Maryland Health Services Cost Review Commission

New All-Payer Model for Maryland Population-Based and Patient-Centered Payment Systems

1

Approved New All-Payer Model

    Updated application submitted to CMMI in October Approved effective January 1, 2014 Focus on new approaches to rate regulation   Moves Maryland 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 2

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 Maryland’s All Payer Model • Enhance Patient Experience • Better Population Health • Lower Total Cost of Care 3

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 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 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 4

Creates New Context for HSCRC

  Align payment with new ways of organizing and providing care Contain growth in total cost of hospital care in line with requirements  Evolve value payments around efficiency, health and outcomes   Priority tasks: Transition to population/global payment models and patient-centered performance targets that are tied directly to payment Major data and infrastructure requirements 5

Better care Better health Lower cost

Timeline of All-Payer Model Development

Phase 1 (5 Year Model)

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Near Term (2014)

Hospital global model

Mid-Term (2015-2017) Long Term (2016 Beyond)

 Population-based  Preparation for Phase 2 focus on total costs of care model 6

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 7

Creates a New Context for Hospitals

Old Model Volume Driven New Model Population and Value Driven

Units/Cases Revenue Base Year Rate Per Unit or Case Hospital Revenue Unknown at the beginning of year. More units/more revenue Updates for Trend, Population, Value Allowed Revenue Target Year Known at the beginning of year.

More units does not create more revenue

Opportunities for Success

    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) 9

Near Term Success Factor: Reduce Avoidable Utilization By Improving Care

 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 10

Value-Based Purchasing to Improve Care      Quality-Based Reimbursement Program Emphasis on patient experience and outcomes  Maryland Hospital-Acquired Conditions Program Aligning the program to achieve state-wide improvement goal of 30 percent  Readmissions Creating positive incentives to reduce readmissions rate below the national average Other policies to promote improvements in care coordination and reduce potentially avoidable utilization 11

Revenue Within Limits

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Global budgets

 Global concepts  Manage rates to global budget targets  P rice adjustments to be spread across all centers (5% corridors in all centers) 

½%

overall compliance corridor for Global Budget

CPE with concurrent 50% volume adjustment and volume governor(1% net growth) Compliance is critical

  Right charging is key Revenue test is Calendar Year. Calendar Year compliance is equally critical 12

Medicare Revenue Growth

:

GO FOR “0”

     Medicare revenue growth below national growth critical to generate savings 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 Focus on achieving “0” % growth rate per capita 13

Cost Focus

       Refocus on cost of care Avoidable costs Cost per capita Cost per episode Variable cost reductions as volumes fall Examine capacity and program demand Innovation as a cost savings opportunity 14

Workgroup activities starting

HSCRC Advisory Council • Open meetings • Physicians, patients, and other providers, hospitals, payers participate

Workgroups

Bridge Process & Analysis (STAFF) Physician Alignment & Engagement Performance Improvement & Measurement Payment Models Data & Infrastructure 15

Conclusion

  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 16 • • • Improved value for patients Sustainable delivery system for efficient and effective hospitals Alignment with physician delivery and payment model changes