history and overview of the hscrc (health services cost review commission)
DESCRIPTION
History and Overview of the HSCRC (Health Services Cost Review Commission). Michael Myers Greater Baltimore Medical Center (GBMC) January 31, 2014. Discussion Topics. Before the HSCRC The Formation of the HSCRC and the “All Payor ” System Impact Current & Future Initiatives - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/1.jpg)
History and Overview of the HSCRC(Health Services Cost Review Commission)
Michael MyersGreater Baltimore Medical Center (GBMC)
January 31, 2014
![Page 2: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/2.jpg)
2
Discussion Topics
I. Before the HSCRC
II. The Formation of the HSCRC and the “All Payor” System
III. Impact
IV. Current & Future Initiatives
V. Other General Information
![Page 3: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/3.jpg)
32.
General Overview
• Uncertainty– Status of Healthcare Reform– Accountable Care Organizations
• Challenge– Performance Improvement– Re-capitalization– Maintaining acceptable operating margins
• Opportunity– Chance for this era of healthcare workers to make a profound and
lasting change
![Page 4: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/4.jpg)
4
Maryland Healthcare EnvironmentPre-HSCRC (Late 60’s – Early 70’s)
• Significant amount of in-efficiency in delivery system– Over utilization– Length of stay for patients exceeded national averages– Excess capacity
• Weak financial performance for Maryland Hospitals
• Inconsistent access to hospital care for the poor and uninsured
• By 1971, hospital cost per case in Maryland exceeded the National average by 25%!
![Page 5: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/5.jpg)
5
The Formation of the HSCRC• 1971 - Initial legislation enacted by the General Assembly
– Independent body within the Department of Health and Mental Hygiene– HSCRC given the authority to establish hospital rates
Legislative Mandate• Contain Hospital Costs
Total costs are reasonable
• Ensure Equity / Stability Charges (unit rates) are reasonably related to costs. Fair and equitable rates to everyone Hospitals are compensated fairly (Provide financial
stability) Predictability for payors and hospitals
• Maximize Access to Care All hospitals and payors share in responsibility of
caring for the poor and uninsured
• Provide Accountability System checks and balances Public disclosure
![Page 6: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/6.jpg)
6
The Formation of the HSCRC• 1971 - Initial legislation enacted by the General Assembly
– Independent body within the Department of Health and Mental Hygiene– HSCRC given the authority to establish hospital rates
Legislative Mandate• Control Costs
Total costs are reasonable
• Ensure Equity Fair and equitable rates to everyone (charges are
reasonably related to costs) Hospitals are compensated fairly (Maintain solvency of
efficient hospitals)
• Maximize Access All hospitals share in responsibility of caring for the
poor and uninsured
• Provide Accountability System checks and balances Public disclosure
Regulatory Jurisdiction (Rates)
Includes: • Inpatient services• Outpatient services “at the hospital”
Excludes: • Physician/Professional Fee/Part B Activity• Other operating revenue• Non operating revenue
![Page 7: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/7.jpg)
7
The Formation of the HSCRC• 1971 - Initial legislation enacted by the General Assembly
– Independent body within the Department of Health and Mental Hygiene– HSCRC given the authority to establish hospital rates
• 1974 – HSCRC began setting unit rates for hospitals after 3 yr phase in– Authority extended only to non-federal insurers
![Page 8: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/8.jpg)
8
The Formation of the HSCRC• 1971 - Initial legislation enacted by the General Assembly
– Independent body within the Department of Health and Mental Hygiene– HSCRC given the authority to establish hospital rates
• 1974 – HSCRC began setting unit rates for hospitals after 3 yr phase in– Authority extended only to non-federal insurers
• 1977 – Maryland granted temporary “waiver” by federal govt. to test alternative payment approaches– Exempted the state from national Medicare and Medicaid reimbursement requirements
Maryland becomes an “All Payor” state
![Page 9: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/9.jpg)
9
The Formation of the HSCRC• 1971 - Initial legislation enacted by the General Assembly
– Independent body within the Department of Health and Mental Hygiene– HSCRC given the authority to establish hospital rates
• 1974 – HSCRC began setting unit rates for hospitals after 3 yr phase in– Authority extended only to non-federal insurers
• 1977 – Maryland granted temporary “waiver” by federal govt. to test alternative payment approaches– Exempted the state from national Medicare and Medicaid reimbursement requirements
• 1980 – Medicare exemption became permanent (with stipulations) in Maryland– Continue to be the only state with this “waiver”
![Page 10: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/10.jpg)
10
HSCRC’s Mandate
• Ensure Equity / Fairness / Stability
• Maximize Access to Care
• Contain Hospital Costs / Total Costs are Reasonable
• Provide Accountability
![Page 11: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/11.jpg)
11
HSCRC’s Mandate
• Ensure Equity / Fairness / Stability
• Maximize Access to Care
• Contain Hospital Costs / Total Costs are Reasonable
• Provide Accountability
![Page 12: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/12.jpg)
12
“All Payor” Hospital Rate Setting SystemUnit Rates
• HSCRC– Establish and approve rates for each unit of service (Room and Board,
imaging, lab, etc…)• Hospital specific
– Unit rates are to be reasonably related to underlying costs• Including social costs of uncompensated care (bad debt / charity)
• Hospitals– Required to charge all payors at HSCRC approved unit rates
• Payors (All)– Required to pay hospitals based on each hospitals approved unit rates
• Payors given the ability to deny payment of care for lack of medical necessity
![Page 13: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/13.jpg)
13
“All Payor” Hospital Rate Setting SystemIllustration
Dear Mr. Jones35 year old Pneumonia Patient
UnitServices Units Rates Charges Room & Board 4 Days $500 $2,000 Emergency Room 1 Visit $125 $125 Operating Room 50 Mins. $20 $1,000 Lab 40 Tests $10 $400 X-Ray 5 Tests $100 $500
Please pay this Amount $4,025
(Non-Medicare)
Dear Mr. Smith75 year old Hip Fracture
UnitServices Units Rates Charges Room & Board 8 Days $500 $4,000 Emergency Room 1 Visit $125 $125 Operating Room 100 Mins. $20 $2,000 Lab 5 Tests $10 $50 X-Ray 10 Tests $100 $1,000
Please pay this Amount $7,175
(Medicare)
![Page 14: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/14.jpg)
14
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Medicare/Mcaid Comm. SelfPay Avg.
Cost Payments
Nation
Hospital Reimbursement Maryland vs. Rest of Nation
![Page 15: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/15.jpg)
15
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Medicare/Mcaid Comm. SelfPay Avg.
Cost Payments
Nation
Hospital Reimbursement Maryland vs. Rest of Nation
5% Margin
![Page 16: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/16.jpg)
16
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Medicare/Mcaid Comm. SelfPay Avg.
Cost Payments
Nation
Hospital Reimbursement Maryland vs. Rest of Nation
Charge to Cost Ratio (Illus.)
0%
50%
100%
150%
200%
250%
300%
Maryland Nation
Cost Mark-up
2.5 to 1
Mostly attributable to pricing needed
to maximize reimbursement
given need to cost shift.
5% Margin
![Page 17: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/17.jpg)
17
0%
50%
100%
150%
200%
250%
300%
Maryland Nation
Cost Mark-up
2.5 to 1
Charge to Cost Ratio (Illus.)
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Medicare/Mcaid Comm. SelfPay Avg.
Cost Payments
Nation
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Medicare/Mcaid Comm. SelfPay Avg.
Cost Payments
Maryland
Hospital Reimbursement Maryland vs. Rest of Nation
![Page 18: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/18.jpg)
18
0%
50%
100%
150%
200%
250%
300%
Maryland Nation
Cost Mark-up
1.2 to 1 2.5 to 1
Charge to Cost Ratio (Illus.)
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Medicare/Mcaid Comm. SelfPay Avg.
Cost Payments
Nation
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Medicare/Mcaid Comm. SelfPay Avg.
Cost Payments
Maryland
Mostly attributable to the cost of
uncomp. care, contractual
allowances, and profit
Hospital Reimbursement Maryland vs. Rest of Nation
![Page 19: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/19.jpg)
19
0%
50%
100%
150%
200%
250%
300%
Maryland Nation
Cost Mark-up
1.2 to 1 2.5 to 1
Charge to Cost Ratio (Illus.)
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Medicare/Mcaid Comm. SelfPay Avg.
Cost Payments
Nation
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Medicare/Mcaid Comm. SelfPay Avg.
Cost Payments
Maryland
Mostly attributable to the cost of
uncomp. care, contractual
allowances, and profit
Hospital Reimbursement Maryland vs. Rest of Nation
HSCRC Approved Discounts
• Medicare/Medicaid 6.0%• MCare/MCaid HMO’s 4.0%• Advance Financing 2.25%• Prompt Pay 1%-
2.25%
![Page 20: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/20.jpg)
20
0%
50%
100%
150%
200%
250%
300%
Maryland Nation
Cost Mark-up
1.2 to 1 2.5 to 1
Charge to Cost Ratio (Illus.)
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Medicare/Mcaid Comm. SelfPay Avg.
Cost Payments
Nation
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Medicare/Mcaid Comm. SelfPay Avg.
Cost Payments
Maryland
Mostly attributable to the cost of
uncomp. care, contractual
allowances, and profit
Hospital Reimbursement Maryland vs. Rest of Nation
Pillar of HSCRC System
Ensure Equity and Fairness
![Page 21: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/21.jpg)
21
HSCRC’s Mandate
• Ensure Equity / Fairness / Stability
• Maximize Access to Care
• Contain Hospital Costs / Total Costs are Reasonable
• Provide Accountability
![Page 22: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/22.jpg)
22
HSCRC Impact – Maximizing Access
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
0
100
200
300
400
500
600
700
800
900
1000
1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Perc
ent o
f Tot
al G
ross
Pat
ient
Rev
enue
Amou
nt in
Unc
ompe
nsat
ed C
are
(Mill
ions
)
Fiscal Year
Statewide Actual Uncompensated Care1977 - 2010
$ UCC (millions) % Total Revenue
![Page 23: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/23.jpg)
23
HSCRC’s Mandate
• Ensure Equity / Fairness / Stability
• Maximize Access to Care
• Contain Hospital Costs / Total Costs are Reasonable
• Provide Accountability
![Page 24: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/24.jpg)
24
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
'76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92
HSCRC Impact – Control CostsDifference in Cost per Case: Maryland vs. Nation
Model of Success
Maryland costs per case had improved dramatically from 25% higher than nation to
12% below in 1992
Source: Maryland Hospital Association
![Page 25: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/25.jpg)
25
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
'76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92
HSCRC Impact – Control CostsDifference in Cost per Case: Maryland vs. Nation
Illustration
MD Nation % Diff’76 $1,000 $800 +25%’92 $1,640 $1,865 -12%
Source: Maryland Hospital Association
![Page 26: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/26.jpg)
26
Maryland Hospitals vs. US HospitalsDifference in Net Operating Revenue per Case
-14.00%-12.00%-10.00%
-8.00%-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
Despite significant reduction in costs, operating profits
(1%-2%) at Maryland hospitals continued to lag
national levels.
![Page 27: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/27.jpg)
27
Maryland Hospitals vs. US HospitalsDifference in Net Operating Revenue per Case
-14.00%-12.00%-10.00%
-8.00%-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
HSCRC began to loosen rate constraints in mid/late ’90’s
and hospital profitability improved.
![Page 28: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/28.jpg)
28
Maryland Hospitals vs. US HospitalsDifference in Net Operating Revenue per Case
-14.00%-12.00%-10.00%
-8.00%-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
HSCRC began to loosen rate constraints in mid/late ’90’s
and hospital profitability improved.
![Page 29: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/29.jpg)
29
Maryland Hospitals vs. US HospitalsDifference in Net Operating Revenue per Case
-14.00%-12.00%-10.00%
-8.00%-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
Federal Government implemented Balanced Budget Act (BBA) limiting Medicare growth to
inflation minus 1%
HSCRC Corrective Actions:• System Correction Factor
(2000)• 1% Across the Board Rate
Reduction (2001)• System Reinvention
Introduction of Charge per Case System (CPC)
• 1st Three Year Deal
![Page 30: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/30.jpg)
30
Dear Mrs. Jones
UnitServices Units Rates Charges
Room & Board 4 Days $500 $2,000 Emergency Room 1 Visit $125 $125 Operating Room 50 Mins. $20 $1,000 Lab 40 Tests $10 $400 X-Ray 5 Tests $100 $500 Supplies/Drugs Usage $540
Please pay this Amount $4,565
Patient Bill (Unit Rates)
$4,565
$13,830
$2,005
Charge per Case Target
$6,800
Must Average
Inpatient Charge Per Case System (CPC)Hospitals continue to charge at HSCRC established unit rates but are also must
comply with its HSCRC established Charge Per Case Target.
![Page 31: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/31.jpg)
31
Maryland Hospitals vs. US HospitalsDifference in Net Operating Revenue per Case
-14.00%-12.00%-10.00%
-8.00%-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
![Page 32: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/32.jpg)
32
Maryland Hospitals vs. US HospitalsDifference in Net Operating Revenue per Case
-14.00%-12.00%-10.00%
-8.00%-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
Rate restraints on Maryland Hospitals had intended impact
of improvement relative to US but
Hospital profitability severely deteriorated.
![Page 33: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/33.jpg)
33
Maryland Hospitals vs. US HospitalsDifference in Net Operating Revenue per Case
-14.00%-12.00%-10.00%
-8.00%-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
![Page 34: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/34.jpg)
34
Maryland Hospitals vs. US HospitalsDifference in Net Operating Revenue per Case
-14.00%-12.00%-10.00%
-8.00%-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
HSCRC again loosened rate constraints and hospital profitability improved.
HSCRC implemented APR-DRG (Severity
Classification) methodology.
![Page 35: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/35.jpg)
35
Maryland Hospitals vs. US HospitalsDifference in Net Operating Revenue per Case
-14.00%-12.00%-10.00%
-8.00%-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
HSCRC again loosened rate constraints and hospital profitability improved.
HSCRC implemented APR-DRG (Severity
Classification) methodology.Rate Capacity by Case (Before APR’s)
Charge Case RatePer Mix Capacity
Case Case Index Per CasePneumonia 8,000$ 0.7800 6,240$
Rate Capacity by Case (After APR’s)Charge Case Rate
Per Mix CapacityCase Case Index Per Case
Pneumonia Minor (1) 8,000$ 0.4300 3,440$ Moderate (2) 8,000$ 0.5780 4,624$ Major (3) 8,000$ 0.8880 7,104$ Extreme (4) 8,000$ 1.5000 12,000$
![Page 36: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/36.jpg)
36
Maryland Hospitals vs. US HospitalsDifference in Net Operating Revenue per Case
-14.00%-12.00%-10.00%
-8.00%-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10
“Hallmark” of Maryland Rate Setting System
So there’s consensus for Maryland to be below nation
– but how far?Source: Maryland Hospital Association
Current Debate:• Where do we go now?• Impact of Healthcare
reform?
![Page 37: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/37.jpg)
37
The Making of the HSCRC• 1971 - Initial legislation enacted by the General Assembly
– Independent body within the Department of Health and Mental Hygiene– HSCRC given the authority to establish hospital rates
• 1974 – HSCRC began setting unit rates for hospitals after 3 yr phase in– Authority extended only to non-federal insurers
• 1977 – Maryland granted temporary “waiver” by federal govt. to test alternative payment approaches– Exempted the state from national Medicare and Medicaid reimbursement requirements
• 1980 – Medicare exemption became permanent (with stipulations) in Maryland– Continue to be the only state with this “waiver”
There’s a “Catch” – There’s always a “Catch”?
“The Waiver Test”
On-going demonstration that the cumulative rate of growth in Medicare payments to Maryland hospitals is no greater than the cumulative rate of growth in Medicare payments to hospitals nationally over the same time period.
National MarylandMedicare MedicarePmt/Case Pmt/Case
Base Period (1981) 2,293$ 2,972$ Measurement Period (Sept 2010) 10,557$ 12,488$
Cummulative Growth Rate 360.4% 320.2% (Absolute Test)
Relative Margin Waiver Cushion 9.57% (HSCRC Calc)
![Page 38: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/38.jpg)
38
The Making of the HSCRC• 1971 - Initial legislation enacted by the General Assembly
– Independent body within the Department of Health and Mental Hygiene– HSCRC given the authority to establish hospital rates
• 1974 – HSCRC began setting unit rates for hospitals after 3 yr phase in– Authority extended only non-federal insurers
• 1977 – Maryland granted temporary “waiver” by federal govt. to test alternative payment approaches– Exempted the state from national Medicare and Medicaid reimbursement requirements
• 1980 – Medicare exemption became permanent in Maryland– Continue to be the only state with this “waiver”
Watch the Catch?“The Waiver Test”
On-going demonstration that the cumulative rate of growth in Medicare payments to Maryland hospitals is no greater than the cumulative rate of growth in Medicare payments to hospitals nationally over the same time period.
Source: HSCRC
Relative Margin Waiver CushionJune 2006 – Projected June 2013
Projected FutureDeterioration
11.7%
11.0%
10.3%
9.1%
8.4% 8.5%
6.8% 6.6% 6.6%
5.8%
6.7%
7.6%
9.5%
10.5%10.2%
10.5%10.4%
9.6%
8.5%
6.7%
4.6%
2.6%2.2%
1.9%1.5% 1.4%
1.1%0.8%
0.5%
12.2%12.1%
11.3%
10.3%
8.5%
6.3%
4.3%
5.6%5.2%
4.8% 4.7%4.5%
4.1%3.8%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
Maryland Relative Waiver Test2006 - 2013
Actual + Forecast Base + MSP + IPPS Increase
Last Waiver Letter
09/2010
ForecastActual
EstimatedCurrentPosition9/30/11
Potential adjustments to national trend
would improve results
![Page 39: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/39.jpg)
39
The Making of the HSCRC• 1971 - Initial legislation enacted by the General Assembly
– Independent body within the Department of Health and Mental Hygiene– HSCRC given the authority to establish hospital rates
• 1974 – HSCRC began setting unit rates for hospitals after 3 yr phase in– Authority extended only non-federal insurers
• 1977 – Maryland granted temporary “waiver” by federal govt. to test alternative payment approaches– Exempted the state from national Medicare and Medicaid reimbursement requirements
• 1980 – Medicare exemption became permanent in Maryland– Continue to be the only state with this “waiver”
Watch the Catch?“The Waiver Test”
On-going demonstration that the cumulative rate of growth in Medicare payments to Maryland hospitals is no greater than the cumulative rate of growth in Medicare payments to hospitals nationally over the same time period.
Source: HSCRC
Relative Margin Waiver CushionMarch 1999 – September 2008
0%
5%
10%
15%
20%
25%
Maryland Medicare Waiver TestRelative Margin Waiver Cushion
March 1996 - September 2008
`
v
Tip Point10%
HSCRC Forecast
Overarching Concern for Maryland Hospitals
Changes to the healthcare delivery system will challenge the current waiver test.• Shift of cases to Observation increases the average
charge per admission in Maryland
• Impact of 2-midnight rule
• New payment initiatives (TPR, ARR, etc.) provide incentives to reduce utilization, increasing the average charge per admission
• Medicaid budget issues
The HSCRC Staff, MHA, Payors and CMS are reviewing the structure of the current Waiver Test.
![Page 40: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/40.jpg)
40
The Triple Aim of Healthcare
• Improve Healthcare Outcomes – clinical outcomes
• Improve the Patient’s Healthcare Experience
• Reduce the Cost-of-Care – “bending the cost curve”
![Page 41: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/41.jpg)
41
Initiatives Designed to Control Growth
• Charge per Visit: Implemented in 2011…formally disbanded in FY12– Charge per Case (CPC) like revenue constraint system for outpatient
services– Designed to constrain growth in outpatient utilization, particularly
supplies and drugs– Based on 3M’s Ambulatory Payment Groups (APGs), similar to
DRG/APRDRG grouping of inpatient cases; Outpatient visits are more diverse, and there are many more visits than inpatient admissions
– Challenge with assessing CPV on a “real time” basis
![Page 42: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/42.jpg)
42
Initiatives Designed to Control Growth
• Quality-Based Reimbursement– Maryland Hospital Acquired Condition (MHAC) program
• Identifies Potentially Preventable Complications using diagnosis and procedure data
• Calculates actual versus expected rates of complications• Hospitals are reward or penalized based on performance relative to their
peers– Quality Based Reimbursement (QBR) program
• Process of care measures (core measure) and patient satisfaction scores (HCAHPS)
• Similar to MHAC, hospitals are scaled based on relative performance Programs are changing, but even more revenue at risk
![Page 43: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/43.jpg)
43
Initiatives Designed to Control Growth
• Expansion of Total Patient Revenue (“TPR”) Methodology– In 2010, eight hospitals converted from CPC/CPV to TPR
• Currently 10 hospitals on TPR agreements– TPR provides hospitals with a “total” revenue base that is 100% fixed
• No change in revenue with increases or decreases in either volume or service mix
– Overall incentive to reduce service utilization and encourage improvements in population health
– If hospitals are successful in reducing utilization, AND, associated variable costs, profitability should increase
![Page 44: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/44.jpg)
44
Initiatives Designed to Control Growth
• Admission Readmission Revenue (“ARR”) Program – program formally eliminated in FY13– Designed as a hybrid to improve quality and reduce utilization– Supplements the CPC system and provides incentives to reduce
readmissions– Hospitals maintain a “fixed” level of revenue for current level of “all
cause” readmissions• No revenue increase for additional readmissions (penalty)• No revenue decrease for reduced readmissions (reward)
![Page 45: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/45.jpg)
45
Current Initiatives
• New Waiver Test– Effective January 1st, 2014, Maryland has a new five-year “waiver”
agreement w/CMS• Limits the Maryland all-payer rate of growth on a per capita basis to
3.58% per year – includes hospital regulated inpatient and outpatient services
• Must generate Medicare specific savings of $330 million during the five-year agreement
• Must reduce Maryland Medicare readmission rate to the National rate• Must reduce Maryland hospital-acquired conditions (MHAC’s) by 30%
![Page 46: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/46.jpg)
46
Current Initiatives
• Global Budget Model– Provides fixed revenue base on an annual basis for inpatient and
outpatient regulated revenue• May be adjusted in the future to more accurately reflect market share• Receive annual inflation adjustments• Possibility for population and aging adjustments
– Changes the long-standing incentives that have been in-place regarding volume
– Forces hospitals to rethink, and possibly redesign, strategic and operating plans
These agreements will be a work-in-progress
![Page 47: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/47.jpg)
47
Future Initiatives
• Capitated and Other Bundled Service Arrangements– Provide payment upfront for a defined population of patients and/or a
specific service
• Gainsharing Models– Have the ability to partner with physicians to share in cost savings and
utilization management
![Page 48: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/48.jpg)
48
HSCRC’s Mandate
• Ensure Equity / Fairness / Stability
• Maximize Access to Care
• Contain Hospital Costs / Total Costs are Reasonable
• Provide Accountability
![Page 49: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/49.jpg)
49
HSCRC Impact – AccountabilityReasonableness of Charges (ROC) and Rate Adjustments
• ROC used by HSCRC and hospitals to evaluate cost effectiveness on a per case basis relative to a peer group.– Adjustments to cost (CMI, Labor, Markup, Medical Education, etc.)– Four peer groups: Major Teaching, Minor Teaching, Non-Teaching, Academic Medical
Center (JHH and UMMC)• HSCRC approves rate adjustments to hospitals annually
– Across the board inflation adjustments + Hospital specific changes in case mix– Other adjustments (program, prior year corrections, etc..)– Annual rate adjustments are “scaled,” based on relative ROC performance
• Higher “cost” hospitals receive a lower update; Lower “cost” hospitals receive a higher update• Hospitals reserve the right ask for additional rates if current rate structure is
not adequate. (Favorable ROC Position)– File “Full” rate application or “Partial” rate application (CON approved capital)
• HSCRC reserves the right to take corrective actions against high cost hospitals (Unfavorable ROC Position), via spenddowns or Full Rate Setting
![Page 50: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/50.jpg)
50
HSCRC Impact – AccountabilityDisclosure of Information and Performance
• High degree of availabilty– Maryland system is based on most comprehensive and timely
information available
• Multiple reporting requirements of Hospitals• Monthly revenue and utilization• Annual filings• Community Benefit Report• Reporting by payer and in-state vs. out-of-state• New data tape submission requirements – now monthly
• Public Disclosure Report prepared annually by the HSCRC
Communication between hospitals and HSCRC becomes even more important in new
environment
![Page 51: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/51.jpg)
Additional Information
51
![Page 52: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/52.jpg)
52
HSCRC Organization Chart
CommissionersJohn Colmers, Chairman
(7 Member Panel appointed by Governor)
Executive StaffDonna Kinzer: Executive Dir.
Stephen Ports: Principal Deputy Dir.
Rate SettingJerry Schmith Deputy Director
Research & MethodologySule Calikoglu, Ph.D.
Deputy Director
Legal Dept.Stan Lustman / Leslie Schulman
Assistant Attorney General
![Page 53: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/53.jpg)
53
HSCRC Current Commissioners(Seven member panel appointed by Governor)
John Colmers – Chairman 2011Former Secretary, MD Dept of Budget and Management
Herbert Wong, Ph.D. – Vice Chairman 2005Senior Economist, Agency for Healthcare Research & Quality
Stephen F. Jencks, M.D., M.P.H. 2012Institute for Healthcare Improvement
George H. Bone, M.D. 2010Private Practice Physician
Bernadette C. Loftus 2011Associate Executive Director, The Permanente Medical Group
Thomas R. Mullen 2011President, Mercy Health Services
Jack C. Keane 2011Independent Consultant
Appointed
![Page 54: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/54.jpg)
54
HSCRC 2014 Meeting Schedule
February 5March 12
April 9May 14June 11July 9
August 13September 10
October 15November 12December 10
![Page 55: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/55.jpg)
55
HSCRC and Other Health Care Links
• Health Services Cost Review Commission (HSCRC)– www.hscrc.state.md.us
• Maryland Hospital Association (MHA)– www.mdhospitals.org
• Healthcare Financial Management Association (HFMA)– www.hfma.org
• HighMark (Medicare Fiscal Intermediary)– www.highmarkmedicareservices.com
![Page 56: History and Overview of the HSCRC (Health Services Cost Review Commission)](https://reader035.vdocuments.mx/reader035/viewer/2022062815/5681695d550346895de111bd/html5/thumbnails/56.jpg)
Closing Comments
56