HSCRC Regulatory Update

Mitch Lomax, Saint Agnes HealthcareJerry Schmith, Maryland Health Services Cost Review

Commission

August 21, 2015

2

Global Budget/Total Patient Revenue (GBR/TPR) Compliance

3

GBR/TPR Compliance

• Two sets of Price Corridors for GBR and TPR hospitals:1). Overall Approved Total Revenue Levels under GBR or TPR agreement.

2). Unit Rate Compliance

• Referencing Documents:1). October 2014 Addendum to Global Budget Agreement – Section V. Compliance

2). October 6, 2014 HSCRC memo “December 31, 2014 Revenue Targets and Unit Rate Compliance”

3). March 20, 2015 HSCRC memo “Unit Rate Compliance”

4

GBR/TPR Compliance

• Interim (6-month) GBR/TPR compliance – Target equal to 50% of overall GBR/TPR target for most hospitals

(hospitals with significant seasonality may have a different target)– Target provided to assure that statewide revenue for the calendar year

does not exceed the revenue limits provided under the new waiver agreements

– Hospitals expected to maintain charges at or below this limit. – “Soft target” for CY 2014 - No penalties applied for not complying

with CY 2014 interim targets.– Unit rate compliance penalties were not applied at December 31, 2014

5

GBR/TPR Compliance• Annual GBR/TPR Compliance

– Hospitals are expected to monitor and adjust unit rate charges on an ongoing basis to ensure that it operates within the Annual GBR target.

– Price Variances will be added/subtracted to the GBR target for the subsequent rate year.

– To assure compliance, HSCRC staff will apply penalties for charges outside of the overall GBR/TPR revenue target:

* If HSCRC staff determines that a hospital intentionally overcharged, then the overcharge corridor exempting an overcharge of up to 0.5% will be eliminated, and a 20% penalty will be applied.

Overcharge/ Undercharge

Range

Overcharge/ Undercharge

Penalty

0 - .5% * 0%

.5 - 1.0% 20%

1.0% - 2% 50%

> 2% undercharge 100%

6

Unit Rate Compliance• Hospitals may increase or decrease rates across all rate centers

within a +/- 5% corridor without notifying the Commission.• If hospitals need to increase or decrease rates by more than 5% to

maintain overall GBR compliance, it must notify the Commission staff.

• Limit may be extended to +/-10% at the discretion of the HSCRC staff, provided the hospital provides satisfactory evidence (including documentation) that this expansion is necessary to meet the revenue constraints for the Rate Year.

• All approved requests will be granted for a maximum of three months. Hospitals are free to submit requests to continue these approvals.

7

Unit Rate Compliance• Hospitals will generally need to spread rate adjustments across all

centers, avoiding adjustments concentrated in a few rate centers, unless it has received approval from the HSCRC staff for an alternative approach.

• Unit rate compliance will be measured for the full rate year. However, compliance is measured by staff monthly, and any large rate shifts among centers will be addressed.

• Interim penalties for three consecutive months (rolling compliance) are not imposed

• Charges beyond corridor shall be subject to penalties (40% of price variance). Corridor Expansion Calculation

Jul - Mar Apr - Jun Fiscal year75% 25% 100%

+/-5% +/- 10% +/- 6.3%

8

Unit Rate Volumes in Rate OrderDemo/Population

Adjustment YE 3/31/15 AdjustmentYE 3/31/15 YE 3/31/15 Factor Volumes Volumes to RR

Center Rate Volume Revenues Volumes @ FY 2015 Rates 1.01 Adjusted 1.30%a b c d e=axd f=Sums of e/c g=d/f h=g x Pop

MSG 1230.8076 60,420 74,364,916$ 54,506 67,086,401$ 1.0093 54,003 54,707

OBS 974.7332 5,167 5,036,121 5,322 5,187,530 1.0093 5,273 5,342

MIS 2586.5688 3,683 9,525,968 4,089 10,576,480 1.0093 4,051 4,104

CCU 2038.3569 1,819 3,707,354 1,587 3,234,872 1.0093 1,572 1,593

NUR 526.8586 4,352 2,292,799 4,505 2,373,498 1.0093 4,463 4,522

ADM 113.9175 17,799 2,027,577 16,236 1,849,564 1.0093 16,086 16,296

EMG 33.5587 736,321 24,709,975 755,947 25,368,588 1.0093 748,970 758,734

CL 37.7883 339,848 12,842,295 349,921 13,222,933 1.0093 346,691 351,211

OR 34.1804 1,172,953 40,092,023 1,186,858 40,567,307 1.0093 1,175,904 1,191,233

ANS 2.0932 1,537,181 3,217,658 1,581,181 3,309,760 1.0093 1,566,587 1,587,010

SDS 568.8928 7,416 4,218,919 7,795 4,434,520 1.0093 7,723 7,824

LAB 1.9512 21,671,760 42,286,588 19,430,186 37,912,761 1.0093 19,250,848 19,501,811

RAD 35.0596 576,359 20,206,901 561,159 19,674,000 1.0093 555,980 563,228

NUC 24.1441 173,955 4,199,990 139,696 3,372,828 1.0093 138,407 140,211

CAT 6.1893 816,382 5,052,865 813,918 5,037,612 1.0093 806,406 816,918

MRI 32.1709 107,374 3,454,329 99,749 3,209,016 1.0093 98,828 100,117

OBV 73.3710 147,026 10,787,422 266,905 19,583,093 1.0093 264,442 267,889

MSS 1.5057 28,669,301 43,167,511 28,398,752 42,760,144 1.0093 28,136,636 28,503,439

CDS 2.0141995 20,714,857 41,723,855 23,553,699 47,441,849 1.0093 23,336,302 23,640,525

Total Revenue 352,915,065$ 77,232,010 356,202,756$ 1.0093

Current Rate Order7/1/2014

Compares price-leveled volume for 12 months ended

March 2015 to FY 14 rate order

volume.

9

Unit Rate Volumes in Rate OrderDemo/Population

Adjustment YE 3/31/15 AdjustmentYE 3/31/15 YE 3/31/15 Factor Volumes Volumes to RR

Center Rate Volume Revenues Volumes @ FY 2015 Rates 1.01 Adjusted 1.30%a b c d e=axd f=Sums of e/c g=d/f h=g x Pop

MSG 1230.8076 60,420 74,364,916$ 54,506 67,086,401$ 1.0093 54,003 54,707

OBS 974.7332 5,167 5,036,121 5,322 5,187,530 1.0093 5,273 5,342

MIS 2586.5688 3,683 9,525,968 4,089 10,576,480 1.0093 4,051 4,104

CCU 2038.3569 1,819 3,707,354 1,587 3,234,872 1.0093 1,572 1,593

NUR 526.8586 4,352 2,292,799 4,505 2,373,498 1.0093 4,463 4,522

ADM 113.9175 17,799 2,027,577 16,236 1,849,564 1.0093 16,086 16,296

EMG 33.5587 736,321 24,709,975 755,947 25,368,588 1.0093 748,970 758,734

CL 37.7883 339,848 12,842,295 349,921 13,222,933 1.0093 346,691 351,211

OR 34.1804 1,172,953 40,092,023 1,186,858 40,567,307 1.0093 1,175,904 1,191,233

ANS 2.0932 1,537,181 3,217,658 1,581,181 3,309,760 1.0093 1,566,587 1,587,010

SDS 568.8928 7,416 4,218,919 7,795 4,434,520 1.0093 7,723 7,824

LAB 1.9512 21,671,760 42,286,588 19,430,186 37,912,761 1.0093 19,250,848 19,501,811

RAD 35.0596 576,359 20,206,901 561,159 19,674,000 1.0093 555,980 563,228

NUC 24.1441 173,955 4,199,990 139,696 3,372,828 1.0093 138,407 140,211

CAT 6.1893 816,382 5,052,865 813,918 5,037,612 1.0093 806,406 816,918

MRI 32.1709 107,374 3,454,329 99,749 3,209,016 1.0093 98,828 100,117

OBV 73.3710 147,026 10,787,422 266,905 19,583,093 1.0093 264,442 267,889

MSS 1.5057 28,669,301 43,167,511 28,398,752 42,760,144 1.0093 28,136,636 28,503,439

CDS 2.0141995 20,714,857 41,723,855 23,553,699 47,441,849 1.0093 23,336,302 23,640,525

Total Revenue 352,915,065$ 77,232,010 356,202,756$ 1.0093

Current Rate Order7/1/2014

Aggregate volume change is applied

across the board to all rate centers.

10

Unit Rate Volumes in Rate OrderDemo/Population

Adjustment YE 3/31/15 AdjustmentYE 3/31/15 YE 3/31/15 Factor Volumes Volumes to RR

Center Rate Volume Revenues Volumes @ FY 2015 Rates 1.01 Adjusted 1.30%a b c d e=axd f=Sums of e/c g=d/f h=g x Pop

MSG 1230.8076 60,420 74,364,916$ 54,506 67,086,401$ 1.0093 54,003 54,707

OBS 974.7332 5,167 5,036,121 5,322 5,187,530 1.0093 5,273 5,342

MIS 2586.5688 3,683 9,525,968 4,089 10,576,480 1.0093 4,051 4,104

CCU 2038.3569 1,819 3,707,354 1,587 3,234,872 1.0093 1,572 1,593

NUR 526.8586 4,352 2,292,799 4,505 2,373,498 1.0093 4,463 4,522

ADM 113.9175 17,799 2,027,577 16,236 1,849,564 1.0093 16,086 16,296

EMG 33.5587 736,321 24,709,975 755,947 25,368,588 1.0093 748,970 758,734

CL 37.7883 339,848 12,842,295 349,921 13,222,933 1.0093 346,691 351,211

OR 34.1804 1,172,953 40,092,023 1,186,858 40,567,307 1.0093 1,175,904 1,191,233

ANS 2.0932 1,537,181 3,217,658 1,581,181 3,309,760 1.0093 1,566,587 1,587,010

SDS 568.8928 7,416 4,218,919 7,795 4,434,520 1.0093 7,723 7,824

LAB 1.9512 21,671,760 42,286,588 19,430,186 37,912,761 1.0093 19,250,848 19,501,811

RAD 35.0596 576,359 20,206,901 561,159 19,674,000 1.0093 555,980 563,228

NUC 24.1441 173,955 4,199,990 139,696 3,372,828 1.0093 138,407 140,211

CAT 6.1893 816,382 5,052,865 813,918 5,037,612 1.0093 806,406 816,918

MRI 32.1709 107,374 3,454,329 99,749 3,209,016 1.0093 98,828 100,117

OBV 73.3710 147,026 10,787,422 266,905 19,583,093 1.0093 264,442 267,889

MSS 1.5057 28,669,301 43,167,511 28,398,752 42,760,144 1.0093 28,136,636 28,503,439

CDS 2.0141995 20,714,857 41,723,855 23,553,699 47,441,849 1.0093 23,336,302 23,640,525

Total Revenue 352,915,065$ 77,232,010 356,202,756$ 1.0093

Current Rate Order7/1/2014

Demographic, market shift and MA utilization adjustments are applied to these

adjusted volumes.

11

Moving Services from Regulated to Unregulated

12

Moving Services from Regulated to Unregulated

• The GBR/TPR agreement requires a hospital to notify HSCRC staff if it moves services from an HSCRC regulated setting to an unregulated setting

• Once notified, hospital and HSCRC staff may negotiate a GBR/TPR cap adjustment to reflect the service shift

• Considerations can include:– Market impact– Fixed/variable costs– Replacement services– Impact on Medicare spend

13

FY 2016 Market Shift Adjustment

14

HSCRC Market Shift

• Rate Year 2016 rate orders reflect the HSCRC’s market shift adjustment, developed during the Fall 2014 / Spring 2015

• In summary:– Algorithm determines the “shift” among hospital volumes in each market (zip code +

service line; certain counties were aggregated from all county zip codes)• Volume increases compared to volume decreases• The smaller utilization change, increase or decrease, becomes the market limit

– See the example on the next page– Excludes potentially avoidable volume– Volumes are measured using Equivalent Case Mix Adjusted Discharges (ECMAD)– Financial impacts are calculated on a hospital and service line specific charge per

ECMAD

• HSCRC released its “final” RY2016 calculation on July 8, excluding outpatient oncology. The results are reflected on page 15.

15

HSCRC Market Shift

• Market Shift example (HSCRC, Payment Models Work Group, January 12, 2015)

Zipcode 210000; Orthopedic Surgery Year 1

Volume Year 2

Volume Volume Change

Proportion of Hospital Market Shift

A B C=B-A D = C /

Subtotal C

E = D * Allowed

Market Shift HOLY CROSS 1,000 1,500 500 76% 99 SUBURBAN 500 600 100 15% 20 MONTGOMERY GENERAL 50 100 50 8% 10 JOHNS HOPKINS - 4 4 1% 1

Utilization Increase 654 129 SINAI 500 500 - 0% - UPPER CHESAPEAKE HEALTH 500 400 (100) 78% (100) SHADY GROVE 50 25 (25) 19% (25) UNIVERSITY OF MARYLAND 4 - (4) 3% (4)

Utilization Decrease (129) (129) Zip Total (Net of Increase and Decrease) 525 -

Allowed Market Shift 129

Hospital Name/Serviceline/ZipcodeECMAD

FY14ECMAD

FY15ECMAD

GROWTHMarket

ShiftTotal Charge

FY14Total Charge

FY15Charge Growth

Average Hospital

Service Line Charge

FY14

Market Shift

AdjustmentJOHNS HOPKINS 36,137 38,180 2,043 921 $603,855,329 $595,500,458 -$8,354,871 $16,516 $7,714,776UM ST. JOSEPH 12,027 13,304 1,277 758 $134,623,481 $136,176,001 $1,552,520 $11,735 $4,161,524HOLY CROSS GERMANTOWN - 782 782 379 $0 $8,904,215 $8,904,215UMMC MIDTOWN 4,111 4,702 591 305 $71,459,672 $76,964,932 $5,505,260 $18,003 $3,249,062UNION MEMORIAL 12,396 13,061 665 280 $158,600,070 $166,481,618 $7,881,548 $12,615 $1,735,895HOLY CROSS 16,144 16,958 814 272 $185,980,243 $185,756,682 -$223,561 $12,442 $1,039,213FREDERICK MEMORIAL 10,389 11,292 903 259 $114,256,797 $124,578,690 $10,321,894 $12,558 $1,347,105HOPKINS BAYVIEW MED CTR 15,099 15,781 683 250 $195,292,425 $203,315,431 $8,023,007 $13,551 $1,795,780FRANKLIN SQUARE 15,037 15,506 469 245 $184,061,098 $184,340,959 $279,861 $11,667 $1,420,348PRINCE GEORGE 6,217 6,902 685 186 $97,793,938 $105,333,091 $7,539,152 $16,117 $1,396,315ST. MARY 5,463 5,920 457 173 $65,367,262 $66,970,761 $1,603,499 $12,793 $972,173ST. AGNES 12,031 12,413 382 104 $149,817,097 $156,237,383 $6,420,286 $13,748 $656,125SUBURBAN 9,544 9,840 295 76 $111,597,360 $111,074,307 -$523,054 $13,472 $333,569ANNE ARUNDEL 19,871 20,492 621 69 $205,978,594 $211,138,441 $5,159,847 $10,334 $396,143GARRETT COUNTY 1,237 1,534 297 49 $14,682,669 $15,093,048 $410,379 $13,626 $188,050WESTERN MARYLAND HEALTH SYSTEM 6,655 6,619 (36) 45 $87,744,459 $90,316,476 $2,572,016 $13,921 $248,759DOCTORS COMMUNITY 6,200 6,439 239 40 $81,618,849 $86,102,440 $4,483,591 $14,660 $373,537HOWARD COUNTY 10,395 10,752 357 38 $114,902,240 $118,455,657 $3,553,417 $10,902 $395,457DORCHESTER 1,335 1,410 76 22 $19,577,837 $21,673,807 $2,095,970 $14,745 $202,127BOWIE HEALTH 540 583 43 14 $7,357,608 $8,920,353 $1,562,745 $13,623 $97,155LEVINDALE - 9 9 7 $0 $952,155 $952,155QUEEN ANNES 243 280 38 4 $2,464,071 $2,469,303 $5,232 $10,157 $18,298MCCREADY 423 436 13 2 $7,662,749 $6,597,857 -$1,064,891 $19,484 -$40,155PENINSULA REGIONAL 11,029 11,218 189 (3) $121,994,020 $127,578,430 $5,584,410 $11,581 -$55,102GERMANTOWN 618 622 3 (13) $6,648,819 $6,839,713 $190,893 $10,753 -$72,215HARFORD 3,195 3,166 (29) (18) $41,362,658 $41,896,730 $534,072 $12,870 -$125,166ATLANTIC GENERAL 2,927 3,054 127 (19) $31,723,502 $30,535,457 -$1,188,045 $11,128 -$108,402CHESTERTOWN 1,466 1,457 (9) (37) $21,263,778 $23,848,456 $2,584,678 $15,418 -$341,212CHARLES REGIONAL 4,730 4,696 (35) (43) $58,527,738 $56,563,636 -$1,964,101 $12,743 -$37,376EASTON 5,155 5,090 (64) (48) $71,689,609 $68,084,090 -$3,605,519 $15,442 -$430,911FT. WASHINGTON 1,463 1,396 (66) (58) $16,432,957 $17,810,200 $1,377,243 $17,363 -$383,283MONTGOMERY GENERAL 5,112 5,261 149 (64) $62,891,561 $64,085,522 $1,193,961 $13,168 -$461,212CALVERT 4,249 4,232 (17) (68) $53,731,253 $56,994,852 $3,263,599 $14,013 -$401,728CARROLL COUNTY 7,259 7,028 (230) (70) $93,230,635 $93,936,573 $705,938 $14,917 -$396,380MERCY 15,632 15,513 (120) (74) $184,718,153 $187,880,221 $3,162,068 $12,478 -$601,739REHAB & ORTHO 3,468 3,374 (95) (99) $44,633,287 $46,516,123 $1,882,836 $15,591 -$704,634BALTIMORE WASHINGTON MEDICAL CENTER 12,845 12,992 147 (117) $147,713,685 $153,701,214 $5,987,529 $12,610 -$799,826MERITUS 9,195 8,987 (208) (124) $104,816,581 $107,383,297 $2,566,716 $11,933 -$709,616HARBOR 6,102 6,038 (64) (129) $80,034,053 $85,529,174 $5,495,122 $13,188 -$905,499UNION HOSPITAL OF CECIL COUNT 4,324 3,990 (334) (140) $56,431,911 $58,904,101 $2,472,190 $12,932 -$1,041,023BON SECOURS 2,681 2,475 (206) (172) $46,523,418 $47,489,627 $966,209 $21,313 -$1,562,367NORTHWEST 6,604 6,463 (141) (225) $87,760,812 $90,184,188 $2,423,376 $12,799 -$1,385,014UPPER CHESAPEAKE HEALTH 9,608 9,193 (415) (232) $110,245,055 $112,460,997 $2,215,942 $11,686 -$1,029,914SOUTHERN MARYLAND 7,090 6,848 (242) (255) $95,113,435 $98,495,310 $3,381,875 $20,049 -$1,493,265WASHINGTON ADVENTIST 7,110 7,020 (90) (256) $91,340,113 $97,716,918 $6,376,805 $13,829 -$1,464,523LAUREL REGIONAL 3,308 3,096 (212) (267) $44,245,144 $39,610,653 -$4,634,491 $14,937 -$1,937,225SINAI 18,647 18,497 (151) (274) $264,375,287 $277,710,399 $13,335,113 $14,351 -$1,977,215UNIVERSITY OF MARYLAND 28,506 28,361 (145) (280) $527,730,424 $536,087,140 $8,356,716 $17,965 -$1,822,357G.B.M.C. 14,014 13,689 (325) (437) $153,210,999 $159,541,812 $6,330,812 $12,153 -$2,278,961SHADY GROVE 13,074 12,857 (218) (458) $150,933,302 $159,379,529 $8,446,226 $11,827 -$2,846,113GOOD SAMARITAN 9,286 8,663 (623) (518) $107,279,322 $114,211,877 $6,932,555 $11,238 -$3,085,321

Grand Total 420,192 428,471 8,279 0 $5,491,295,360 $5,644,330,303 $153,034,943 $13,831 -$756,341

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HSCRC Market Shift

• In the July release, outpatient oncology services – infusion, chemotherapy and radiation therapy - were excluded as a result of “cycle” versus “individual” billing.– Individual patient records, and therefore EAPG weights, were not comparable

among hospitals.• To address this, HSCRC staff developed an alternative case weighting

method for outpatient oncology services (draft results on the next page)– Aggregates patient records using CRISP EID (or hospital medical record numbers if

EID isn’t available)– Assigns an EAPG hierarchy: infusion, chemotherapy and radiation therapy– Calculates an average “per diem” charge, dividing charges by patient “length of

stay” based on “From” and “Thru” dates– To create an outpatient weight, the average EAPG per diem charge is divided by the

average outpatient charge per visit– The average weight is multiplied by each hospital’s “length of stay” to calculate the

total outpatient case weight

Hospital NameECMAD

FY14ECMAD

FY15ECMAD

GROWTHMarket

ShiftTotal Charge

FY14Total Charge

FY15Charge Growth

Market Shift Adjustment

JOHNS HOPKINS 15,102 17,545 2,443 824 $78,835,798 $83,804,393 $4,968,595 $2,202,237UPPER CHESAPEAKE HEALTH 2,797 3,561 763 409 $14,987,109 $22,331,982 $7,344,873 $1,121,119UNION MEMORIAL 594 1,144 550 226 $5,680,850 $8,533,608 $2,852,758 $1,105,053ANNE ARUNDEL 5,654 6,331 677 181 $39,706,728 $39,830,113 $123,385 $651,969MONTGOMERY GENERAL 728 929 201 98 $7,002,731 $9,362,516 $2,359,785 $481,946HOPKINS BAYVIEW MED CTR 2,410 2,803 393 116 $15,906,988 $15,348,588 -$558,399 $393,183MERCY 3,903 4,542 639 118 $24,195,321 $26,327,407 $2,132,086 $374,586CARROLL COUNTY 1,687 1,890 203 91 $10,528,283 $10,283,054 -$245,229 $292,316UMMC MIDTOWN 3 21 17 8 $166,990 $620,647 $453,656 $207,019PENINSULA REGIONAL 3,373 3,649 276 61 $18,036,882 $18,650,394 $613,512 $166,650ST. MARY 1,062 1,272 210 54 $5,668,381 $6,778,419 $1,110,038 $146,208HOWARD COUNTY 255 309 54 26 $1,899,556 $2,304,975 $405,419 $99,431ATLANTIC GENERAL 357 491 134 32 $2,045,861 $2,864,130 $818,269 $94,885CHESTERTOWN 161 188 27 8 $1,683,137 $2,088,358 $405,222 $43,123SOUTHERN MARYLAND 7 39 32 10 $48,657 $404,942 $356,285 $36,347WASHINGTON ADVENTIST 405 408 3 6 $2,479,876 $3,060,537 $580,661 $19,739MCCREADY 7 8 1 1 $78,947 $33,845 -$45,102 $4,325BON SECOURS 57 69 12 1 $336,939 $548,803 $211,864 $2,302HARFORD 155 149 (6) 2 $342,542 $438,644 $96,103 $2,197GARRETT COUNTY 3 7 4 (0) $44,715 $65,507 $20,792 -$477PRINCE GEORGE 4 3 (1) (2) $87,548 $82,254 -$5,294 -$17,367NORTHWEST 857 985 128 (4) $8,540,332 $11,669,678 $3,129,346 -$22,017DORCHESTER 13 8 (5) (5) $140,640 $9,819 -$130,821 -$29,432WESTERN MARYLAND HEALTH SYSTEM 2,239 2,234 (5) (13) $14,916,139 $15,345,663 $429,523 -$45,900LAUREL REGIONAL 159 127 (31) (35) $507,635 $648,013 $140,378 -$57,915SINAI 4,160 4,378 218 (22) $25,962,185 $26,355,084 $392,899 -$69,894REHAB & ORTHO 69 0 (69) (61) $188,813 $11,480 -$177,333 -$84,878CALVERT 1,034 1,034 (0) (31) $5,928,849 $6,554,423 $625,574 -$90,333HOLY CROSS 526 512 (15) (39) $2,675,421 $2,612,730 -$62,691 -$101,227SUBURBAN 630 566 (63) (46) $2,703,191 $2,205,633 -$497,558 -$101,447CHARLES REGIONAL 449 394 (56) (57) $1,670,890 $1,678,111 $7,221 -$108,674MERITUS 446 406 (41) (35) $2,971,391 $2,969,616 -$1,775 -$118,208DOCTORS COMMUNITY 164 141 (22) (30) $1,511,619 $1,576,681 $65,061 -$142,216EASTON 1,390 1,387 (3) (38) $13,965,982 $14,090,302 $124,320 -$196,981SHADY GROVE 1,280 1,301 21 (65) $7,603,344 $7,614,028 $10,685 -$197,011HARBOR 290 217 (72) (82) $1,894,656 $1,199,994 -$694,662 -$275,312GOOD SAMARITAN 1,456 1,404 (53) (97) $10,995,402 $9,611,026 -$1,384,376 -$376,109UNION HOSPITAL OF CECIL COUNT 517 421 (96) (96) $4,231,039 $3,109,805 -$1,121,233 -$401,537BALTIMORE WASHINGTON MEDICAL CENTER 1,363 1,381 18 (89) $12,139,438 $11,204,866 -$934,572 -$405,022G.B.M.C. 4,323 4,341 18 (182) $26,206,608 $26,862,274 $655,665 -$565,905UNIVERSITY OF MARYLAND 9,909 10,560 651 (289) $47,160,534 $52,463,228 $5,302,693 -$704,690UM ST. JOSEPH 2,719 2,533 (186) (242) $22,908,992 $19,850,629 -$3,058,363 -$1,043,765ST. AGNES 2,980 2,666 (314) (352) $18,301,637 $17,450,987 -$850,650 -$1,105,553FRANKLIN SQUARE 2,917 2,733 (184) (359) $17,629,435 $16,514,537 -$1,114,897 -$1,109,222Grand Total 78,616 85,087 6,470 (0) $480,518,011 $505,371,725 $24,853,713 $73,542

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FY 2016 Demographic Adjustment

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Rate Year 2016 Demographic Adjustment

• The HSCRC’s demographic adjustment is applied to annually to hospital rates.

• Essentially a “prospective” adjustment for volume and service mix change

• The demographic adjustment reflects:– Age weighted population growth– Adjustment for potentially avoidable utilization– Each hospital’s unique service market (based on ECMAD)

• The aggregate results are then adjusted to the statewide average population growth reflected in the annual update, with certain adjustments

Hospital Population Growth based on Proportion of ECMADs by age and zipcode

HOSPID Hospital namePayment Type*

2015 Population Growth

2015 Age Adjusted Growth

CY 2014 All-Payer Percent PAU

2015 Age& PAU Adjusted

Growth

FY 2016 Demographic Adjustment

FY 16 -FY15 Age Adjusted

Growth Difference

FY 16 -FY15 PAU Percent

Difference

FY16 -FY15 Demographic Adjustment Difference

FY 2015 Age Adjusted Growth

Fy 2015 PAU Percent

FY 2015 Demographic Adjustment

210023 ANNE ARUNDEL GBR 0.90% 1.83% 11.03% 1.63% 0.66% 0.29% -0.46% -0.08% 1.54% 11.49% 0.74%210061 ATLANTIC GENERAL GBR 0.33% 1.29% 12.29% 1.13% 0.46% 0.19% 0.60% -0.07% 1.10% 11.69% 0.53%210043 BALTIMORE WASHINGTON MEDICAL CENTER GBR 1.27% 2.23% 18.82% 1.81% 0.74% 0.17% 0.89% -0.19% 2.06% 17.92% 0.93%210013 BON SECOURS GBR -0.17% 0.00% 25.11% 0.00% 0.00% -0.06% -0.67% -0.02% 0.06% 25.78% 0.02%210333 BOWIE HEALTH GBR 0.07% 0.46% 0.00% 0.46% 0.19% 0.25% 0.00% 0.07% 0.21% 0.12%210039 CALVERT TPR 1.48% 2.34% 11.18% 2.08% 0.52% 1.49% -1.45% 0.12% 0.85% 12.64% 0.40%210033 CARROLL COUNTY TPR 0.82% 2.35% 16.77% 1.96% 0.51% 1.60% 1.43% 0.16% 0.75% 15.33% 0.35%210035 CHARLES REGIONAL GBR 1.67% 2.53% 18.23% 2.07% 0.84% 0.87% -0.55% 0.10% 1.66% 18.78% 0.74%210030 CHESTERTOWN TPR -1.38% -0.73% 16.80% -0.61% 0.40% -1.31% -2.57% 0.15% 0.57% 19.37% 0.25%210051 DOCTORS COMMUNITY GBR 1.40% 2.73% 20.36% 2.17% 0.88% 0.57% -0.32% -0.06% 2.16% 20.69% 0.94%210010 DORCHESTER TPR 0.31% 1.52% 22.02% 1.18% 0.41% 1.37% 4.27% 0.34% 0.15% 17.75% 0.07%210037 EASTON TPR -0.08% 1.28% 14.52% 1.10% 0.41% 0.46% 1.32% 0.02% 0.82% 13.20% 0.39%210015 FRANKLIN SQUARE GBR 0.48% 0.97% 18.42% 0.79% 0.32% -0.23% 2.16% -0.23% 1.20% 16.26% 0.55%210005 FREDERICK MEMORIAL GBR 0.73% 1.71% 14.07% 1.47% 0.60% 0.08% -0.84% -0.16% 1.63% 14.90% 0.76%210060 FT. WASHINGTON GBR 0.92% 2.19% 19.71% 1.76% 0.71% 0.05% 4.09% -0.27% 2.14% 15.62% 0.99%210044 G.B.M.C. GBR 0.50% 1.08% 10.11% 0.97% 0.39% 0.15% -0.84% -0.06% 0.92% 10.94% 0.45%210017 GARRETT COUNTY TPR 0.55% 1.98% 10.48% 1.77% 0.27% 2.08% -0.93% 0.27% -0.10% 11.41% 0.00%210087 GERMANTOWN GBR 0.76% 0.48% 0.00% 0.48% 0.20% -0.39% 0.00% -0.28% 0.87% 0.48%210056 GOOD SAMARITAN GBR 0.32% 1.05% 18.04% 0.86% 0.35% -0.71% -1.10% -0.43% 1.76% 19.14% 0.78%210034 HARBOR GBR 0.49% 0.71% 15.89% 0.60% 0.24% -0.33% 0.18% -0.24% 1.04% 15.71% 0.48%210006 HARFORD GBR -0.18% 0.90% 19.33% 0.73% 0.29% -0.39% 3.17% -0.30% 1.29% 16.16% 0.59%210004 HOLY CROSS GBR 0.85% 1.16% 14.82% 0.99% 0.40% -0.27% 1.26% -0.28% 1.44% 13.56% 0.68%210065 HOLY CROSS GERMANTOWN

New Hospita 1.02% 1.37% 0.00% 1.37% 0.56%

210029 HOPKINS BAYVIEW MED CTR GBR 0.53% 0.81% 14.37% 0.70% 0.28% -0.22% -0.79% -0.20% 1.03% 15.15% 0.48%210048 HOWARD COUNTY GBR 1.35% 2.00% 15.44% 1.69% 0.69% 0.38% -0.09% -0.06% 1.62% 15.53% 0.75%210009 JOHNS HOPKINS GBR 0.45% 0.84% 10.08% 0.76% 0.31% 0.11% -2.84% -0.04% 0.73% 12.92% 0.35%210055 LAUREL REGIONAL GBR 0.95% 1.59% 16.26% 1.33% 0.54% -0.15% 0.90% -0.27% 1.75% 15.35% 0.81%210064 LEVINDALE GBR 1.96% 4.39% 0.00% 4.39% 1.78%210045 MCCREADY TPR -0.03% 0.09% 11.71% 0.08% 0.00% 0.56% -1.23% 0.00% -0.47% 12.95% 0.00%210008 MERCY GBR 0.51% 1.05% 8.66% 0.96% 0.39% 0.04% -1.08% -0.11% 1.01% 9.75% 0.50%210001 MERITUS TPR 0.29% 1.08% 15.64% 0.91% 0.51% 0.08% -1.53% 0.06% 0.99% 17.17% 0.45%210018 MONTGOMERY GENERAL GBR 0.96% 1.95% 14.70% 1.66% 0.67% 0.27% 0.45% -0.11% 1.68% 14.25% 0.79%210040 NORTHWEST GBR 0.74% 1.40% 19.77% 1.13% 0.46% -0.10% -3.14% -0.18% 1.50% 22.91% 0.63%210019 PENINSULA REGIONAL GBR 0.03% 0.51% 14.33% 0.44% 0.18% -0.35% 0.14% -0.23% 0.86% 14.19% 0.40%210003 PRINCE GEORGE GBR 0.65% 1.23% 15.25% 1.05% 0.42% 0.24% 0.11% -0.04% 0.99% 15.14% 0.46%210088 QUEEN ANNES GBR -0.98% -0.22% 0.00% -0.22% -0.09% 0.32% 0.00% -0.09% -0.54% 0.00%210058 REHAB & ORTHO GBR 0.65% 1.17% 7.58% 1.08% 0.44% 0.03% -0.76% -0.13% 1.14% 8.33% 0.57%210057 SHADY GROVE GBR 0.96% 1.43% 12.59% 1.25% 0.51% -0.21% 1.50% -0.29% 1.64% 11.09% 0.80%210012 SINAI GBR 0.55% 0.98% 11.83% 0.86% 0.35% -0.02% -2.30% -0.12% 1.00% 14.13% 0.47%210062 SOUTHERN MARYLAND GBR 1.49% 2.83% 20.76% 2.24% 0.91% 0.97% 2.27% 0.08% 1.86% 18.49% 0.83%210011 ST. AGNES GBR 0.66% 1.18% 17.36% 0.97% 0.39% -0.14% 0.14% -0.20% 1.32% 17.23% 0.60%210028 ST. MARY GBR 0.27% 1.39% 12.75% 1.21% 0.49% -0.18% 0.11% -0.26% 1.56% 12.63% 0.75%210022 SUBURBAN GBR 1.11% 2.14% 14.15% 1.84% 0.75% -0.14% 0.04% -0.33% 2.29% 14.11% 1.07%210063 UM ST. JOSEPH GBR 0.62% 1.49% 10.83% 1.33% 0.54% 0.04% -1.86% -0.15% 1.45% 12.69% 0.69%210038 UMMC MIDTOWN GBR 0.30% 0.45% 18.71% 0.37% 0.15% -0.11% -0.55% -0.10% 0.56% 19.25% 0.25%210032 UNION HOSPITAL OF CECIL COUNT TPR 0.53% 1.94% 13.19% 1.68% 0.59% 0.95% 1.09% 0.12% 0.99% 12.10% 0.47%210024 UNION MEMORIAL GBR 0.49% 1.26% 14.63% 1.08% 0.44% -0.25% -0.84% -0.26% 1.51% 15.47% 0.70%210002 UNIVERSITY OF MARYLAND GBR 0.52% 0.99% 9.97% 0.89% 0.36% 0.14% -1.76% -0.05% 0.85% 11.73% 0.41%210049 UPPER CHESAPEAKE HEALTH GBR 0.27% 1.53% 13.98% 1.31% 0.53% 0.04% 0.99% -0.17% 1.48% 13.00% 0.70%210016 WASHINGTON ADVENTIST GBR 0.94% 1.67% 16.47% 1.39% 0.56% -0.71% 0.25% -0.52% 2.37% 16.23% 1.09%210027 WESTERN MARYLAND HEALTH SYSTEM TPR -0.32% 0.50% 12.80% 0.44% 0.15% 0.36% -2.25% 0.09% 0.14% 15.06% 0.06%

Total FY16 0.69% 1.38% 13.65% 1.18% 0.47% 0.08% -0.70% -0.13% 1.30% -0.70% 0.60%Total FY15 0.68% 1.30% 14.35% 1.10% 0.60%

** TPR Hospital Demographic Adjustment is determined by county population growth. 0.57%

-0.09%Scaling factor 0.4057

Department of Planning Population GrowthNet Impact of Other Adjustments (Market Shift,Transfers, Categoricals)

22

FY 2016 Uncompensated Care Policy Update

23

FY 16 Uncompensated Care Policy

• Establishes Uncompensated Care Funded in Hospital Rates– 50% based on 2-year actual UCC per hospitals audited financials– 50% based on a predicted amount as determined by a regression

• For FY 16, UCC in rates was “frozen” at FY 15 amounts– January 1, 2014, ACA expansion occurred which significantly

expanded Medicaid coverage– Data reporting lag of UCC policy made it near impossible to reflect

recent increase in Medicaid population– The mid-year Medicaid expansion does not line up with the historical

July – June measurement period of the UCC policy.– Reporting challenges exist as it relates to hospitals reporting of the

Medicaid Pending population

24

FY 16 Uncompensated Care Policy• Since UCC policy was frozen, the HSCRC prospectively reduced

UCC provisions to reflect the January 1, 2014 Medicaid expansion.

FY 15• Prospective reduction limited to

conversion of the Primary Adult Care (PAC) program to Medicaid.

• Did not include anticipated reductions as a result of MA expansion (116% - 138% FPL)

• Result 1.09% statewide reduction

FY 16• Used Medicaid enrollment file along

with HSCRC data (using MPI) to analyze reduction in self pay and increase in Medicaid charges.

• Approach effectively captured remaining MA expansion population

• Result 0.89% statewide reduction

Total 2-year statewide reduction 1.98%

25

FY 16 Uncompensated Care Policy• Prospective reduction for Medicaid expansion should be included

in the Medicaid portion of the Payer Differential calculation of hospitals rate order to account for the 6% discount provided to Medicaid payers.

FY 15 (7/1/13)

FY 16 (7/1/14)

Increase / (Decrease) % Impact

Third Party Payor Utilization

1 Medicare & Medicaid Charges 0.44887 0.44964 0.0008 0.005%

2 Blue Cross I/P Charges 0.08321 0.07737 (0.0058) -0.013%

3 Blue Cross O/P Charges 0.07539 0.07449 (0.0009) -0.002%

4 MCO Medicare Medicaid Charges 0.16817 0.18931 0.0211 0.127%

5 Deductibles Paid by Medicaid & Blue Cross 0.01804 0.01683 (0.0012) -0.002%

6 Provision for Uncollectable Accounts : ** 0.06160 0.05250 (0.0091) -0.910%

7 Provision for Other Payors : 0.16276 0.15668 (0.0061) -0.012%

Total Approved Markup 1.11809 1.10808 (0.0100) -0.8953%1.11809 1.10808 -0.8953%0.1567

Note: ** = Statewide Average

Note: Approved Markup= 1 / (1 - 0.06A + 0.0225B1 + 0.02B2 + 0.06C + 0.02D + EP + 0.02FP)Note (2): Medicare and Medicaid Charges include PAC revenue 1.36%

26

• Medicaid expansion also resulted in an increase in the utilization of hospital services for newly eligible Medicaid beneficiaries.

• Reflects pent up demand thought to be largely temporary (e.g. orthopedics/surgery)

• Temporary growth funded in FY 15 by excess UCC in rates• Permanent portion of this utilization growth was built into

hospitals Global Budget Revenue targets for FY 16.• Permanent portion of growth was based on growth rate for

Quarter 4 of 2014 of 21% (50% variable cost factor applied).• Results in $57.4 million in additional statewide funding.

FY 16 Uncompensated Care Policy

27

FY 17 UCC Policy Considerations• UCC Policy will likely need a major redesign since the

landscape has changed with ACA insurance expansion.– Medicaid coverage as a predictive variable may no longer be

appropriate– Undocumented population continues to be a highly uninsured

population– More high deductible plans offered on the insurance market meaning

more after insurance uncompensated care– Potential change could be looking at poverty rates of hospitals service

area. – Is there a high correlation between zip codes’ rate of poverty and the

likelihood of a patient from that zip code resulting in UCC?

28

CMS Payment Bundle

29

CMS Payment Bundle• On July 14, CMS released its Comprehensive Care for Joint

Replacement (CCJR) proposed payment rule

• Hospitals at risk for episodes of care, including physician, SNF and other services, versus an established target

• All providers are paid on a fee-for-service basis, less some savings, with the hospital settling the overall difference versus the target– Hospitals are responsible but can share risk with collaborating providers

• Waives certain policies (receive a certain number of home health visits without qualification, allows telehealth and waives 3-day rule beginning in year 2)

• CMS invited Maryland to comment in the context of our new Waiver

30

CMS Payment Bundle• Coordination of care is critical to Maryland All-Payer model and tools

provided under this model could assist Maryland in achieving cost targets.

• Given Maryland’s all payer nature, existing incentives and increasing focus on total cost of care, implementation may take a different path.– E.g., Maryland hospitals cannot be paid under normal Medicare DRG payment rates

• The data and tools under the CCJR model are needed to successfully align initiatives in Maryland.

• HSCRC staff plan to:– Work with stakeholders to craft a comment and request data to evaluate

opportunities– Ask for access to the same tools, while considering the opportunity in the broader

context of health improvement

31

Questions?