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Leading Age MarylandAnnual Conference 2015

Maryland Healthcare and Aging Services Intersections

Workshop Session F

Wednesday, April 22, 2015

2:45 – 3:45 p.m.

Rick Grindrod, CEO

National Post-Acute HealthcareNPH

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Maryland Hospital Medicare Waiver History

Maryland is the only state to have a waiver from the Medicare hospital PPS payment rules.

Hospital rates are regulated by State

“All-Payer” System since 1977

Waiver test to keep Medicare spending less that the nation

Test included Inpatient, Medicare cost per hospital stay

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Erosion of the Former Medicare Waiver

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New Medicare Waiver Agreement

The State’s proposed new waiver demonstration model was approved January 10th with an effective date January 1, 2014 (base period CY 2013).

The waiver is for a 5-year term.

All payer test will be tied to growth in per capita gross state product (target set to 3.58%).

Cost includes inpatient and outpatient hospital costs

Cost of all payers, not just Medicare

Per capita cost of care is measured for Maryland residents, regardless of state of service.

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Termination and Corrective Action Triggers

The Medicare per capita total hospital spending target will be set to produce $330 million in Medicare savings over 5 years (target as follows): Year 1: $0 Year 2: $49.5 million Year 3: $132 million Projected savings in Year 2 – 5 = Year 4: $247.5 million 0.5% below the national trend. Year 5: $330 million

The following events can lead to further review and potentially early termination:

Failure to achieve savings, measured against Medicare trend, for two consecutive years.

Failure to meet the cumulative target by a total of $100 million or more at any point during the life of the waiver.

Annual growth in Medicare per capita total cost of care this is more than 1% greater than the national Medicare total cost of care growth rate.

Cost per capita can’t exceed the national trend over a two-year period.

A determination or a significant deterioration in the quality of care provided to Medicare, Medicaid or CHIP beneficiaries.NPH

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Quality and Value-Based Metrics30-day all

cause Readmissions

Hospital-Acquired

Conditions

Quality-based Reimbursemen

t

Application establishes a

readmission target of the national average by the end of year 5. Currently MD is 10%

over national average

Application specifies

cumulative total reduction of 30%

over the five years (6.89% per year).

Maryland must continue to

demonstrate how QBR program

meets or exceeds national program.

• Page 26 of Waiver Agreement - “For each performance year, Maryland will place the same percentage of hospital revenue at risk as the national Medicare quality programs”.

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Maryland Medicare Readmission Performance

Maryland Medicare Waiver Agreement establishes target of the national average by the end of the 5 year agreement (CY 2018).

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Population-based Revenue Application calls for Maryland to shift virtually 100% of revenue into population-based payment

models. Application sets targets for the end of years two through five.

Hospital revenues that are not covered under a population-based payment model will be subject to an aggressive volume governor.

Year 0 Year 1 Year 2 Year 3 Year 4 Year 50%

10%

20%

30%

40%

50%

60%

70%

80%

90%

30%

40%

50%

60%

70%

80%

Percentage of Revenue under Population-based Payment Model

HSCRC estimates the State at 95% mid way through

Year 1

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Fee-for-Service Model vs. Global Revenue Budget

Fee-for-Service (Volume) Model

• 2.0% volume governor

• 50% variable cost factor (assumes that 50% of hospital’s cost structure is fixed)

• Lower update factor (market basket less 0.7%)

• Limited funding for growth in case-mix

Global Revenue Budget Model (GRB)

• Initial budget based on historical revenue

• No change in revenue for changes in volume and case-mix

• Full update factor (likely something closer to full factor cost inflation)

• Annual adjustments for changes in age-adjusted population

• Funding for population health infrastructure

• Adjustments for changes in market share for “good volume” (non-PAU) at efficient prices (50% adjustment proposed starting 7/1/15).

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Distribution of Potentially Avoidable Utilization

Readmis-sions46%

Observation Revisits3%

ER Revisits2%

Prevention Quality Indicators

38%

Potentially Pre-ventable Complica-

tions10%

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Potentially Avoidable Utilization (PAU) 30-Day Revisits – Inpatient / Observation / ER (by including IP

and OP, HSCRC eliminates differences in patient status). Planned readmissions are excluded.

Potentially Preventable Complications (PPCs) – Inpatient cases with complications acquired during inpatient portion of a hospitalization. Uses the existing MHAC logic (Maryland Hospital-acquired Conditions).

Prevention Quality Indicators (PQIs) – Used for inpatients to identify quality of care for “Ambulatory Care Sensitive Conditions”. Conditions for which good outpatient care and early intervention can potentially prevent the need for hospitalization. Diagnosis specific based on AHRQ logic.

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Prevention Quality Indicators (PQIs)Ambulatory Sensitive Conditions

Cardiac PQIs Heart Failure Hypertension Angina w/o Procedure

Infections Bacterial Pneumonia Urinary Tract Infection

Asthma/COPD

Dehydration

DiabetesLong Term

complicationsLower Extremity

AmputationShort Term

ComplicationsUncontrolledPerforated Appendix

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Global Budget/Population Health Initiatives

Enhanced Care Management

Effective shift of care to lower cost settings

Smart, cost effective market share growth

Physician alignment

Focus on chronic disease management

Access to primary care services

Partnerships with Post-Acute Providers

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Implications to Post-Acute Providers

Build relationship with acute providers

Build relationships with other post-acute providers

Alternative payment models

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Build Relationships with Acute Providers

Data and outcomes not donuts

Scorecard that includes 30-day readmission rates, revisit rates, PAU rates

Enhance Clinical Capability

Quality Improvement and Innovative Programs

Manage Transitions of Care

Executive level contact

EMR, Data mining, HEI

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Build Relationships with other Post-Acute Providers

Focus on data and outcomes

Develop preferred providers without limiting choice

Create networks of high performing providers

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Consider Alternative Payment Models

Bundled Payment Program

ACO’s

Medical Home

Advantage Plan

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