Maryland Value-Based Performance Policies: Achievements and Future Plans

1. Maryland Value-Based Performance PoliciesWhat we’ve achieved and where we’re headed Traci La Valle Vice President Maryland Hospital Association January 27, 2017

2. Today’s Agenda • Big picture: Maryland performance • Value-based performance policies • Population health metrics • Population-based measurement

3. The Maryland Demonstration is Designed to Accomplish the Triple Aim Maryland entered into a five-year contract with CMS to implement the Maryland All-Payer Model, a demonstration under Section 1115A of the Social Security Act, intended to test how global budgets could be used to achieve The Triple Aim Lower Costs Better Care Better Health • The Triple Aim: • Improve the experience of care for patients • Improve the health of whole populations • Reduce the per capita cost of health care

4. How It Works • Providing fixed, predictable revenues gives hospitals flexibility to invest in care and health improvement activities such as: • Coordinating care with other health care providers • Reducing complications • Reducing readmissions • In turn, these activities reduce avoidable utilization, which improves value and affordability Physicians Medications Outpatient clinics Under the demonstration, Maryland’s hospitals are accountable for driving down health care costs, no matter where or how the care is delivered Home health Nursing homes Durable medical equipment

5. Financial and Quality Performance As a result of the demonstration, Maryland’s hospitals have saved Medicare over $400 million, more than 3 times the amount that was required by this point in time

6. Reducing Medicare Costs For the rest of the country, Medicare costs per beneficiary are increasing, while in Maryland these costs are decreasing Average Medicare Costs Per-Beneficiary-Per-Year Source: Maryland figures are calculated from 100 percent Medicare Parts A and B claims data. National figures calculated from 5 percent sample file of Medicare claims

7. Bending the Cost Curve for Medicare Medicare Spending per Beneficiary by Provider Type The demonstration drives a decrease in Medicare spending, in part by incentivizing a shift in utilization to lower-cost settings of care

8. Monthly Case-Mix Adjusted Readmission Rates Note: Based on final data for January 2012 – June 2016, and preliminary data through October 2016.

9. Maryland is reducing readmission rate but only slightly faster than the nation

10. All-Payer Case-Mix Adjusted PPC RatesCYTD 2013 - CYTD 2016

11. Value-Based Performance Policies • All-payer demonstration contract requirements • HSCRC payment policies • Exemptions from national value-based payment policies

12. Value-Based Performance Policies • All-payer demonstration contract language applies to readmissions and complications …the state [must] demonstrate that it is implementing a programfor regulated Maryland hospitals and, as applicable, other hospitals in Maryland that achieves or surpasses the [national] measured results in terms of patient outcomes and cost savings… The state must ensure that the aggregate percentage of regulated revenue at risk for quality programs…is equal to or greater than the aggregate…at risk under national Medicare quality programs. • Value Based Purchasing exemption is an annual process and follows similar guidelines

13. Updates to HSCRC Value-Based Payment Policies

14. ICD-10 Transition In CY 2017 performance year, the base and performance periods are coded in ICD-10. The preference is to use grouper version 34

15. Updates to HSCRC Policies • QBR • Revenue neutral scaling eliminated. Pre-set scale similar to MHAC policy • FY 2018 pre-set scale to be based on performance year 2016 results • FY 2019 pre-set scale to be determined by commissioners • Continued emphasis on HCAHPS • MHAC • Proposal to remove palliative care exclusion—studying further • Update thresholds and benchmarks; CY17 performance compared to October 2015 – September 2016 base period; Grouper version 34 • No state improvement target; single payment scale

16. Updates to HSCRC Policies • Readmissions • No significant changes to policy have been discussed • Delay in setting attainment and improvement targets due to ICD-10 anomalies

17. QBR and MHAC Scoring • Earn between 0-10 points on each metric, which rolls up to a final score between 0-1 • Better of attainment and improvement • Threshold – average performance and minimum performance required to begin earning points • Benchmark – top (decile) performance for which maximum points are earned • Final score of 0 = on every metric the hospital performed worse than average; 1 = hospital at top performance on every metric

18. Setting QBR and MHAC Payment Scales • Three anchor points • Maximum reward – best score, best possible score, or some other high point (e.g., 0.8) • Maximum penalty – lowest score or lowest possible score • “Break point” – where rewards begin and penalties end; average score from a current or prior period. This is a value judgment and an indication of expectations

19. Setting the QBR Payment Scale

20. Modeling of QBR Scaling Options • Which scores should be used for maximum rewards and penalties ? • Which score should be used as cut point to turn from penalty to reward zones ? • 80% represents realistic max possible score • Rewards can be increased in commensurate with higher points • Increase the maximum reward from 1% to 2% inpatient revenue

21. MHAC Scaling Options

22. Exemptions from Medicare Value-Based Programs • Hospital Acquired Conditions and Readmissions exemptions are part of the all-payer demonstration…as long as we have a program of similar scope and risk compared to the nation, and are meeting annual performance targets • VBP exemption is an annual process where CMS reviews Maryland’s annual performance and the HSCRC policy • Maryland programs measure performance across all payers and adjust all-payer revenue • Uniformity in performance metrics across all payers • Harder to compare Maryland performance to nation when Maryland is focused on different metrics

23. Maryland QBR Compared to CMS VBP CMS VBP Maryland QBR *Starting in FY2019, CMS will include two new metrics that measure complication rates up to 90 days following elective primary total hip arthroplasty and/or total knee arthroplasty. Maryland is not able to calculate all-payer complication rates that extend beyond the hospital stay.

24. Maryland MHAC Compared to CMS HAC

25. Population Health Metrics and Measurement

26. Population Health Planning • CMMI • Maryland must include population health metrics as part of Care Redesign amendment to All-Payer Demonstration model and • All-Payer Demonstration Progression Plan • DHMH’s Office of Population Health Improvement • Developed a broad-reaching strategic thought framework and process to address individual risk factors contributing to poor health, including social determinants of health. The final document, Maryland Population Health Improvement Plan: Planning for Population Health Improvement will be posted at http://pophealth.dhmh.maryland.gov/Pages/transformation.aspx • Developing a framework to identify priorities, data sources, potential metrics and accountability mechanisms that will eventually lead to inclusion of metrics in HSCRC value-based payment policies

27. Draft Population Health Timeline

28. MHA’s Recommendations to DHMH • Hold providers accountable only for outcomes they can control • Focus on risk factors that can be influenced by clinical interventions, e.g., diabetes and hypertension control • Involve other sectors such as schools, local health departments, public policy for behavioral risk factors such as smoking prevalence and obesity • Public and private entities address shared goals with interventions and accountability appropriate to their sphere of influence in a “layered approach”

29. MHA’s Recommendations to DHMH • Include behavioral health and access to care • Emergency Department visits for behavioral health conditions have increased over the last three years while ED use for all other conditions has declined • While Maryland has one of the lowest rates of uninsured, access to a regular source of primary care is critical to managing chronic health conditions

30. Example: Layered Measurement Approach and Varying Accountability in Public Policy and Health Care

31. Population-based Measurement • Several policies under development involve measuring individual hospitals’ impact on a population. Different methods of attributing individuals and costs may be used depending on the policy goal • Total cost of care (TCOC) monitoring, e.g., as one of the annual update conditions (HSCRC’s zip code approach) • TCOC guardrail, e.g., care redesign activities that include access to detailed Medicare data require a TCOC guardrail (approach not yet defined) • HSCRC “geographic model” an extension of GBR to include non-hospital costs • Payment policy related to efficiency, e.g., value-based policy, eligibility for capital funds • Attribute some or all Medicare beneficiaries • Consider combination of different approaches, including beneficiary level attribution, geographic attribution

32. Population-based Measurement • Total cost of care • Assigns or attributes most or all beneficiaries to hospitals • Account for a significant portion of total Medicare costs • Inherent differences in population’s disease prevalence and community resources could be addressed by • Comparing trend in spending per beneficiary • Risk adjustment • Beneficiary level analysis is important to understand patterns of use to inform this approach and to identify potential issues that need to be addressed in a geographic approach • However, for some beneficiaries, it may not be clear which hospital has the lead on managing their care and a geographic model or shared accountability may be needed

33. Population-based Measurement • Criteria to assign beneficiaries could include • Plurality of hospital care • Total charges • Types of service, e.g., inpatient admissions, observation, clinic and ED visits are more likely than diagnostic imaging services to indicate the hospital that is managing care • Beneficiary residence • Physician E & M visits and physician referral patterns • Combination of factors • In most cases, the hospital with the plurality of visits is also the hospital with the highest charges, and it appears that a high percentage of beneficiaries who use hospital services are clearly linked to a single hospital or system

34. Other Areas Still to be Explored • Non-hospital utilization • Post-acute care following a hospital discharge • Patterns of use and potential linkages to hospital for hospice and home health • Non-hospital Part B utilization among high utilizers of hospital care • Beneficiaries with little utilization • Non-hospital Part B utilization only • No utilization • Stability of patterns over time • Comparison to ACO attribution

35. Traci La Valle is a Vice President at the Maryland Hospital Association where she advocates for Maryland's hospitals, health systems, communities, and patients primarily before state regulatory bodies. In her role, she works to ensure fair and reasonable hospital payment policies that provide appropriate incentives to improve quality and reduce avoidable costs. In her years at MHA, she has held progressively responsible roles covering a range of issues that affect Maryland hospital finances. Traci has a Master of Public Health and a Certificate in Health Finance and Management from Johns Hopkins School of Public Health, and a Bachelor of Science in Physical Therapy from Temple University. Traci La Valle Maryland Hospital Association 6820 Deerpath Road Elkridge, MD 21075 410-540-5087 tla_valle@mhaonline.org

36. Maryland Value-Based Performance PoliciesWhat we’ve achieved and where we’re headed Traci La Valle Vice President Maryland Hospital Association January 27, 2017