HSCRC Rate System

HSCRC Rate SystemArin Foreman

Senior Associate - KPMG LLP [email protected]

Jennifer Hulvey Director of Reimbursement - Frederick Memorial Hospital

[email protected]

January 31, 2014

mailto:[email protected]

mailto:[email protected]

Discussion Topics• Overview – Revenue Methodologies• Rate Order• Annual Rate Order Adjustments• Unit Rate Compliance• Total Revenue Compliance• Reasonableness of Charges• Required Reporting• Terminology and Acronyms

Overview• HSCRC has developed methodologies to constrain

healthcare costs in Maryland. • Hospitals currently elect one of the following:

– Total Patient Revenue (TPR) System,– Charge per Case (CPC) System, or– Charge per Episode / Admission-Readmission Revenue

(CPE / ARR)

Total Patient Revenue (TPR)• Inpatient and outpatient revenue is constrained by the TPR

System• Implemented July 1, 2010 (Garrett County Memorial

Hospital and Edward W. McCready Memorial Hospital transitioned to TPR prior to 07/01/10)

• Approved revenue amount in a given year is a fixed cap• No adjustment for changes in volume• No adjustment for changes in Case Mix Index (CMI)• Available to sole community provider hospitals and hospitals

operating in regions of the State that don’t share service areas with other hospitals

Charge per Case (CPC)• Inpatient Revenue is constrained by the Charge per Case

system (CPC) • Fixed amount of revenue per inpatient case• Implemented July 1, 2005 • Each hospital's allowed CPC is based on their Case Mix

Index (CMI) • CMI measures the complexity of a hospital's cases

Charge per Episode (CPE)• Admission-Readmission Revenue arrangement (ARR):

– Fixed amount of revenue per inpatient episode– Under ARR, hospitals assume the risks and rewards of

managing hospital readmissions. – No revenue increase for additional readmissions (penalty) – No revenue decrease for reduced readmissions (reward)

• Implemented July 1, 2011 • Voluntary 3-year revenue constraint program replacing CPC • Excludes intra-hospital readmissions within 30 days • All cause readmissions • Each hospital's allowed CPE is based on Case Mix Index

(CMI)

Which rate methodology is your hospital under?

Calvert Memorial HospitalCarroll Hospital CenterChester River Hospital CenterDorchester General HospitalEdward W. McCready HospitalGarrett County Memorial HospitalMemorial Hospital at EastonMeritus Medical CenterUnion Hospital of Cecil CountyWestern MD Regional Medical Center

Atlantic General HospitalFort Washington Medical CenterLaurel Regional HospitalPrince Georges Hospital CenterSouthern Maryland Hospital Center

Anne Arundel Medical CenterBaltimore Washington Medical CenterBon Secours HospitalCivista Medical CenterDoctors Community HospitalFranklin Square Hospital CenterFrederick Memorial HospitalGood Samaritan HospitalGreater Baltimore Medical CenterHarbor Hospital CenterHarford Memorial HospitalHoly Cross HospitalHoward County General HospitalJohns Hopkins Bayview Medical CenterJohns Hopkins HospitalKernan Hospital

Maryland General HospitalMercy Medical CenterMontgomery General HospitalNorthwest Hospital CenterPeninsula Regional Medical CenterShady Grove Adventist HospitalSinai HospitalSt. Agnes HospitalSt. Joseph Medical CenterSt. Mary's HospitalSuburban HospitalUnion Memorial HospitalUniversity of Maryland Medical CenterUpper Chesapeake Medical CenterWashington Adventist Hospital

TPR

CPC

CPE / ARR

Permanent CPE - $10,543Compliance CPE - $10,607Base CPE Casemix Index - 1.011528

BudgetedService Unit Budgeted Annual

Revenue Center Unit Rates Volume Revenue

Med./Surg. Acute Patient Days 854.1740$ 60,972 52,080,697$ Pediatrics Patient Days 1,033.6924$ 805 832,122 Admissions Admission 151.7719$ 18,967 2,878,658 Emergency Services MD RVU'S 37.6217$ 636,025 23,928,342 Clinic Services RVU'S 22.2031$ 333,241 7,398,983 Psychiatric Day/Night Visits 252.9133$ 2,417 611,291 Operating Room Minutes 25.2681$ 1,065,699 26,928,189 Same Day Surgery Per Patient 632.1710$ 8,641 5,462,590 Labor and Delivery RVU'S 107.7558$ 87,994 9,481,864 Laboratory MD RVU'S 1.8902$ 15,824,464 29,911,402 Nuclear Medicine HSCRC RVU'S 23.7300$ 75,401 1,789,266 Renal Dialysis Treatments 777.9715$ 1,184 921,118 Leukapheresis JHH RVU'S 1,640.1178$ 1 1,640 TUMT Procedure 6,855.5597$ 1 6,856 MRI Scanner (R) RVU'S 103.9810$ 87,038 9,050,298 Hyperbaric Chamber Hrs of Treatment 316.6025$ 1,607 508,780

(R) = Rebundled Service TOTAL 255,255,646$ CHARGES for MEDICAL SUPPLIES and DRUGS SOLD

MaximumAnnual

Mark up Overhead

Med./Surg. Supplies Invoice Cost plus 1.1206 , plus Overhead. 12,025,772$ Drugs Invoice Cost plus 1.1206 , plus Overhead. 14,813,263$

Charge per Episode (CPE) Target & Casemix Indexes

HEALTH SERVICES COST REVIEW COMMISSIONNEW APPROVED CHARGE PER EPISODE TARGETS AND RATES

RATE ORDER

forFrederick Memorial Hospital

Effective:July 1, 2013

FINAL

Rate Order• Revenue Center: Hospitals

have different revenue centers depending on the services they provide

• Service Unit: The service unit is the same for all hospitals (i.e. every hospital charges for Operating Room services by the minute)

• Unit Rates: Unit rates (prices) vary by hospital – These rates must be

charged to all payers - no contract negotiations

Service UnitRevenue Center Unit Rates

Med./Surg. Acute Patient Days 854.1740$ New Born Nursery Patient Days 518.2096$ Admissions Admission 151.7719$ Psychiatric Day/Night Visits 252.9133$ Operating Room Minutes 25.2681$ Radiology-Diagnostic RVU'S 26.4154$ Renal Dialysis Treatments 777.9715$

RVUs• RVUs relate to the

complexity (time and cost) of tests and procedures

• The service units for RVU's (relative value units) are defined by the HSCRC in Appendix D

• For example, a chest x-ray, single view, has the same RVU at all MD hospitals

CPTCODE DESCRIPTION RVU's71010 Chest, single view, posteroanterior 271015 Stereo, frontal 371023 With fluoroscopy 671030 Chest, complete, minimum of 4 views 5

APPENDIX DSTANDARD UNIT OF MEASURE REFERENCES

DIAGNOSTIC RADIOLOGY

The patient charge becomes a calculation…

2 RVU's x $26.4154 = $52.83

Service UnitRevenue Center Unit Rates

Med./Surg. Acute Patient Days 854.1740$ New Born Nursery Patient Days 518.2096$ Admissions Admission 151.7719$ Psychiatric Day/Night Visits 252.9133$ Operating Room Minutes 25.2681$ Radiology-Diagnostic RVU'S 26.4154$ Renal Dialysis Treatments 777.9715$

CPTCODE DESCRIPTION RVU's71010 Chest, single view, posteroanterior 271015 Stereo, frontal 371023 With fluoroscopy 671030 Chest, complete, minimum of 4 views 5

Updates to Rate Orders• Hospitals receive an updated rate order once per year -

effective July 1st • Unit rates are updated for:

CPC/CPE TPRx xx xx xxx xx x

xxChange in case mix (CMI)

Other one time adjustments (quality, assessments)

Population

Inflation (update factor)Rate realignmentChange in approved mark-up (UCC)

Compliance

Volume adjustment

History of Update Factors• The following chart displays the previous five years’

update/inflation factors that have been applied to hospitals’ rates:

FY 2014 FY 2013 FY 2012 FY 2011 FY 2010Inpatient 1.65% -1.00% 2.20% 1.68% 1.77%Outpatient 1.65% 2.59% 3.05% 2.53% 1.27%

Rate Realignment• Charges are related to the underlying cost of providing the

service • This does not change a hospital's total revenue; it just

reallocates it among revenue centers• Costs for FY 2012 were used to realign FY 2014 rates

Rate RealignmentApproved

Cases CPC Target Revenue

1. Base Period CPC Compliance Target 14,957 X 10,000 = 149,573,461

2. Reversal of Previous One-Time AdjustmentsCPC Retros -293 -4,386,253

3. Net Current Base Period Cases & Revenue (1) 15,299 X 9,707 = 148,506,993

4. Change in Casemix IndexBase period Casemix Index (CMI) 0.861135Permanent Period CMI 0.846192Total Casemix Change -1.735%Other 0.000%Net Casemix Change -1.735%

Net Allowable Casemix Revenue FYE Jun-11 15,299 9,539 145,929,989

5. Trims and Exclusions FYE Jun-11Other 0Other 0Other 0

6. Adjusted Permanent CPC Target & Revenue 145,929,989

7 Other Permanent CPC Target & Revenue AdjustmentsOther Permanent 0

8 Permanent CPC Revenue to be Rate Realigned 145,929,989

Rate Realignment

Actual Actual Actual Volume Adjusted Revenue Excluded ProratedUnits per Revenue per Inpatient Outpatient Total Variable % Change Schedule M From Current

Schedule M Schedule M Units Units Units Cost In Units Revenue Rate Realignment Revenue

MSG Med./Surg. Acute 44,794 31,840 44,882 0 44,882 1.0000 0.2% 31,902 0 36,959,127PED Pediatrics 1,236 1,094 1,403 0 1,403 1.0000 13.5% 1,242 0 1,438,919PSY Psychiatric Acute 4,830 3,224 4,297 0 4,297 1.0000 -11.0% 2,868 0 3,322,357OBS Obstetric Acute 4,850 3,570 4,723 0 4,723 1.0000 -2.6% 3,476 0 4,027,360DEF Definitive Observation 7,173 6,689 6,841 0 6,841 1.0000 -4.6% 6,379 0 7,390,611MIS Med./Surg. I.C.U. 5,744 9,156 5,598 0 5,598 1.0000 -2.5% 8,923 0 10,337,830NUR New Born Nursery 5,373 3,396 5,107 0 5,107 1.0000 -5.0% 3,228 0 3,739,641EMG Emergency Services 673,807 17,037 164,586 524,236 688,822 1.0000 2.2% 17,417 0 20,177,627CL Clinic Services 242,609 4,807 74 252,246 252,320 1.0000 4.0% 4,999 0 5,791,635ADM Admissions 16,270 1,472 16,482 0 16,482 1.0000 1.3% 1,491 0 1,727,784SDS Same Day Surgery 9,704 2,371 0 9,810 9,810 1.0000 1.1% 2,397 0 2,777,070DEL Labor and Delivery 63,147 2,806 53,033 10,576 63,609 1.0000 0.7% 2,827 0 3,274,917OR Operating Room 1,112,319 17,482 476,188 824,950 1,301,138 1.0000 17.0% 20,449 0 23,690,437ANS Anesthesiology 777,116 1,880 431,124 347,512 778,636 1.0000 0.2% 1,884 0 2,182,610LAB Laboratory 10,704,414 16,894 7,387,753 3,616,255 11,004,008 1.0000 2.8% 17,367 0 20,120,028EKG Electrocardiography 422,366 1,063 246,449 202,721 449,170 1.0000 6.3% 1,131 0 1,310,143RAD Radiology-Diagnostic 281,506 6,603 135,456 158,983 294,439 1.0000 4.6% 6,906 0 8,000,851CAT CT Scanner 641,186 2,708 274,526 386,008 660,534 1.0000 3.0% 0 3,594,307 3,594,307RAT Radiology-Therapeutic 7,420 260 5,286 1,160 6,446 1.0000 -13.1% 226 0 261,271NUC Nuclear Medicine 85,424 1,778 24,513 56,364 80,877 1.0000 -5.3% 1,684 0 1,950,521RES Respiratory Therapy 2,984,919 4,248 2,601,939 325,142 2,927,081 1.0000 -1.9% 4,165 0 4,825,656

Using the M schedule from the most recent Annual Filing, the Revenue calculated in the previous step is realigned based on the Volume adjusted cost

in each center. For example, if MSG has 15% of the costs, then 15% of the revenue will be allocated to that center.

UCC• Uncompensated Care includes charity care and bad debt• The UCC policy allows hospitals to charge additional

amounts in their rates to all payors to cover the shortfall produced by providing uncompensated care

• Blend of:– Three-year average– Predicted UCC

UCC• Three-year average is based on the Hospital’s 3 most

recent year’s Annual Filings• Predicted UCC uses a linear regression model

– Independent variable (x): Actual Uncompensated Care– Dependent variables (y):

• Inpatient Medicaid, Self Pay, and Charity Charges as a % of Total Charges

• Inpatient Charges from non-Medicare Admissions through the ER as a % of Total Charges

• Outpatient Medicaid, Self Pay, and Charity Charges from the ER as a % of Total Charges

• Outpatient Charges from non-Medicare ER Visits as a % of Total Charges

UCC• UCC Pool – since Statewide UCC % is built into all

hospitals’ rates, the UCC Pool acts as a settlement methodology to account for hospitals that experience more or less UCC than the State

UCC Policy Result

Statewide UCC %

UCC Above / (Below) Average

Hospital A 15.00% 7.47% 7.53%Hospital B 7.47% 7.47% 0.00%Hospital C 3.50% 7.47% -3.97%

Volume Adjustment• Rates are adjusted for volume increases and decreases• FY 2014 rates adjusted for volume changes occurring in FY 2013• Variable Cost Factor = 85% / Fixed = 15%

– Volume increases - 15% of volume increase taken out of rates– Volume decreases - 15% is put into rates

• Changes Effective Jan 1, 2014– Adjustment will be made on a concurrent basis (during the

year in which the volume change occurs)– Variable Cost Factor = 50% / Fixed = 50%

Volume AdjustmentTotal

Inpatient Other Clinic VolumesBase Year: 16,529 15,109 706 32,345

Rate Year: 16,281 14,855 706 31,843

Change 248 254 0 502

Allowable (x 85%) 211 216 0 427

Volume Adj -0.23%

Assessments• Two assessments pass through hospitals in order to support

“medically uninsurable” patients and Medicaid expansion– MHIP (Maryland Health Insurance Plan)– Health Care Coverage Fund

• Medicaid Budget Deficit Assessment– State total spread to hospitals based on % of total

revenue– Payer portion put into rates (all-payers) 86%– Hospital portion paid by hospital throughout year 14%

• NSP I (Nursing Support Program) – grant funding– Applied directly to admissions center

Application of Assessments

Revenue after application of

Current Year Price Variances and

Penalties

Applied based on % of Revenue in that center

NSP I is applied

directly to the

Admissions Center

This revenue produces the Rate Order Rates to be used in Unit

Rate Compliance

New Approved Retroactive AdjustmentsAmount of

Volume Revenue Rate

MSG 50,436 58,255,257 1,155.0333MIS 6,400 14,821,318 2,315.8310ADM 13,147 1,568,216 119.2831EMG 618,489 22,184,987 35.8697OR 899,322 21,854,564 24.3012ANS 765,657 881,124 1.1508SDS 7,205 3,750,733 520.5736LAB 10,041,667 16,398,433 1.6330EKG 686,384 1,882,977 2.7433EEG 405,224 4,991,768 12.3185RAD 311,206 10,004,122 32.1463RAT 17,019 503,980 29.6128NUC 79,507 1,160,300 14.5937CAT 549,763 2,642,121 4.8059IRC 54,954 1,675,168 30.4831RES 1,619,264 2,586,923 1.5976

Allocated Center Adjustments RevenueRevenue MHIP Health Care Defict Total After

After Adjustment Coverage Fund Assessment Allocated NSP I AllRate Allocation $1,905,069 $2,742,381 $5,797,825 Adjustment = Adjustment Adjustments

Center Realignment % Final $10,445,275MSG $55,482,772 0.2654 $505,662 $727,909 $1,538,914 2,772,485 $58,255,257MIS 14,115,942 0.0675 128,651 185,195 391,531 705,376 14,821,318ADM 1,285,404 0.0061 11,715 16,864 35,653 64,232 218,580 1,568,216EMG 21,129,159 0.1011 192,568 277,205 586,055 1,055,828 22,184,987OR 20,814,461 0.0996 189,700 273,076 577,326 1,040,103 21,854,564ANS 839,189 0.0040 7,648 11,010 23,276 41,934 881,124SDS 3,572,228 0.0171 32,557 46,866 99,082 178,505 3,750,733LAB 15,617,999 0.0747 142,340 204,901 433,193 780,434 16,398,433EKG 1,793,363 0.0086 16,344 23,528 49,742 89,615 1,882,977EEG 4,754,200 0.0227 43,329 62,373 131,866 237,568 4,991,768RAD 9,528,006 0.0456 86,837 125,003 264,276 476,116 10,004,122RAT 479,995 0.0023 4,375 6,297 13,314 23,985 503,980NUC 1,105,079 0.0053 10,072 14,498 30,651 55,221 1,160,300CAT 2,516,377 0.0120 22,934 33,014 69,796 125,744 2,642,121IRC 1,595,443 0.0076 14,541 20,932 44,252 79,725 1,675,168RES 2,463,807 0.0118 22,455 32,324 68,338 123,117 2,586,923

Quality Based Reimbursement• Implemented – July 2008• What’s Measured –

• Source of Data – CMS QIO Clinical Warehouse• Measurement Period - Calendar Year

– For example, results from CY 2013 will impact FY 2015 rates • % of Revenue at Risk: 0.5% (increasing to 1.0% in FY 2016 rates)• Other - Revenue Neutral - some hospitals "win" and some "lose“

– net result to the state is $0

Measurement Period CY13 - going into FY15

rates

Measurement Period CY14 - going into FY16

ratesClinical/Process 40% 30%HCAPS 50% 40%Outcome 10% 30%

HOSPITAL NAMEGROSS INPATIENT

CPC/CPE REVENUE QBR FINAL SCORE

REVENUE NEUTRAL ADJUSTED PERCENT

REVENUE NEUTRAL ADJUSTED REVENUE IMPACT OF SCALING

B C D E FSouthern Maryland Hospital Center $146,082,502 0.4096 -0.50% -$730,413Greater Baltimore Medical Center $208,875,651 0.4099 -0.50% -$1,043,091Prince Georges Hospital Center $175,673,564 0.4106 -0.50% -$874,760Sinai Hospital $365,095,082 0.4338 -0.45% -$1,644,016Atlantic General Hospital $35,569,941 0.4638 -0.39% -$138,255Northwest Hospital Center $125,688,476 0.4873 -0.34% -$427,868Peninsula Regional Medical Center $235,561,632 0.5015 -0.31% -$733,199Frederick Memorial Hospital $179,085,665 0.5338 -0.24% -$438,613Fort Washington Medical Center $20,591,728 0.5356 -0.24% -$49,672Suburban Hospital $146,894,874 0.5494 -0.21% -$312,708Calvert Memorial Hospital $57,014,942 0.5519 -0.21% -$118,445Bon Secours Hospital $72,763,474 0.5848 -0.14% -$101,996Harbor Hospital Center $120,286,962 0.5857 -0.14% -$166,388Chester River Hospital Center $34,409,502 0.5951 -0.12% -$40,954Union Memorial Hospital $223,141,625 0.6085 -0.09% -$204,173Meritus Hospital $170,280,942 0.6102 -0.09% -$149,860Laurel Regional Hospital $55,032,232 0.6105 -0.09% -$48,093Howard County General Hospital $148,552,102 0.6168 -0.07% -$110,601Franklin Square Hospital Center $244,662,796 0.6174 -0.07% -$179,143Washington Adventist Hospital $172,399,246 0.6174 -0.07% -$126,231St. Agnes Hospital $223,703,417 0.6182 -0.07% -$160,121Johns Hopkins Bayview Medical Center $254,179,825 0.6294 -0.05% -$123,467Shady Grove Adventist Hospital $205,252,257 0.6414 -0.02% -$49,115Good Samaritan Hospital $185,067,078 0.668 0.03% $53,270Western Maryland Regional Medical Center $162,173,440 0.6787 0.05% $80,092Garrett County Memorial Hospital $18,335,488 0.6791 0.05% $9,197Montgomery General Hospital $86,987,493 0.6795 0.05% $44,300Civista Medical Center $65,004,737 0.7013 0.09% $60,392Carroll Hospital Center $133,858,715 0.7114 0.11% $150,391Union of Cecil $64,046,952 0.7316 0.15% $96,868Harford Memorial Hospital $46,419,174 0.7368 0.16% $74,855Holy Cross Hospital $284,622,588 0.7396 0.17% $474,323St. Joseph Medical Center $200,080,034 0.7441 0.18% $350,770Doctors Community Hospital $121,919,094 0.7485 0.18% $224,071Johns Hopkins Hospital $844,917,135 0.7501 0.19% $1,578,877University of Maryland Hospital $787,107,460 0.7597 0.21% $1,616,344Upper Chesapeake Medical Center $117,444,944 0.7786 0.24% $283,917Anne Arundel Medical Center $241,861,191 0.7822 0.25% $601,451Mercy Medical Center $188,060,788 0.7911 0.27% $499,890Memorial Hospital at Easton $117,317,772 0.7958 0.27% $322,463Dorchester General Hospital $37,355,818 0.8005 0.28% $106,058Baltimore Washington Medical Center $188,870,979 0.83 0.34% $643,512Maryland General Hospital $119,697,303 0.8301 0.34% $408,057St. Mary's Hospital $54,639,193 0.905 0.49% $265,070McCready Memorial Hospital $5,196,783 0.923 0.52% $27,012Statewide Total $7,691,782,590 0.00% $0

Maryland Hospital Acquired Conditions (MHAC)• Implemented – July 2009• What’s Measured - Potentially preventable complications (PPC's)

– Diagnosis present on admission? If no, penalized • Source of Data - Quarterly discharge data submitted by hospitals • Measurement Period - Calendar year

– For example, results from CY 2013 will impact FY 2015 rates • % of Revenue at Risk: 2.0% for attainment, 1.0% for improvement• Other - Revenue Neutral - some hospitals "win" and some "lose“

– net result to the state is $0

HOSPITAL NAMEGROSS INPATIENT

CPC/CPE REVENUE

% OF AT RISK REVENUE FROM

EXCESS COMPLICATIONS

MHAC RANK

REVENUE NEUTRAL

CONTINUOUS SCALING

ADJUSTMENT

MHAC SCALED

REVENUEB C D E F G

Greater Baltimore Medical Center $184,989,402 0.57% 1 -2.000% -$3,699,788Johns Hopkins Hospital $843,010,098 0.19% 2 -0.667% -$5,624,996Union of Cecil $60,653,880 -0.11% 3 0.011% $6,711Harbor Hospital Center $116,221,680 -0.28% 4 0.030% $34,321Suburban Hospital $151,177,296 -0.29% 5 0.030% $44,801St. Joseph Medical Center $180,611,979 -0.30% 6 0.031% $56,707Chester River Hospital Center $26,318,692 -0.56% 7 0.058% $15,345Southern Maryland Hospital Center $145,134,232 -0.58% 8 0.061% $87,916University of Maryland Hospital $783,335,558 -0.74% 9 0.077% $600,328Sinai Hospital $362,977,920 -0.81% 10 0.084% $305,313Montgomery General Hospital $79,741,456 -0.88% 11 0.091% $72,878Garrett County Memorial Hospital $17,951,439 -0.95% 12 0.099% $17,763Johns Hopkins Bayview Medical Center $248,923,504 -0.99% 13 0.102% $254,934Calvert Memorial Hospital $57,493,422 -1.00% 14 0.104% $59,675Frederick Memorial Hospital $170,650,516 -1.21% 15 0.126% $214,461Meritus Hospital $165,746,592 -1.24% 16 0.128% $212,423St. Agnes Hospital $209,768,089 -1.25% 17 0.129% $270,799Peninsula Regional Medical Center $219,461,838 -1.27% 18 0.131% $287,864Prince Georges Hospital Center $163,205,248 -1.27% 19 0.131% $214,412Union Memorial Hospital $215,726,275 -1.32% 20 0.137% $295,490Bon Secours Hospital $70,685,898 -1.43% 21 0.148% $104,957Good Samaritan Hospital $172,932,011 -1.44% 22 0.150% $258,929Howard County General Hospital $146,791,098 -1.47% 23 0.152% $223,289Upper Chesapeake Medical Center $115,418,544 -1.50% 24 0.155% $179,397Holy Cross Hospital $276,326,064 -1.52% 25 0.157% $434,082Anne Arundel Medical Center $250,956,754 -1.52% 26 0.158% $396,311Doctors Community Hospital $119,486,136 -1.57% 27 0.162% $194,144Baltimore Washington Medical Center $184,662,660 -1.74% 28 0.180% $332,979Western MD Regional Medical Center $159,433,379 -1.79% 29 0.186% $296,248Mercy Medical Center $191,948,526 -1.81% 30 0.188% $361,044Carroll Hospital Center $118,189,180 -1.94% 31 0.201% $237,380Northwest Hospital Center $121,348,486 -2.03% 32 0.211% $255,679Harford Memorial Hospital $42,495,040 -2.04% 33 0.211% $89,713McCready Memorial Hospital $4,512,494 -2.04% 34 0.211% $9,531James Lawrence Kernan Hospital $45,850,528 -2.18% 35 0.226% $103,643St. Mary's Hospital $53,846,970 -2.29% 36 0.237% $127,748Civista Medical Center $60,770,370 -2.32% 37 0.240% $145,938Franklin Square Hospital Center $241,738,193 -2.34% 38 0.243% $586,291Memorial Hospital at Easton $82,689,144 -2.38% 39 0.246% $203,634Shady Grove Adventist Hospital $195,270,023 -2.38% 40 0.247% $481,892Maryland General Hospital $105,819,110 -2.45% 41 0.254% $269,043Fort Washington Medical Center $16,249,592 -2.64% 42 0.274% $44,482Washington Adventist Hospital $155,015,406 -2.71% 43 0.281% $435,272Laurel Regional Hospital $53,359,459 -3.52% 44 0.365% $194,922Dorchester General Hospital $28,755,684 -4.61% 45 0.478% $137,545Atlantic General Hospital $33,780,340 -4.81% 46 0.499% $168,549Statewide Total $7,451,430,205 0.000% $0

Total rewards $9,324,784

Population Adjustment• Relevant for TPR hospitals only• HSCRC calculates population growth for

each hospital’s primary and secondary service area by age cohort

• An adjustment is made to the TPR Cap in order to account for the increase or decrease in the population

Case Mix Index (CMI)• All Patient Refined Diagnostic Related Grouper• Each APR-DRG has a level of severity from 1 – 4 which is

assigned based on in depth coding information such as age, weight, other pre-existing conditions, etc.

• 3-Level Case Mix Calculation• Level I (CPC Included) – Hospital-specific change in CMI• Level II (Trim) and III (Exclusions)

– Revenue pass-through for exclusions and trim revenue– Statewide CMI change based on Level III

Case Mix Index (CMI)• Calculation of Relative Weights

– Establish Statewide Average Charge per Case (with remaining data set)

– For each Cell (DRG by Severity)

DRG 002 Severity 3 $10,000 DRG 390 Severity 2 $3,000

Total State Average $5,000 Total State Average $5,000

Relative Weight 2.0000 0.6000

State Average State Average

Example: Calculation of Relative Weight and CMI

Case Mix Index (CMI)Based on Mix of Services Provided (Case

Mix Index)Example:

Index TotalDRG Description Weight x Cases = Index

Normal Delivery 0.4020 730 293 Chest Pain 0.5342 490 262 Heart Failure 1.0144 385 391 Pneumonia 0.7800 385 300 Hysterectomy 0.8699 240 209 Hip Replacement 2.2500 273 614 Stroke 1.1914 150 179 Splenectomy 3.1411 3 9

Subtotal 2,656 2,257/ Total Cases 2,656

Average CMI 0.850

Unit Rate Compliance

Hospitals must be in compliance with approved unit rates on a monthly (except TPR) and YTD (7/1 - 6/30) basis

Col. 1 Col. 2 Col. 3 Col. 4 Col. 5 Col. 6Actual HSCRC

Revenue Gross Units of Rate Approved Charge VarianceCenter Revenues Measure Charged Rate Variance Percentage

(Col 1/Col 2) (Col 3-Col 4) x Col 2 (Col 3-Col 4) / Col 4

Med./Surg. Acute 4,000,000$ 4,630 863.9309$ 854.1740$ 45,174$ 1.1%New Born Nursery 120,000 229 524.0175 518.2096 1,330 1.1%Admissions 200,000 1,300 153.8462 151.7719 2,697 1.4%Psychiatric Day/Night 70,000 285 245.6140 252.9133 (2,080) -2.9%Operating Room 2,500,000 90,000 27.7778 25.2681 225,871 9.9%Radiology-Diagnostic 850,000 33,000 25.7576 26.4154 (21,708) -2.5%Renal Dialysis 150,000 220 681.8182 777.9715 (21,154) -12.4%

• Although rate orders are effective July 1, hospitals usually receive them in Oct/Nov

• Still need to be in compliance by June 30th

• Approved rate (per rate order) = $15.00• Actual average charge for July-Dec = $10.00• Average charge for Jan-June must = $20.00 to be in

compliance by June 30

Unit Rate Compliance

Supply and Drug ComplianceMSS CDS

(Supplies) (Drugs)

A Invoice Cost 2,400,000$ 1,700,000$ B Markup Amount - per rate order 1.1206 1.1206 C Invoice Cost with Markup A x B 2,689,440 1,905,020 D Actual Revenue 3,800,000 3,100,000 E Overhead Collected D - C 1,110,560 1,194,980 F Approved Overhead - per rate order 12,025,772 14,813,263 G Months of Rate Year 1 1 H Approved Overhead for Period F x G / 12 1,002,148 1,234,439 I Overhead Variance E - H 108,412 (39,459) J % Variance I / H 10.82% -3.20%

CPE/CPC Price Corridors

Overcharges/undercharges that are within the allowed corridors go into next years rates (one time adjustment)

Revenue Center Upper Lower Upper LowerAll Inpatient Room & Board 10% 10% 10% 10%Admissions 10% 10% 10% 10%Emergency Services 4% 4% 2% 2%Clinic Services 4% 4% 2% 2%Psychiatric Day/Night 4% 10% 2% 5%Operating Room 6% 10% 3% 5%Operating Room - Clinic 6% 10% 3% 5%Anesthesiology 6% 10% 3% 5%Same Day Surgery 4% 10% 2% 5%Labor and Delivery 6% 4% 3% 2%Laboratory 6% 10% 3% 5%Electrocardiography 6% 10% 3% 5%Electroencephalography 6% 10% 3% 5%Radiology - Diagnostic 6% 10% 3% 5%Radiology - Therapeutic 6% 10% 3% 5%Nuclear Medicine 6% 10% 3% 5%

Monthly Year EndRevenue Center Upper Lower Upper Lower

CT Scanner 6% 10% 3% 5%Interventional Cardiology 6% 10% 3% 5%Respiratory Therapy 6% 10% 3% 5%Pulmonary 6% 10% 3% 5%Physical Therapy 6% 10% 3% 5%Occupational Therapy 6% 10% 3% 5%Speech Therapy 6% 10% 3% 5%Renal Dialysis 10% 10% 5% 5%Audiology 6% 10% 3% 5%MRI Scanner 6% 10% 3% 5%Lithotripsy 6% 10% 3% 5%Ambulance 6% 10% 3% 5%Hyperbaric Chamber 6% 10% 3% 5%Observation 4% 4% 2% 2%Med/Surg Supplies 30% 30% 30% 30%Drugs 30% 30% 30% 30%

Monthly Year End

TPR Price Corridors• TPR unit rate compliance corridors are more

relaxed• Hospitals are free to charge at levels up to 5%

above / (below) the approved individual unit rates without penalty

• This limit can be extended to 10% at the discretion of the Commission Staff

Penalties for Exceeding the Corridors• Penalties will be applied if rates exceed monthly

corridors for consecutive periods (TPR excluded): – 6 consecutive months for Supplies (MSS) and

Drugs (CDS) – 3 consecutive months for all other centers – Penalties are calculated at 20% of the sum

(absolute value) of all charges in excess of the corridors

– Penalties are subtracted from next years rates

• Penalties will be applied if rates exceed year-end corridors– Penalties are calculated at 40% of the sum

(absolute value) of all charges in excess of the corridors

– Penalties are subtracted from next years rates

Penalties for Exceeding the Corridors Cont.

CPC and CPE Trim Exclusions• Trim

– High charge cases• Exclusions

– Zero and one day stay cases – Hospice Cases – Cases denied for medical necessity (when 100% of room and board

charges denied) – Transplants (organ & bone) – Other Special Cases

• Burn at Bayview• Chronic at Kernan • Shock Trauma • Special Oncology

• Readmissions

Charge per Case (CPC) Compliance

(A) (B)Inpatient InpatientRevenue Cases

Actual Revenue and Cases - YTD 200,000,000$ 21,000

Less: Exclusions 15,000,000 2,750

Less: Trim 1,900,000

Less: Assessments 8,500,000

Included CPC Revenue and Cases 174,600,000$ 18,250 Actual CPC 9,567$

(C) Actual CPC (A/B) 9,567$

(D) Actual CMI 0.9290

(E) HSCRC CMI - per rate order 0.9310

(F) Increase (Decrease) in CMI (D/E-1) -0.21%

(G) HSCRC-Approved CPC - per rate order 9,627$

(H) Allowed CPC based on actual CMI (FxG) 9,606$

(I) Overcharge (undercharge) in CPC (C-H) (39)$

(J) Overcharge (undercharge) in Revenue (IxB) (715,322)$

(K) % Variance (I/H) -0.41%

Can only adjust Inpatient Routine Centers to achieve CPC compliance

Charge per Episode (CPE) Compliance

(A) (B)Inpatient InpatientRevenue Cases

Actual Revenue and Cases - YTD 200,000,000$ 21,000

Less: Exclusions (15,000,000) (2,750)

Less: Readmissions (1,650)

Less: Trim (1,900,000)

Less: Assessments (8,500,000)

Included CPE Revenue and Cases 174,600,000$ 16,600 Actual CPE 10,518$

(C) Actual CPE (A/B) 10,518$

(D) Actual CMI 1.0100

(E) HSCRC CMI - per rate order 1.0120

(F) Increase (Decrease) in CMI (D/E-1) -0.20%

(G) HSCRC-Approved CPE - per rate order 10,607$

(H) Allowed CPE based on actual CMI (FxG) 10,586$

(I) Overcharge (undercharge) in CPE (C-H) (68)$

(J) Overcharge (undercharge) in Revenue (IxB) (1,128,223)$

(K) % Variance (I/H) -0.64%

Can only adjust Inpatient Routine Centers to achieve CPE compliance

CPC/CPE Compliance Corridors• Overcharge Corridors:

– 0% to 1.0% No Penalty– 1.0% to 1.5% 20% Penalty– 1.5% to 2.0% 30% Penalty – 2.0% and greater 40% Penalty

• Undercharge Corridors:– 0% to 2.0% No Penalty– 2.0 to 3.0% 40% Penalty– 3.0% and greater 100% Penalty

Reasonableness of Charges· “ROC” is the acronym for the HSCRC’s Reasonableness of

Charges· Currently, there is no efficiency measure in place

(suspended)· HSCRC is developing a new efficiency measure· Several parts of the “ROC” will probably remain in the new

efficiency measure including peer groups and charge adjustments to account for differences at each hospital.

Required Monthly ReportingName of Report Description Frequency Due Date

Volumes and Revenues

Inpatient and Outpatient volumes and revenue by rate center. Recently expanded to report In-State vs Out of State and Medicare Monthly

30 days after end of month

Unaudited Financial Statements Income Statement and Balance Sheet Monthly30 days after end of month

Price variance letter, Schedule SB, Schedeule CSS

Listing of rate centers with rates outside of allowed corridors and plan to come into compliance, Supplemental Births, Supply & Drug Compliance Monthly

30 days after end of month

Required Quarterly ReportingName of Report Description Frequency Due Date

Inpatient Case Mix Data, Outpatient Case Mix Data

Patient specific data including demographics, diagnoses & procedures, financial data Quarterly

See production schedule on HSCRC website

Denied Admissions

Report patients and related charges when 100% of room & board charges are written off for medical necessity Quarterly

45 days after end of quarter

Inpatient Hospice Report

Listing of hospice patients with related charges and payments. Not applicable to all hospitals Quarterly


AR1, AR2, AR3

Income, expense and utilization reporting for Global Pricing/Capitation arrangements. Not applicable to all hospitals Quarterly


Required Annual ReportingName of Report Description Frequency Due Date

Annual Cost ReportExpenses, FTE's, revenues and volume for rate centers and HSCRC defined overhead (OH) centers. Must reconcile to audited financial statements. OH is allocated to rate centers

Annually120 days after end of fiscal year

Audited Financial Statements Audited Financial Statements Annually120 days after end of fiscal year

Credit and Collection Policy Hospital's Credit and Collection policy Annually120 days after end of fiscal year

Trustee DisclosureList of trustees with business addresses, individual disclosure form for each trustee doing > $10,000 business with the hospital


AR1, AR2, AR3Income, expense and utilization reporting for Global Pricing/Capitation arrangements. Not applicable to all hospitals


Special Audit ReportPerformed by independent auditing firm, audits various components of the monthly, quarterly and annual reports submitted to HSCRC. HSCRC defines the audit procedures.


Community Benefit ReportListing of expenses incurred providing community benefits (direct and indirect expenses net of offsetting revenue)

Annually December 15

Federal IRS Form 990 Federal IRS Form 990 Annually January 15

Interns and ResidentsListing of interns and residents that rotated to hospital during the FY. Includes the medical school graduated from. Not applicable to all hospitals

Annually January 15

Wage and Salary ReportBased on one pay period, groups employees into HSCRC defined categories, calculates an average rate of pay

Annually June 1

Terminology & AcronymsAcronym What It Represents What It Means% Occ % of Occupancy Calculated by dividing total patient days by (# of beds

x 365 days).

ACS Ambulatory Care Services Services rendered to persons who are not confined overnight in a healthcare institution. Often referred to as “O/P” (Outpatient) services.

ACO Accountable Care Organization Are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to the Medicare patients they serve.

ADC Average Daily Inpatient Census Average number of I/Ps (Inpatients) (based on the daily inpatient census) present each day of a given period of time.

ADM Admission Formal acceptance by an institution of a patient who is provided with room and board, continuous nursing service and other institutional services while lodged in the institution.

APG Ambulatory Payment Group Classification system used to group ambulatory cases.

Terminology & AcronymsAcronym What It Represents What It MeansALOS Average Length of Stay Average number of days of service rendered to each I/P

discharged during a given period.

AOB Average Occupied Beds Total Inpatient Days divided by 365.

APR-DRG All Payer Refined-Diagnosis Related Group

System used by 3M Health Information Systems as the basis of all-payer hospital payment system; used by many hospitals in the US to analyze comparative hospital performance.

ARR Admission Readmission Revenue Inpatient revenue measurement on a per episode basis.

ARMS Alternative Rate Setting Methods When a hospital is permitted to accept financial risk for the provision of services under certain conditions and circumstances.

CMI Case Mix Index Measure of complexity of patient population and/or treatment provided by an institution; tells how complex patients and services are.

Terminology & AcronymsAcronym What It Represents What It MeansCMS Center for Medicare and Medicaid

ServicesThe federal agency that runs the Medicare program. In addition, CMS works with the states to run the Medicaid program. CMS works to make sure that the beneficiaries in these programs are able to get high quality health care.

CON Certificate of Need Formal state application and approval process for adding new beds and services.

CPC Charge Per Case Inpatient revenue measurement on a per case basis.

CPT Current Procedural Terminology Numeric coding system maintained by the American Medical Association (AMA). Coding scheme for outpatient procedures and services.

Terminology & AcronymsAcronym What It Represents What It MeansDME Direct Medical Education Direct expenses (salaries, benefits, etc.) related to

qualified intern, residents and fellows in teaching-related programs.

DSH Disproportionate Share Providing services to a disproportionately large share of low-income patients. Under Medicaid, states augment payments to hospitals with high DSH. Medicare inpatient hospital payments are also adjusted for this added burden.

EIPA Equivalent Inpatient Admission Statistic that combines inpatient admissions and total outpatient visits as one unit of measure.

EIPD Equivalent Inpatient Days Statistic that combines inpatient days and outpatient ambulatory visits in a weighted method.

EIPC Equivalent Inpatient Cases Statistic that combines inpatient cases and outpatient ambulatory visits in a weighted method.

Terminology & Acronyms

Total Inpatient Revenue $ 63,304.8 A

Total Inpatient Admissions 6,637 B

Inpatient Unit Revenue 9.54 C = A / B

Total Outpatient Revenue $ 29,845.7 D

Total Outpatient Visits 47,274 E

Outpatient Unit Revenue 0.63 F = D / E

Inpatient / Outpatient Unit Ratio 15.11 G = C / F

Total Inpatient Admissions 6,637 H

Outpatient Visits 3,129 I

EIPAs 9,766 J = H + I

Calculation of EIPAs:


Acronym What It Represents What It MeansE & M Evaluation and Management Universal codes to bill for patient visits or consultations

conducted at a clinic, emergency room or physician’s office.

FS Financial Statements Balance sheet, income statement, funds statement, statement of changes in financial position or any supporting statement or other presentation of financial data derived from accounting records.

FTE Full Time Equivalents An objective measurement of the personnel employment of an institution in terms of full time labor capability.

HSCRC bases FTEs on # of hours worked.

Medicare bases FTEs on # of hours paid.

Terminology & AcronymsAcronym What It Represents What It MeansGL General Ledger A ledger containing accounts in which all the

transactions of a business enterprise or accounting unit are classified either in detail or in summary form.

GME Graduate Medical Education Generally defined as the clinical training following graduation from medical school. This clinical training, which ranges from three to seven years in length (internship and/or residency), has traditionally taken place in teaching hospitals or academic medical centers (AMCs). This is funded in Maryland’s rate-setting system and is the cost of graduate medical education (GME) generally for interns and residents trained in Maryland hospitals.

HCPCS Healthcare Common Procedure Coding System

Alpha numeric billing codes used to identify and bill for items and services not included in the CPT Codes.

Terminology & AcronymsAcronym What It Represents What It MeansHIPAA Health Insurance Portability and

Accountability ActDesigned for patient confidentiality, data security and standardization.

HMO Health Maintenance Organization A health care provider or group of medical service providers who contracts with insurers or self-insured employers to provide a wide variety of managed health care services to enrolled workers through participating panel providers.

HSCRC Health Services Cost Review Commission

Rate-regulating and rate-setting body in the State of Maryland.

I/P Inpatient Patient who is provided with room and board, and continuous general nursing services in a hospital. Defined as an admission and an overnight stay.

ICC Inter-Hospital Cost Comparison Cost comparison methodology used in full rate application process.

Terminology & AcronymsAcronym What It Represents What It MeansICD-9 International Classification of

Diseases – 9th Revision Clinically Modified

Classification of codes that represent diagnoses, conditions and symptoms.

ICD-10 International Classification of Diseases – 10th Revision Clinically

Modified

Classification of codes that represent diagnoses, conditions and symptoms. October 2014

IME Indirect Medical Education Indirect Medical Education expenses are generally described as those additional costs incurred as a result of the teaching process (e.g., extra tests ordered by interns / residents or the extra costs of supervision).

MCO Managed Care Organization A type of Medicare managed care plan where a group of doctors, hospitals and other health care providers agree to give health care to Medicare beneficiaries for a set amount of money from Medicare every month. You usually must get your care from the providers in the plan.

MHA Maryland Hospital Association State organization of Maryland hospitals.

Terminology & AcronymsAcronym What It Represents What It MeansMHCC Maryland Health Care Commission An independent regulatory agency whose mission is to

plan for health system needs, promote informed decision-making, increase accountability and improve access in a rapidly changing health care environment by providing timely and accurate information on availability, cost and quality of services to policy makers, purchasers, providers and the public.

MHIP Maryland Health Insurance Plan State-managed health insurance program for Maryland residents who are unable to obtain health insurance from other sources. Each hospital is assessed at 1% of its net patient revenue to operate the program.

NOR Net Operating Revenue Operating gross revenue less any contractual or other revenue deductions.

Terminology & AcronymsAcronym What It Represents What It MeansNSP Nursing Support Program Nursing Support Program developed to help address the

nursing workforce shortage. Each rate-regulated hospital is eligible for a percentage of rate increase to help pay for programs to recruit and / or retain nurses (NSPI and NSPII).

O/P Outpatient Patient involved in an emergency visit, diagnostic test or clinic visit procedure or service and is not admitted to the hospital.

Permanent Revenue

Total Allowed Revenue Permanent revenue represents revenue that a hospital is entitled to on a permanent and ongoing basis. The opposite of permanent revenue is one-time revenue which is only approved for a one year period.

PIP Periodic Interim Payment When a hospital receives cash payments from third-party payers (Usually Medicare) in constant amounts each period. The total of these payments received over a year is an estimated cost of providing services to patients covered by the plan.

PLF Price Leveling Factor Factor used to inflate and / or adjust charges from a historical / current period to a current / future period.

Terminology & AcronymsAcronym What It Represents What It MeansRAC Recovery Audit Contractor Approved CMS contractors who have been

commissioned to review the Medicare claims of acute care facilities to deem if services were necessary or appropriate.

ROC Reasonableness of Charges (Suspended)

HSCRC’s Reasonableness of Charges Report. This report is the Commission’s tool for assessing the reasonableness of each hospital’s charges on a per case basis relative to their peer group.

RVU Relative Value Unit Index number assigned to various procedures based upon the relative amount of labor, supplies and capital needed to perform the procedure. Predominantly for ancillary activities and clinic visits (by time and complexity).


Acronym What It Represents What It MeansTPR Total Patient Revenue An agreement which establishes a revenue cap for

qualifying hospitals. A qualifying hospital is typically located in a rural area and has a well-defined catchment area with a stable population.

UB-04 Uniformed Billing 2004 Standard form used for the billing of facility-based / inpatient services, effective July 2007.

UCC Uncompensated Care Care provided for which compensation is not received (bad debts and charity care).

W&S Wage & Salary Report Job-specific pay information for hospitals. This is used in the calculation of the Labor Market Adjustment for HSCRC ROC and Full Rate Settings.

QBR Quality Based Reimbursement New HSCRC reimbursement methodology which adjusts reimbursement for identified quality measurements.


Acronym What It Represents What It MeansPPC Potentially Preventable

Complications64 Complications that are highly preventable as defined by 3M.

PPR Potentially Preventable Readmissions Readmission scenarios deemed preventable.

MHAC Maryland Hospital Acquired Conditions

Subset of PPC. Considered as “never events”.

P4P Pay for Performance Initiative which gives incentive to provider to improve quality of care.

ODS Zero and One-Day Length of Stay Patients admitted and discharged by a hospital with a length of stay less than or equal to one.

CPE Charge per Episode An ARR hospital’s approved revenue constraint as determined by dividing approved included revenue by the count of ARR Episodes of Care

QUESTIONS??

HSCRC Rate System

Documents

Transcript of HSCRC Rate System