History and Overview of the HSCRC
(Health Services Cost Review Commission)
Michael Myers
Greater Baltimore Medical Center (GBMC)
January 31, 2014
Discussion Topics
I.
Before the HSCRC
II.
The Formation of the HSCRC and the “All Payor” System
III. Impact
IV. Current & Future Initiatives
V.
Other General Information
1
General Overview
• Uncertainty
– Status of Healthcare Reform
– Accountable Care Organizations
• Challenge
– Performance Improvement
– Re-capitalization
– Maintaining acceptable operating margins
• Opportunity
– Chance for this era of healthcare workers to make a profound and
lasting change
22.
Maryland Healthcare Environment
Pre-HSCRC (Late 60’s – Early 70’s)
• Significant amount of in-efficiency in delivery system
– Over utilization
– Length of stay for patients exceeded national averages
– Excess capacity
• Weak financial performance for Maryland Hospitals
• Inconsistent access to hospital care for the poor and uninsured
• By 1971, hospital cost per case in Maryland exceeded the National
average by 25%!
3
The Formation of the HSCRC
• 1971 - Initial legislation enacted by the General Assembly
– Independent body within the Department of Health and Mental Hygiene
– HSCRC given the authority to establish hospital rates
Legislative Mandate
• Contain Hospital Costs
 Total costs are reasonable
• Ensure Equity / Stability
 Charges (unit rates) are reasonably related to costs.
 Fair and equitable rates to everyone
 Hospitals are compensated fairly (Provide financial
stability)
 Predictability for payors and hospitals
• Maximize Access to Care
 All hospitals and payors share in responsibility of
caring for the poor and uninsured
• Provide Accountability
 System checks and balances
 Public disclosure
4
The Formation of the HSCRC
• 1971 - Initial legislation enacted by the General Assembly
– Independent body within the Department of Health and Mental Hygiene
– HSCRC given the authority to establish hospital rates
Legislative
Mandate
Regulatory Jurisdiction
(Rates)
• Control Costs
Includes:
 Total costs are reasonable
• Inpatient services
• Ensure Equity
• Outpatient
services
“at the hospital”
 Fair and equitable rates to everyone (charges are
reasonably related to costs)
Excludes:
 Hospitals are compensated fairly (Maintain solvency
of efficient hospitals)
• Physician/Professional
Fee/Part B Activity
• Maximize
Access
• Other operating
revenue
 All hospitals share in responsibility of caring for the
• Non operating
revenue
poor and uninsured
• Provide Accountability
 System checks and balances
 Public disclosure
5
The Formation of the HSCRC
• 1971 - Initial legislation enacted by the General Assembly
– Independent body within the Department of Health and Mental Hygiene
– HSCRC given the authority to establish hospital rates
• 1974 – HSCRC began setting unit rates for hospitals after 3 yr phase in
– Authority extended only to non-federal insurers
6
The Formation of the HSCRC
• 1971 - Initial legislation enacted by the General Assembly
– Independent body within the Department of Health and Mental Hygiene
– HSCRC given the authority to establish hospital rates
• 1974 – HSCRC began setting unit rates for hospitals after 3 yr phase in
– Authority extended only to non-federal insurers
• 1977 – Maryland granted temporary “waiver” by federal govt. to test
alternative payment approaches
– Exempted the state from national Medicare and Medicaid reimbursement requirements
Maryland becomes an “All
Payor” state
7
The Formation of the HSCRC
• 1971 - Initial legislation enacted by the General Assembly
– Independent body within the Department of Health and Mental Hygiene
– HSCRC given the authority to establish hospital rates
• 1974 – HSCRC began setting unit rates for hospitals after 3 yr phase in
– Authority extended only to non-federal insurers
• 1977 – Maryland granted temporary “waiver” by federal govt. to test
alternative payment approaches
– Exempted the state from national Medicare and Medicaid reimbursement requirements
• 1980 – Medicare exemption became permanent (with stipulations) in
Maryland
– Continue to be the only state with this “waiver”
8
HSCRC’s Mandate
• Ensure Equity / Fairness / Stability
• Maximize Access to Care
• Contain Hospital Costs / Total Costs are
Reasonable
• Provide Accountability
9
HSCRC’s Mandate
• Ensure Equity / Fairness / Stability
• Maximize Access to Care
• Contain Hospital Costs / Total Costs are
Reasonable
• Provide Accountability
10
“All Payor” Hospital Rate Setting System
Unit Rates
• HSCRC
– Establish and approve rates for each unit of service (Room and Board,
imaging, lab, etc…)
• Hospital specific
– Unit rates are to be reasonably related to underlying costs
• Including social costs of uncompensated care (bad debt / charity)
• Hospitals
– Required to charge all payors at HSCRC approved unit rates
• Payors (All)
– Required to pay hospitals based on each hospitals approved unit rates
• Payors given the ability to deny payment of care for lack of medical
necessity
11
“All Payor” Hospital Rate Setting System
Illustration
(Non-Medicare)
(Medicare)
Dear Mr. Jones
Dear Mr. Smith
35 year old Pneumonia Patient
75 year old Hip Fracture
Services
Room & Board
Emergency Room
Operating Room
Lab
X-Ray
Units
4 Days
1 Visit
50 Mins.
40 Tests
5 Tests
Please pay this Amount
Unit
Rates
$500
$125
$20
$10
$100
Charges
$2,000
$125
$1,000
$400
$500
$4,025
Services
Room & Board
Emergency Room
Operating Room
Lab
X-Ray
Units
8 Days
1 Visit
100 Mins.
5 Tests
10 Tests
Please pay this Amount
Unit
Rates
$500
$125
$20
$10
$100
Charges
$4,000
$125
$2,000
$50
$1,000
$7,175
12
Hospital Reimbursement
Maryland vs. Rest of Nation
Nation
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
Medicare/Mcaid
Comm.
Cost
SelfPay
Avg.
Payments
13
Hospital Reimbursement
Maryland vs. Rest of Nation
Nation
$2.50
5%
Margin
$2.00
$1.50
$1.00
$0.50
$0.00
Medicare/Mcaid
Comm.
Cost
SelfPay
Avg.
Payments
14
Hospital Reimbursement
Maryland vs. Rest of Nation
Nation
$2.50
Charge to Cost Ratio
(Illus.)
5%
Margin
$2.00
$1.50
$1.00
2.5 to 1
300%
250%
$0.50
$0.00
200%
Medicare/Mcaid
Comm.
Cost
150%
SelfPay
Avg.
Payments
100%
50%
0%
Maryland
Cost
Nation
Mark-up
Mostly attributable
to pricing needed
to maximize
reimbursement
given need to cost
shift.
15
Hospital Reimbursement
Maryland vs. Rest of Nation
Nation
$2.50
Charge to Cost Ratio
(Illus.)
$2.00
$1.50
$1.00
2.5 to 1
300%
250%
$0.50
$0.00
200%
Medicare/Mcaid
Comm.
Cost
150%
100%
SelfPay
Avg.
Payments
Maryland
50%
$2.50
0%
Maryland
Nation
$2.00
Cost
Mark-up
$1.50
$1.00
$0.50
$0.00
Medicare/Mcaid
Comm.
Cost
SelfPay
Payments
Avg.
16
Hospital Reimbursement
Maryland vs. Rest of Nation
Nation
$2.50
Charge to Cost Ratio
(Illus.)
$2.00
$1.50
$1.00
300%
1.2 to 1
2.5 to 1
250%
$0.50
$0.00
200%
Medicare/Mcaid
Comm.
Cost
150%
100%
SelfPay
Avg.
Payments
Maryland
50%
$2.50
0%
Maryland
Nation
Cost
Mark-up
Mostly
attributable
to the cost of
uncomp. care,
contractual
allowances, and
profit
$2.00
$1.50
$1.00
$0.50
$0.00
Medicare/Mcaid
Comm.
Cost
SelfPay
Payments
Avg.
17
Hospital Reimbursement
Maryland vs. Rest of Nation
Nation
$2.50
Charge to Cost Ratio
$2.00
(Illus.)
$1.50
$1.00
300%
1.2 to 1
2.5 to 1
$0.50
HSCRC Approved Discounts
250%
$0.00
200%
•
•
•
•
150%
100%
50%
Medicare/Mcaid
Comm.
SelfPay
Avg.
Medicare/Medicaid
6.0%
Cost Payments
MCare/MCaid HMO’s
4.0%
Advance Financing
2.25%
Maryland
Prompt Pay
1%-2.25%
$2.50
0%
Maryland
Nation
Cost
Mark-up
Mostly
attributable
to the cost of
uncomp. care,
contractual
allowances, and
profit
$2.00
$1.50
$1.00
$0.50
$0.00
Medicare/Mcaid
Comm.
Cost
SelfPay
Payments
Avg.
18
Hospital Reimbursement
Pillar of HSCRC System
Maryland vs. Rest of Nation
Ensure Equity and Fairness
Nation
$2.50
Charge to Cost Ratio
(Illus.)
$2.00
$1.50
$1.00
300%
1.2 to 1
2.5 to 1
250%
$0.50
$0.00
200%
Medicare/Mcaid
Comm.
Cost
150%
100%
SelfPay
Avg.
Payments
Maryland
50%
$2.50
0%
Maryland
Nation
Cost
Mark-up
Mostly
attributable
to the cost of
uncomp. care,
contractual
allowances, and
profit
$2.00
$1.50
$1.00
$0.50
$0.00
Medicare/Mcaid
Comm.
Cost
SelfPay
Payments
Avg.
19
HSCRC’s Mandate
• Ensure Equity / Fairness / Stability
• Maximize Access to Care
• Contain Hospital Costs / Total Costs are
Reasonable
• Provide Accountability
20
HSCRC Impact – Maximizing Access
Statewide Actual Uncompensated Care
1977 - 2010
10.00%
900
9.00%
800
8.00%
700
7.00%
600
6.00%
500
5.00%
400
4.00%
300
3.00%
200
2.00%
100
1.00%
0
Percent of Total Gross Patient Revenue
Amount in Uncompensated Care (Millions)
1000
0.00%
1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Fiscal Year
$ UCC (millions)
% Total Revenue
21
HSCRC’s Mandate
• Ensure Equity / Fairness / Stability
• Maximize Access to Care
• Contain Hospital Costs / Total Costs are
Reasonable
• Provide Accountability
22
HSCRC Impact – Control Costs
Difference in Cost per Case: Maryland vs. Nation
Model of Success
30%
Maryland costs per case had
improved dramatically from
25% higher than nation to
12% below in 1992
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
'76
'77
'78
'79
'80
'81
'82
'83
'84
'85
'86
'87
'88
'89
'90
'91
'92
Source: Maryland Hospital Association
23
HSCRC Impact – Control Costs
Difference in Cost per Case: Maryland vs. Nation
Illustration
30%
MD
Nation % Diff
$1,000 $800
+25%
$1,640 $1,865 -12%
25%
’76
’92
20%
15%
10%
5%
0%
-5%
-10%
-15%
'76
'77
'78
'79
'80
'81
'82
'83
'84
'85
'86
'87
'88
'89
'90
'91
'92
Source: Maryland Hospital Association
24
Maryland Hospitals vs. US Hospitals
Difference in Net Operating Revenue per Case
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
-6.00%
-8.00%
-10.00%
-12.00%
-14.00%
Despite significant reduction
in costs, operating profits
(1%-2%) at Maryland
hospitals continued to lag
national levels.
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
25
Maryland Hospitals vs. US Hospitals
Difference in Net Operating Revenue per Case
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
-6.00%
-8.00%
-10.00%
-12.00%
-14.00%
HSCRC began to loosen rate
constraints in mid/late ’90’s
and hospital profitability
improved.
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
26
Maryland Hospitals vs. US Hospitals
Difference in Net Operating Revenue per Case
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
-6.00%
-8.00%
-10.00%
-12.00%
-14.00%
HSCRC began to loosen rate
constraints in mid/late ’90’s
and hospital profitability
improved.
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
27
Federal Government
implemented
Balanced
Maryland
Hospitals
vs.
US
Hospitals
Budget Act (BBA) limiting Medicare growth to
Difference in Net Operating Revenue per Case
inflation minus 1%
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
-6.00%
-8.00%
-10.00%
-12.00%
-14.00%
HSCRC Corrective Actions:
• System Correction Factor
(2000)
• 1% Across the Board Rate
Reduction (2001)
• System Reinvention
'92 '94 '96 '98 '00 
'02 Introduction
'04 '06 '08 '10
of
Charge per Case
System (CPC)
• 1st Three Year Deal
28
Inpatient Charge Per Case System (CPC)
Hospitals continue to charge at HSCRC established unit rates but are also must
comply with its HSCRC established Charge Per Case Target.
$4,565
Patient Bill
(Unit Rates)
Must Average
Dear Mrs. Jones
Services
Room & Board
Emergency Room
Operating Room
Lab
X-Ray
Supplies/Drugs
Units
4 Days
1 Visit
50 Mins.
40 Tests
5 Tests
Usage
Please pay this Amount
Unit
Rates
$500
$125
$20
$10
$100
Charge per Case Target
Charges
$2,000
$125
$1,000
$400
$500
$540
$13,830
$6,800
$4,565
$2,005
29
Maryland Hospitals vs. US Hospitals
Difference in Net Operating Revenue per Case
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
-6.00%
-8.00%
-10.00%
-12.00%
-14.00%
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
30
Maryland Hospitals vs. US Hospitals
Difference in Net Operating Revenue per Case
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
-6.00%
-8.00%
-10.00%
-12.00%
-14.00%
Rate restraints on
Maryland Hospitals
had intended impact
of improvement
relative to US but
Hospital profitability
severely deteriorated.
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
31
Maryland Hospitals vs. US Hospitals
Difference in Net Operating Revenue per Case
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
-6.00%
-8.00%
-10.00%
-12.00%
-14.00%
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
32
Maryland Hospitals vs. US Hospitals
Difference in Net Operating Revenue per Case
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
-6.00%
-8.00%
-10.00%
-12.00%
-14.00%
HSCRC implemented
APR-DRG (Severity
Classification)
methodology.
HSCRC again loosened rate
constraints and hospital
profitability improved.
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
33
Maryland Hospitals vs. US Hospitals
Difference in Net Operating Revenue per Case
HSCRC implemented
APR-DRG (Severity
Classification)
methodology.
6.00%
4.00%
2.00%
Rate Capacity
by Case (Before APR’s)
0.00%
Charge
Case
Rate
Per
Mix
Capacity
-2.00%
Case
Case
Index
Per Case
-4.00%
Pneumonia
$
8,000
0.7800 $
6,240
-6.00%
HSCRC again loosened rate
-8.00%
Rate Capacity by Case (After APR’s)
constraints and hospital
-10.00%
Charge
Case
Rate
Per
Mix
Capacity
profitability improved.
-12.00%
Case
Case
Index
Per Case
Pneumonia
-14.00%
Minor (1)
$
8,000
3,440
'92 0.4300
'94 $ '96
'98 '00 '02 '04 '06 '08 '10
Moderate (2)
$
8,000
0.5780 $
4,624
Major (3)
Extreme (4)
$
$
8,000
8,000
0.8880 $
1.5000 $
7,104
12,000
34
Maryland Hospitals vs. US Hospitals
Current
Difference in Net Operating Revenue
perDebate:
Case
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
-6.00%
-8.00%
-10.00%
-12.00%
-14.00%
• Where do we go now?
• Impact of Healthcare
reform?
“Hallmark” of Maryland
Rate Setting System
So there’s consensus for
Maryland to be below nation
– but how far?
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
Source: Maryland Hospital Association
35
The
Making
of
There’s
a “Catch”
– There’s
always a “Catch”?
the HSCRC
• 1971 - Initial“The
legislation
Waiverenacted
Test” by the General Assembly
– Independent body within the Department of Health and Mental Hygiene
On-going demonstration that the cumulative
– HSCRC given the authority to establish hospital rates
•
•
rate of growth in Medicare payments to
Maryland hospitals is no greater than the
1974
– HSCRC began setting unit rates for hospitals after 3 yr phase in
cumulative rate of growth in Medicare
– Authority extended only to non-federal insurers
payments to hospitals nationally over the same
time –period.
1977
Maryland granted temporary “waiver” by federal govt. to test
alternative payment approaches
– Exempted the state from national Medicare and Medicaid reimbursement
Nationalrequirements
Maryland
• 1980 – Medicare exemption became permanent
Medicare
Pmt/Case
(with stipulations)
Base
(1981)
– Continue to be the only state with
thisPeriod
“waiver”
Measurement Period (Sept 2010)
Cummulative Growth Rate
(Absolute Test)
Relative Margin Waiver Cushion
(HSCRC Calc)
Medicare
Pmt/Case
in Maryland
$
2,293
$
2,972
$
10,557
$
12,488
360.4%
320.2%
9.57%
36
The Making of the HSCRC
Watch
the Cushion
Catch?
Relative Margin
Waiver
• 1971 - Initial legislation enacted “The
by theWaiver
General
Assembly
Test”
June
2006
–
Projected
June
2013
– Independent body within the Department of Health and Mental Hygiene
Maryland Relative Waiver Test
On-going
demonstration
that the cumulative
Projected Future
– HSCRC given the authority
establish
hospital rates
2006to
- 2013
rate of growth in Medicare payments toDeterioration
14.00%
•
12.2%12.1%
hospitals
no greater
thanafter
the 3 yr phase in
1974 – HSCRC beganMaryland
setting unit
ratesis for
hospitals
of growth in Medicare
– Authority extended onlycumulative
non-federal rate
insurers
payments to hospitals nationally over thePotential
same
time period.
1977 – Maryland granted
temporary “waiver” by federal
govt. to
adjustments
to test
12.00%
11.3%
11.7%
Actual
Forecast
10.3%
11.0%
10.00%
10.5%10.4%
10.5%
10.2%
10.3%
•
8.5%
9.6%
9.5%
9.1%
8.00%
8.4% 8.5%
8.5%
7.6%
6.3%
alternative payment approaches
6.8%
6.7%
6.7%
national trend
would improve
– Exempted the state from national Medicare and Medicaid reimbursement
requirements
results
Estimated
6.00%
6.6% 6.6%
5.6%
5.2%
4.8% 4.7%
5.8%
4.3%
4.00%
4.5%
4.1%
3.8%
4.6%
• 1980 – Medicare exemption became permanent in Maryland
Last Waiver
Letter
09/2010
2.00%
Current
Position
9/30/11
2.6%
2.2%
– Continue to be the only state with this “waiver”
0.00%
Actual + Forecast
1.9%
1.5% 1.4%
1.1%
0.8%
0.5%
Base + MSP + IPPS Increase
Source: HSCRC
37
The Making of the HSCRC
Overarching
Concern
for
Watch
the Cushion
Catch?
Relative
Margin
Waiver
• 1971 - Initial legislation
enacted “The
by the
General
Assembly
Waiver
Test”
Maryland
Hospitals
March
1999
–
September
2008
– Independent body within the Department of Health and Mental Hygiene
Maryland Medicare Waiver Test
Relative Margin Waiver Cushion
On-going
demonstration
that
the cumulative
– HSCRC Changes
given the authority
to establish
hospital
rates
to the
healthcare
delivery
system
will
March 1996 - September 2008
rate
of growth
in Medicare
challenge the
current
waiver
test. payments to
hospitals
no greater
thanafter
the 3 yr phase in
• 1974 – HSCRC beganMaryland
setting unit
ratesis for
hospitals
25%
• Shift of cases to Observation
average
ofincreases
growth inthe
Medicare
– Authority extended onlycumulative
non-federal rate
insurers
charge per admission
Tipsame
Point
paymentsintoMaryland
hospitals nationally over the
time
period.
10%
1977 – Maryland
granted
temporary
govt. to test
• Impact
of 2-midnight
rule“waiver” by federal
20%
•
15%
`
alternative payment approaches
v
• New
payment
initiatives
(TPR,and
ARR,
etc.) reimbursement
provide
– Exempted
the state
from national
Medicare
Medicaid
requirements
incentives to reduce utilization, increasing the average
charge per
admissionbecame permanent in Maryland
1980 – Medicare
exemption
10%
•
5%
– Continue• to
0% be the only state with this “waiver”
Medicaid
budget issues
Source: HSCRC
HSCRC Forecast
The HSCRC Staff, MHA, Payors and CMS are
reviewing the structure of the current Waiver Test.
38
The Triple Aim of Healthcare
• Improve Healthcare Outcomes – clinical outcomes
• Improve the Patient’s Healthcare Experience
• Reduce the Cost-of-Care – “bending the cost curve”
39
Initiatives Designed to Control Growth
• Charge per Visit: Implemented in 2011…formally disbanded
in FY12
– Charge per Case (CPC) like revenue constraint system for outpatient
services
– Designed to constrain growth in outpatient utilization, particularly
supplies and drugs
– Based on 3M’s Ambulatory Payment Groups (APGs), similar to
DRG/APRDRG grouping of inpatient cases; Outpatient visits are more
diverse, and there are many more visits than inpatient admissions
– Challenge with assessing CPV on a “real time” basis
40
Initiatives Designed to Control Growth
• Quality-Based Reimbursement
– Maryland Hospital Acquired Condition (MHAC) program
• Identifies Potentially Preventable Complications using diagnosis and
procedure data
• Calculates actual versus expected rates of complications
• Hospitals are reward or penalized based on performance relative to their
peers
– Quality Based Reimbursement (QBR) program
• Process of care measures (core measure) and patient satisfaction scores
(HCAHPS)
• Similar to MHAC, hospitals are scaled based on relative performance
 Programs are changing, but even more revenue at risk
41
Initiatives Designed to Control Growth
• Expansion of Total Patient Revenue (“TPR”) Methodology
– In 2010, eight hospitals converted from CPC/CPV to TPR
• Currently 10 hospitals on TPR agreements
– TPR provides hospitals with a “total” revenue base that is 100% fixed
• No change in revenue with increases or decreases in either volume or
service mix
– Overall incentive to reduce service utilization and encourage
improvements in population health
– If hospitals are successful in reducing utilization, AND, associated
variable costs, profitability should increase
42
Initiatives Designed to Control Growth
• Admission Readmission Revenue (“ARR”) Program –
program formally eliminated in FY13
– Designed as a hybrid to improve quality and reduce utilization
– Supplements the CPC system and provides incentives to reduce
readmissions
– Hospitals maintain a “fixed” level of revenue for current level of “all
cause” readmissions
• No revenue increase for additional readmissions (penalty)
• No revenue decrease for reduced readmissions (reward)
43
Current Initiatives
• New Waiver Test
– Effective January 1st, 2014, Maryland has a new five-year “waiver”
agreement w/CMS
• Limits the Maryland all-payer rate of growth on a per capita basis to 3.58%
per year – includes hospital regulated inpatient and outpatient services
• Must generate Medicare specific savings of $330 million during the fiveyear agreement
• Must reduce Maryland Medicare readmission rate to the National rate
• Must reduce Maryland hospital-acquired conditions (MHAC’s) by 30%
44
Current Initiatives
• Global Budget Model
– Provides fixed revenue base on an annual basis for inpatient and
outpatient regulated revenue
• May be adjusted in the future to more accurately reflect market share
• Receive annual inflation adjustments
• Possibility for population and aging adjustments
– Changes the long-standing incentives that have been in-place regarding
volume
– Forces hospitals to rethink, and possibly redesign, strategic and
operating plans
 These agreements will be a work-in-progress
45
Future Initiatives
• Capitated and Other Bundled Service Arrangements
– Provide payment upfront for a defined population of patients and/or a
specific service
• Gainsharing Models
– Have the ability to partner with physicians to share in cost savings and
utilization management
46
HSCRC’s Mandate
• Ensure Equity / Fairness / Stability
• Maximize Access to Care
• Contain Hospital Costs / Total Costs are
Reasonable
• Provide Accountability
47
HSCRC Impact – Accountability
Reasonableness of Charges (ROC) and Rate Adjustments
•
•
•
•
ROC used by HSCRC and hospitals to evaluate cost effectiveness on a per
case basis relative to a peer group.
– Adjustments to cost (CMI, Labor, Markup, Medical Education, etc.)
– Four peer groups: Major Teaching, Minor Teaching, Non-Teaching, Academic
Medical Center (JHH and UMMC)
HSCRC approves rate adjustments to hospitals annually
– Across the board inflation adjustments + Hospital specific changes in case mix
– Other adjustments (program, prior year corrections, etc..)
– Annual rate adjustments are “scaled,” based on relative ROC performance
• Higher “cost” hospitals receive a lower update; Lower “cost” hospitals receive a higher
update
Hospitals reserve the right ask for additional rates if current rate
structure is not adequate. (Favorable ROC Position)
– File “Full” rate application or “Partial” rate application (CON approved capital)
HSCRC reserves the right to take corrective actions against high cost
hospitals (Unfavorable ROC Position), via spenddowns or Full Rate
Setting
48
HSCRC Impact – Accountability
Disclosure of Information and Performance
• High degree of availabilty
– Maryland system is based on most comprehensive and timely
information available
• Multiple reporting requirements of Hospitals
•
•
•
•
•
Monthly revenue and utilization
Annual filings
Community Benefit Report
Reporting by payer and in-state vs. out-of-state
New data tape submission requirements – now monthly
Communication
between hospitals and
HSCRC becomes even
more important in new
environment
• Public Disclosure Report prepared annually by the
HSCRC
49
Additional Information
50
HSCRC Organization Chart
Commissioners
John Colmers, Chairman
(7 Member Panel
appointed by Governor)
Executive Staff
Donna Kinzer: Executive Dir.
Stephen Ports: Principal Deputy Dir.
Rate Setting
Research & Methodology
Legal Dept.
Jerry Schmith
Deputy Director
Sule Calikoglu, Ph.D.
Deputy Director
Stan Lustman / Leslie Schulman
Assistant Attorney General
51
HSCRC Current Commissioners
(Seven member panel appointed by Governor)
Appointed
John Colmers – Chairman
Former Secretary, MD Dept of Budget and Management
Herbert Wong, Ph.D. – Vice Chairman
Senior Economist, Agency for Healthcare Research & Quality
Stephen F. Jencks, M.D., M.P.H.
Institute for Healthcare Improvement
George H. Bone, M.D.
Private Practice Physician
Bernadette C. Loftus
Associate Executive Director, The Permanente Medical Group
Thomas R. Mullen
President, Mercy Health Services
Jack C. Keane
Independent Consultant
2011
2005
2012
2010
2011
2011
2011
52
HSCRC 2014 Meeting Schedule
February 5
March 12
April 9
May 14
June 11
July 9
August 13
September 10
October 15
November 12
December 10
53
HSCRC and Other Health Care Links
• Health Services Cost Review Commission (HSCRC)
– www.hscrc.state.md.us
• Maryland Hospital Association (MHA)
– www.mdhospitals.org
• Healthcare Financial Management Association (HFMA)
– www.hfma.org
• HighMark (Medicare Fiscal Intermediary)
– www.highmarkmedicareservices.com
54
Closing Comments
55