmissions
 Maryland Hospital Acquired Conditions (potentially
preventable complications)
 Improved care coordination: particular focus on high
needs/frequent users, involvement of social services
earlier on
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Value-Based Purchasing to Improve Care
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Quality-Based Reimbursement Program
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Maryland Hospital-Acquired Conditions Program
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Aligning the program to achieve state-wide improvement goal
of 30 percent
Readmissions
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Emphasis on patient experience and outcomes
Creating positive incentives to reduce readmissions rate below
the national average
Other policies to promote improvements in care
coordination and reduce potentially avoidable utilization
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Revenue Within Limits
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Global budgets
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Global concepts
Manage rates to global budget targets
 Price adjustments to be spread across all centers (5%
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corridors in all centers)
 ½% overall compliance corridor for Global Budget
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CPE with concurrent 50% volume adjustment and
volume governor(1% net growth)
Compliance is critical
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Right charging is key
Revenue test is Calendar Year. Calendar Year compliance is
equally critical
Medicare Revenue Growth: GO FOR “0”
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Medicare revenue growth below national growth
critical to generate savings
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Focus on high need patients and avoidable utilization
In particular, where better care = lower costs
Involve clinicians in determining where to focus
Monitor your Medicare revenue growth
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Focus on achieving “0” % growth rate per capita
Cost Focus
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Refocus on cost of care
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Avoidable costs
 Cost per capita
 Cost per episode
 Variable cost reductions as volumes fall
Examine capacity and program demand
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Innovation as a cost savings opportunity
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Workgroup activities starting
HSCRC
Advisory
Council
Bridge
Process &
Analysis
(STAFF)
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Physician
Alignment &
Engagement
Workgroups
Performance
Improvement
&
Measurement
•Open meetings
•Physicians, patients, and
other providers, hospitals,
payers participate
Payment
Models
Data &
Infrastructure
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The new All-Payer model
has enormous potential to
improve the efficiency and
effectiveness of care and
the health of Marylanders
The HSCRC and the
stakeholders face an
unprecedented need to
work together, and make
this transition successful
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Delivery System Objectives
Conclusion
• Improved value for
patients
• Sustainable
delivery system
for efficient and
effective hospitals
• Alignment with
physician delivery
and payment
model changes