Maryland Hospitals’ Payment Policy Environment

2 About Me From This.... To This:

3 Why is Volume-Based Payment a Problem? Incentivizes volume in an expensive setting Incentivizes creation of service lines which may not be necessary De-emphasizes care coordination and working with post-acute and primary care partners Promotes cost-shifting among payers  May incentivize hospitals to seek out certain groups of patients Less coordination and money available for charity care

4 How Should a System Work? -Institute for Healthcare Improvement, 2007 Population Health Experience of Care Per Capita Costs Triple Aim

5 Changing Incentives Global Budgets “The GBR model assures hospitals that adopt it that they will receive an agreed- on amount of revenue each year—i.e., the Hospital’s “Approved Regulated Revenue” (Approved Regulated Revenue) under the GBR system-- regardless of the number of Maryland residents they treat and the amount of services they deliver provided that they meet their obligations to serve the health care needs of their communities in an efficient, high quality manner on an ongoing basis.” »Health Services Cost Review Commission

6 Different Incentives

7 Financial Targets Financial Targets in Waiver 3.58% annual, all-payer per capita growth limit Per Capita Costs

8 Financial Targets Financial Targets in Waiver $330M in cumulative Medicare hospital savings Per Capita Costs

9 Financial Targets Financial Targets in Waiver Maryland’s Medicare per beneficiary total cost growth rate cannot exceed the national average by more than 1 percentage point Per Capita Costs

10 Quality Targets Preventable Complication Reductions Maryland will achieve an annual aggregate reduction of 6.89% in the 65 Potentially Preventable Complications (PPCs) over five years for a cumulative reduction of 30% Readmission Reductions Maryland will reduce its aggregate Medicare 30-day unadjusted all-cause, all-site hospital readmission rate in Maryland to the national rate Other Quality Program Not in Waiver...QBR The state must ensure that the aggregate percentage of regulated revenue at risk for quality programs…is equal to or greater than the aggregate…at risk under national Medicare quality programs Experience of Care

11 How Are We Doing - Readmits Maryland Readmissions Rates versus Nation, Medicare Unadjusted Source: CMS

12 How Are We Doing – PPCs Potentially Preventable Complications, Q – Q % Decline Source: HSCRC monthly inpatient case-mix data with 3M PPCs, final data

13 For Maryland, penalties affect all inpatient revenue under global budgets For hospitals in the rest of the nation, penalties only affect Medicare inpatient revenue Example Maryland Hospital With $100M in Annual Revenue* $60M in Inpatient Revenue 2016 Program% at RiskDollar Value MHAC4%$2.4M Readmits1.36%$0.8M QBR1%$0.6M Total Without PAU6.36%$3.8M Example National Hospital With $100M in Annual Revenue* $60M in Inpatient Revenue $24M (40% of Inpatient Revenue) from Medicare $14M (~60% of Medicare inpatient Revenue) from base MS-DRG 2016 Program% at RiskDollar Value HAC1%$0.14M Readmits3%$0.42M VBP1.75%$0.25M Total5.75%$0.81M *Revenues are hypothetical and roughly based on known proportions of inpatient revenue, Medicare inpatient revenue and base MS-DRG revenue relative to total hospital revenue When the dollar value of potential penalties is considered against total annual revenue, the Maryland hospital in this example would have 3.8% at risk versus 0.8% for the hospital located elsewhere in the nation There is a cap in place, so in actuality, no hospital would reach 6.36% in penalties MD Hospitals Have More at Risk

PPC Issues 14 Where’s the floor? Data accuracy Do PPCs accurately capture quality? Collaboration is needed to ensure there is definitional agreement

15 What Staff Are Doing About PPCs Interventions Targeting Respiratory Failure Reduced postoperative ventilator times for post cardiac surgery patients with the goal of extubation within 6 hours after the procedure Implemented new staff training regarding best practices for chest physiotherapy, patient positioning, surgical preparation, patient change in status tracking through documentation, oral hygiene, and activity promotion Interventions Targeting Heart Failure Created a heart failure task force to participate in daily rounding and perform medications reviews with patients and discuss compliance Interventions Targeting Decubitus Ulcers Revised the H& P section of ED documentation to include an Integumentary Assessment section Utilized screen savers with a q 2hr turning reminder Instituted a turning campaign with a turning schedule and clock in each room Interventions Targeting CHF  Created a heart failure task force to participate in daily rounding and perform medications reviews with patients and discuss compliance How to Reduce?

16 Readmissions Readmissions Count More in Maryland! Medicare Readmissions Program (Everyone Else) Maryland Medicare Readmissions Only, Some Payers have Programs Medicare Only for Waiver, but All-Payer for Yearly Payment Program Only Certain Conditions for Index AdmitAll Cause Penalties Only on Medicare Revenue, Some Payers have Programs Penalties on All Revenue Risk Adjusted Not Risk Adjusted for Waiver, but Risk Adjusted for Payment Program

Readmission Issues 17 Risk adjustment? Competing incentives? Who will be readmitted?

18 Working With Partners A key to readmission reductions is working closely with other partners The percentage of Home Health episodes in MD that come straight from an acute-care hospital is much higher than the national average (50% versus 22%)

Someone will be watching you wash your hands! 19 Other Quality Efforts Improving Sepsis Survival Collaborative

20 Incentives Beyond Payment Hospitals are subject to public scrutiny through public reporting

What We Need 21 Team Players Adaptable Smart Able to Anticipate Understand the Bigger Picture

Examples of change Opportunities for the Future? 22 PatientsPartnershipsPopulation health Bedside prescription delivery Close collaboration with SNFs Wellness initiatives Health “coaches”Transport to primary care appointments Predictive data analytics In-home post- discharge visits Physician education/partnerships Mental health & substance abuse clinics Nurse hotlinesSharing of dataMobile health clinics