Briefing for Maryland Legislators 1

2 New Maryland Waiver Five year demonstration program State of Maryland and CMS signed agreement in January 2014 Allows Maryland to continue setting hospital reimbursement rates for all patients Maryland is only state in the nation with a “waiver” from federally set Medicare rates Could become a national model for reducing health care costs 2

3 New Maryland Waiver Three financial metrics:  Annual hospital spending cap – 3.58% per person  Medicare savings target - $330 million over five years  Growth in Maryland spending (hospital and non- hospital) cannot exceed the nation Two quality metrics:  Reduce 30-day readmissions to national average  Reduce complications by 30% in 5 years 3

4 A Healthier Maryland Changes how hospitals are paid to reward the right things Volume − NO; Value − YES Success under new spending caps requires volume control & cost reduction The key: population health management Care for patients in the community in lower cost settings; reduce unnecessary care 4

Maryland Waiver Performance Dashboard October Release 5

Maryland hospitals’ new waiver changes the way hospitals are paid and redesigns health care delivery for Marylanders to:  Make care more affordable  Improve the patient’s experience of care  Improve the health of Maryland’s communities 6 Maryland Leading Reform

Success under this new system allows Maryland to keep an additional $1.5 billion each year in federal Medicare funds Loss of $1.5 billion would be disastrous for the state Success requires policymakers and legislators to:  Knock down barriers to innovation  Avoid adding new impediments Maryland Leading Reform 7

8 MHA’s Top Priorities Eliminate Maryland’s tax on hospital care – the Medicaid deficit assessment Control Maryland’s health care liability costs Fix Maryland’s behavioral health system 8

Medicaid deficit assessment began in 2009 as a “temporary” $19 million to backfill state’s Medicaid budget - ballooned to nearly $400 million annual burden on consumers Artificially inflates hospital bills by 3%, yet the revenue goes to the state’s general fund, not to health care Artificial increase makes meeting new waiver spending and quality targets more difficult Maryland has an opportunity to reduce the tax burden on patients and their families Eliminate Maryland’s Tax on Hospital Care 9

No increase in the existing Medicaid hospital assessment No new hospital assessments Use Medicaid and other state savings that exceed budget projections to reduce the hospital assessment Working with the administration and General Assembly, ensure priority is given to using any identified state revenue or programmatic sources to reduce the Medicaid hospital assessment Steps to Success 10

Health care in Maryland can be more innovative and affordable if the state improves the medical liability environment Nationally, the fear of malpractice litigation (“defensive medicine”) costs some $46 billion A September 2014 Journal of the American Medical Association study revealed that defensive orders accounted for 13% of all hospital costs In Maryland, a 13% increase in hospital cost due to defensive medicine totals about $2 billion Control Health Care Liability Costs 11

Protect the current cap on liability Secure HSCRC participation in medical liability reform discussion Introduce legislation to improve Maryland’s health care liability environment (e.g., mandatory cooling off period; increased evidentiary standard; post-judgment interest rates; apology; possible birth injury fund) Steps to Success 12

One in four Americans experiences a mental illness or substance abuse disorder each year In one year, 17 percent of American adults had comorbid mental and physical conditions To ensure waiver success, Maryland’s hospitals must manage and coordinate patient care, before they reach the hospital, while in the hospital, and after a patient is released--both physical and behavioral Maryland must increase its state public health investment in behavioral health Fix Maryland’s Behavioral Health System 13

Evaluate: The state should appoint a blue ribbon commission of experts to evaluate the mental health/substance abuse resources available Plan: The commission should plan a comprehensive solution to address the many gaps preventing people from receiving care Invest: Once a plan is in place, the state must fund that solution to ensure it is realized Steps to Success 14

Briefing for Maryland Legislators 15