Improving Patient-Centered Care
in Maryland—Hospital Global
Budgets
November 5, 2015
Overview

The Evolving Healthcare Landscape: Shifting to Patient
Centered and Population Based Care

Unique Changes in Maryland’s Healthcare Delivery
System
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Global Budgets for Hospitals

Implementation Approach
2
Context: Evolving National Landscape
Current Landscape
Consumer
Demands
Provider Payment Structures
Coverage
& Access
Fragmentation
& Variation
High Costs
CMS & National Focus
Health
Disparities
• Volume to value
Delivery of Care
• Coordinated care,
population health, &
patient engagement
Distribution of Information
Aging, Sicker
Population
3
• Transparency &
meaningful use
Maryland’s Approach: New All-Payer Model

Maryland’s New All-Payer Model for hospital payment
Approved by Center for Medicare and Medicaid Services
Effective January 1, 2014
Modernizes Maryland’s all-payer hospital rate system in place
since 1977
Implementation led by Maryland’s Health Services Cost
Review Commission together with stakeholder groups
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Old Model
Per inpatient
admission hospital
revenue and OP unit
rates
4
New Model
All-payer, per capita,
total hospital
payment & quality
Backdrop: Health Services Cost Review
Commission (HSCRC)

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Oversees hospital rate regulation for all payers

7 member independent Commission

Rate setting authority extends to all payers, Medicare waiver
Provides considerable value
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Limits cost shifting--all payers pay their share, including
uncompensated care and graduate medical education
Innovates with stakeholders and regulates on a local level
Uses all payer metrics to measure outcomes and guide care
improvement
Maryland’s Innovation: New All-Payer Model

Key provisions:
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Ties all payer growth in hospital costs to the long term growth of the Maryland
economy and assures Medicare of savings
Patient/population centered measures to promote care and health improvement
(i.e. readmissions, hospital complications, patient satisfaction, etc.)
Payment transformation away from fee-for-service for hospital care
Innovation in payment began in 2011 (46 acute hospitals)

Global budgets for 10 rural hospitals, hospital episode payments that
incorporated all cause readmissions for all others
2011 Global budgets
for rural hospitals
6
Stakeholder and HSCRC Implementation for
2014: Move All Hospitals to Global Budgets
Former Hospital Payment Model:
Volume Driven
New Hospital Payment Model:
Population Driven
Units/Cases
Revenue Base Year
Updates for Trend,
Population, Value
Rate Per Unit or Case
(Updated for Trend and Value)
Allowed
Revenue for Target Year
Hospital Revenue
•
•
Unknown at the beginning of year
More units creates more revenue
•
•
Known at the beginning of year
More units does not create more
revenue
Key Aspects of Hospital Global Budgets

Fixed revenue base for 12-month period with annual adjustments

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Hospitals bill based on rates per unit as a cost distribution system
Hospitals raise and lower rates within corridors to stay on budget
Retain revenue related to reductions in potentially avoidable utilization

Invest savings in care improvement

Annual update factor (inflation)
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Demographic adjustment and adjustments for specialized services
(transfers, transplants, specialized cancer patients)
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Annual quality/value based adjustments

Adjustments when patients shift across hospitals and settings

Initial funding for infrastructure to support care coordination provided
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Maryland’s Current Situation & Future Focus

Year 1 Model results were good: Financial targets were exceeded and quality was improved
Year 1 Focus
Engage stakeholders
Year 2 Focus (Now)
Initiate payment reform Work on clinical
(Hospital global budgets) improvement, care
coordination, integration
Focused policies on
planning, and
reducing potentially
infrastructure
avoidable utilization
development
Build infrastructure
Partner across hospitals,
other providers, and
communities to focus on
changes to care delivery
Years 3-5 Focus
Implement changes, and
improve care
coordination and
chronic care
Focus on alignment
models
Engage patients, families,
and communities
Focus on model
progression
9
Stakeholder-Driven Strategy for Maryland
Sustainability dependent on patient-centered care delivery
transformation and infrastructure to support it
Focus Areas
Care Delivery
•
•
•
•
Health
Information
Exchange and
Tools
• Leverage and enhance statewide infrastructure
• Connect all providers
• Bring additional electronic health information to the
point of care
Alignment
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Description
Increase coordination of clinical care
Scale chronic care and care for complex patients
Support primary care
Promote consumer engagement
• Promote value payment focused on outcomes
• Increase payment alignment
Approach to Moving to a More PatientCentered System
Focus
Improving
Patient-Centered
Care
Reducing
Avoidable
Utilization
Ensuring
Consumer
Protections
Chronic Care & Care
for Patients with High
Needs
Maryland’s Hospital
Acquired Conditions
Global Budget
Contracts
Collaboration &
Coordination Across
Providers/Others
PQIs: Prevention
Quality Indicators
Market Shift,
Transfers,
Transplants/Other
Utilization of PatientCentered Measures
Readmissions and
Rehospitalizations
Data Analytics:
Detailed Monthly
Reports on Volumes
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Success Factors for Hospitals’ Change

Hospitals gain control of their revenue budgets
 Payment is not volume-dependent
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Global budget model opens up new avenues for innovation
 Hospital strategies are expanding— now there is a financial incentive to manage
resources efficiently and effectively to control cost growth while improving
health

All-payer nature lends a greater ability to focus on common outcomes, which yields
better care and outcomes for patients

Success and sustainability dependent on:
 Reducing avoidable utilization and improving population health
 Partnering with other providers, communities, and patients to integrate and
coordinate care
 Developing effective care coordination—emergency room, transitions, addressing
complex patients, disease management, long-term care and post-acute
integration
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Summary
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Maryland’s new All-Payer Hospital Model tests all payer
innovation implemented at a state and local level
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Improve care and lower costs for all consumers and
purchasers, using common measures and aligned approaches,
without undue cost shifting
Payment model change for hospital care provides a foundation
for broader change
Stakeholder participation (especially the Maryland Hospital
Association, MedChi, payers, consumer organizations, and
others) in Model planning and implementation has been critical
to early success
Questions?
14
Appendix
Potentially Avoidable Utilization (PAU)

“Hospital care that is unplanned and can be prevented through
improved care, coordination, effective primary care and
improved population health.”
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Readmissions/Rehospitalizations that can be reduced with care
coordination and quality improvements
Preventable Admissions and ER Visits that can be reduced with improved
community based care
Avoidable admissions from skilled nursing facilities and assisted living
residents that can be reduced with care integration, remote services, and
prevention
Health care acquired conditions that can be reduced with quality
improvements
Admissions and ER visits for high needs patients that can be moderated
with better chronic care and care coordination