1. Improving Patient-Centered Care in Maryland—Hospital Global Budgets
November 5, 2015

2. Overview
The Evolving Healthcare Landscape: Shifting to Patient Centered and Population Based Care
Unique Changes in Maryland’s Healthcare Delivery System
Global Budgets for Hospitals
Implementation Approach

3. Context: Evolving National Landscape
Current Landscape
CMS & National Focus
Provider Payment Structures
Volume to value
Delivery of Care
Coordinated care, population health, & patient engagement
Distribution of Information
Transparency & meaningful use
Consumer Demands
Coverage & Access
Fragmentation
& Variation
Health
Disparities
High Costs
Aging, Sicker Population

4. 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
Old Model
Per inpatient admission hospital revenue and OP unit rates
New Model
All-payer, per capita, total hospital payment & quality

5. Backdrop: Health Services Cost Review Commission (HSCRC)
Oversees hospital rate regulation for all payers
7 member independent Commission
Rate setting authority extends to all payers, Medicare waiver
Provides considerable value
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

6. Maryland’s Innovation: New All-Payer Model
Key provisions:
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

7. Stakeholder and HSCRC Implementation for 2014: Move All Hospitals to Global Budgets
New Hospital Payment Model:
Population Driven
Former Hospital Payment Model:
Volume Driven
Units/Cases
Revenue Base Year
Rate Per Unit or Case (Updated for Trend and Value)
Updates for Trend, Population, Value
Hospital Revenue
Allowed
Revenue for Target Year
Unknown at the beginning of year
More units creates more revenue
Known at the beginning of year
More units does not create more revenue

8. Key Aspects of Hospital Global Budgets
Fixed revenue base for 12-month period with annual adjustments
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)
Demographic adjustment and adjustments for specialized services (transfers, transplants, specialized cancer patients)
Annual quality/value based adjustments
Adjustments when patients shift across hospitals and settings
Initial funding for infrastructure to support care coordination provided

9. Maryland’s Current Situation & Future Focus
Year 1 Focus
Engage stakehold ers
Initiate payment reform (Hospital global budgets)
Focused policies on reducing potentiall y avoidable utilization
Build infrastruc ture
Year 2 Focus (Now)
Work on clinical improvement, care coordination, integration planning, and infrastructure development
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
Year 1 Model results were good: Financial targets were exceeded and quality was improved

10. Health Information Exchange and Tools
Stakeholder-Driven Strategy for Maryland
Sustainability dependent on patient-centered care delivery transformation and infrastructure to support it
Focus Areas
Description
Health Information Exchange and Tools
Leverage and enhance statewide infrastructure
Connect all providers
Bring additional electronic health information to the point of care
Alignment
Promote value payment focused on outcomes
Increase payment alignment
Care Delivery
Increase coordination of clinical care
Scale chronic care and care for complex patients
Support primary care
Promote consumer engagement

11. Approach to Moving to a More Patient-Centered System
Focus
Improving Patient-Centered Care
Chronic Care & Care for Patients with High Needs
Collaboration & Coordination Across Providers/Others
Utilization of Patient-Centered Measures
Reducing Avoidable Utilization
Maryland’s Hospital Acquired Conditions
PQIs: Prevention Quality Indicators
Readmissions and Rehospitalizations
Ensuring Consumer Protections
Global Budget Contracts
Market Shift, Transfers, Transplants/Other
Data Analytics: Detailed Monthly Reports on Volumes

12. Success Factors for Hospitals’ Change
Hospitals gain control of their revenue budgets
Payment is not volume-dependent
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

13. Summary
Maryland’s new All-Payer Hospital Model tests all payer innovation implemented at a state and local level
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

14. Questions?

15. Appendix

16. Potentially Avoidable Utilization (PAU)
“Hospital care that is unplanned and can be prevented through improved care, coordination, effective primary care and improved population health.”
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