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Ascendient
The Maryland Model – Strategic Considerations for a Fixed Payment System
September 30, 2015
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www.nchastrategicpartners.org
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October 8, 2015 Webinar
The Maryland Model – Strategic Considerations for a Fixed Payment System
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Guide for Today’s Discussion
Introductions
History of Maryland Model
Current Model Structure
Initial Progress & Lessons Learned
Implications & Near-term Considerations for NC
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Our Firm:Health and Healthcare Focus
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Our Firm:Locations
National HarborMaryland
Quadrangle Office ParkChapel Hill
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Today’s Presenters
Brian Ackerman, MHA
Principal
National Harbor Office
Daniel Carter, MBA
Principal
Chapel Hill Office
History of the Maryland Model
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History...the Old Model
• Maryland - Only state where hospitals (and insurers) don’t decide how much to charge for care
• Health Services Cost Review Commission – Establishes hospital rates...all payors must pay the same rate
• 26 Percent – The amount Maryland hospitals were above the national average cost per discharge in 1976
• Medicare waiver – Maryland hospitals “waived” from Federal Medicare payment models
• Criteria – Waiver to remain in place as long as: The system remains “all-payor” Inpatient payments per Medicare discharge grow
at a rate less than the nation
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The Old Model...Results
Source: Maryland HSCRC
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The Old Model...Results
Source: Maryland HSCRC
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The Old Model...Limitations for a Future Delivery System
Inpatient Only
Medicare Only
Cost per Unit/ Hospital Stay
Current Model Structure
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Current Waiver...Why it Should Matter to You
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Current Waiver...Shifting Focus
Old ModelWaiver
Modernization
Inpatient Only
Care Focus All Hospital Care
Payor FocusMedicare Only All payers
Metric FocusCost per Unit/ Hospital Stay
Total Cost of Hospital Care
& Quality
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Waiver Modernization: What it Means for Maryland Hospitals
Global Payment Model linked to total hospital revenue received
from all payors
Ceiling (and floor) placed on a hospital’s total revenue based on recent top-line performance
E.g. If your total revenue was $200M last year, it will be
$200M next year...with some slight adjustments
More volume does not create more revenue...only increased expenses and lower margins
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Waiver Modernization:How Hospital Revenue is Calculated
Base Year Revenue
X Adjustments
Allowed Revenue
Global Payment Model
• Population growth
• Quality scores
• Shift to unregulated setting
• Service level changes (e.g. program closure)
• Market share changes
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Waiver Modernization:Terms of Agreement with Medicare
• Must achieve $330M Medicare savings over five years
• Maryland’s all-payer per capita total hospital cost growth limited to 3.58%...10-year CAGR for per capita GDP
• Limit total Medicare spending in Maryland to no more than national growth
• Reduce Maryland readmission rate to national average within five years...currently ranked 49 of 51 in the U.S.
• Reduce hospital-acquired conditions by 30 percent within five years
• If Maryland fails during five-year performance period, hospitals will transition to national Medicare payment systems
Initial Progress & Lessons Learned
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Waiver Modernization:Recent Performance Dashboard
Source: www.mhaonline.org
Medicare savings to-date: Estimated at ~$100M
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Waiver Modernization:Additional Performance Measures
Operating profits
$71M or 15%
Operating margin 1%
# of Hospitals w/ Losses
10 to 7
Hospital Admission
s
4.1%
Potentially Avoidable Admission
s
6.0%ED Visits Flat
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What’s Changed
Increased use & availability of:
• Health coaches
• In-home post-discharge visits
• Social workers in the ED
• Transportation to primary care appts.
• Nurse hotlines
• Bedside prescription delivery
• Subsidized medicationsPriority on partnerships:
• Strengthened collaboration and coordination with primary care and SNFs
• Meaningful health coalitions
• Physician education
• Increased data sharing
Population health focus:
• Additional wellness initiatives
• Expansion of mental health & substance abuse clinics
• Use of predictive analytics
• Additional mobile clinics
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What’s Changed:Focus on Chronic Disease Management
Understanding of most at risk/costly patients In-home visits after discharge, to connect people with
needed support and resources Free or reduced-cost clinics for underserved patients with
chronic diseases (including mental health and substance abuse)
Tele-health monitoring for chronic disease management Increased community health education
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What’s Next for Maryland?
Waiver expansion...to physicians,
unregulated settings, post-acute providers
Implications and Near-Term Considerationsfor North Carolina
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So...What Does it All Mean?
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Reset Your Expectations...Discharges will Continue to Decline
Current Discharges
Population Change
ACSAs PSAs Misc. Conditions Medicare Readmissions
2025 Discharges0
5,000
10,000
15,000
20,000
25,000
Dis
cha
rge
s in
Avg
. N
C M
ark
et
Growth in discharges Decline in discharges
Source: Ascendient “Healthytown” predictive modeling based on DRG-specific data from Truven
20%-
25%
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Reset Your Expectations:Healthytown 2025
A complete copy of the report can be found at:
http://ascendient.com/2015/08/healthytown-usa/
Healthytown, USATransformation of Healthcare Delivery in a Statistically Average American Community
35%ED Visits
86%Primary Care Utilization
46%
Primary Care Physician Demand
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Rethink How/Where You Will Grow
Although uncertainty around future payment methods still remains, we are clearly moving away from a system that rewards volume:
Reduced Re-admissions
Bundled Payment
ACOs or “ACO-like”
organizations
What it Looks Like
Volume Based
Outcome BasedPayment
Method
Key Implication: Most of today’s revenue centers will be tomorrow’s cost
centers
Fee-for-service
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Redefine Traditional Definitions
LEAN within our departments
LEAN-mindset across the community
Efficiency
A nice thought A requirementCollabor-
ation
Of patients/volume
Of covered livesMarket Share
As a consideration As a priorityFlexibility
Past Future
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Learn to Accept Greater Risk...Quickly!
Hospitals & Health Systems
Commercial Payors,Federal & State Payors
Risk
Where to start?1. Begin where you’re already at risk...employees, self-pay2. Leverage pilot programs, where appropriate
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Learn to Accept Greater Risk...CMS Comprehensive Care for Joint
Replacement (CCJR)
• Medicare’s first mandatory bundled payment model• Applies to hip and knee replacement patients• Will hold hospitals accountable for the quality and cost of care
through 90 days post-discharge• Applies to hospitals within 18 NC counties• At conclusion of transition period payment will be regionally
based: Within the South Atlantic, 69% of CCJR hospitals have episode
spending above the regional average*
Sources: *ww.avalere.com; ^Excerpt from Ascendient work plan
Assess Data/ Know Where you Stand
Assess Your Alternatives
Develop Your Narrow Network
Implement & Monitor
Phases of Preparation^
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So...What Should We Be Doing Today?
1. Enhance and expand collaborative efforts across the continuum
2. Know who your most at-risk patients are...establish proactive processes for intervention, follow-up, and monitoring
3. Build flexibility into new provider contracts
4. Start managing the health of those populations for which you are already at risk
5. Build your IT infrastructure:a) Can you track the cost/utilization of a patient across
your system?
b) Can you track the cost/utilization of a patient across your community?
c) Are you collecting information necessary to support future predictive analytics efforts?
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What Hospitals in NC Are Already Doing
• Developing profiles of all providers/facilities within the community and prioritizing those for collaboration
• Establishing structure to develop physician leaders... particularly within primary care
• Developing processes and structure to most fully leverage advanced care practitioners
• Piloting population health management initiatives on employees
• Centralizing services and/or reducing unnecessary duplication across the system
• Developing “Gap” assessment related to the competencies necessary for participation in a clinically integrated network
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And in Conclusion...Always Remember
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Thank You!
Brian Ackerman
240.776.4752
Daniel Carter
919.403.3300
