Maryland Hospitals Ally Under Population-Based Payment

Under Maryland’s unique all-payer model, hospitals are reimbursd for care based on the populations they serve, rather than fee-for-service. In response to this change, five Maryland-based health systems—Peninsula Regional Medical Center, Adventist HealthCare, LifeBridge Health, Mercy Health Services and Trivergent Health Alliance—formed an alliance among their 10 hospitals. Called the Advanced Health Collaborative (AHC), it seeks to harness the systems’ collective resources in improving health and healthcare for Marylanders while addressing the challenges of the new reimbursement model.

Integrated Healthcare Delivery talked with Robb Cohen, CEO of AHC, about the alliance.

IHD: What is the primary focus of the AHC?

Robb Cohen: The goal is to provide better health, better care and lower costs through the implementation of population-health and care-coordination activities. It’s a big change to turn an entire industry from a fee-for-service model to one that is globally budgeted and effectively capitated.

How will the new payer model help drive those changes?

We want to manage volumes, not just manage price. Rather than an incentive to manage length of stay and cost per case—but at the same time wanting more cases—you now have an incentive to manage total costs. This will reduce the number of patients and allow hospitals to concentrate on people with chronic disease and superutilizers to keep them healthy and out of the hospital.

How can a large network like AHC do that and still provide personalized care?

We’re not looking to displace any of the local high-touch [care management], but we are looking to improve efficiency. Some things could be done centralized by a call center. IT management can be done remotely. We’re looking to leverage that which can be leveraged to be efficient, but it doesn’t change the dynamic that good care management has to have … localized high-touch components.

Will partnering with nonhospital providers be part of AHC’s approach?

Working with nonhospital providers and nontraditional providers involved in care coordination and other determinants of health [is] essential. To influence per-capita costs, while there’s absolutely opportunity related to cost-per-case and cost-per-episode (which includes readmissions), the largest single opportunity may be to eliminate initial hospitalizations by improving health and improving care for persons, especially Medicare beneficiaries, with chronic diseases.

To reduce avoidable hospitalizations will require community-based care management, using multidisciplinary care teams that would include: physicians, nurse practitioners, nurses, social workers, pharmacists, mental health professionals, disease educators, social services coordinators, caregivers, etc., all working as a collaborative care team. In other words, having longitudinal care coordination for persons most at risk for hospitalizations. This includes a focus on readmissions and transitions, as a subset of the high-risk population, while also focusing on initial admissions.

How would you characterize the year and a half since this model was implemented?

At the system level, the first year was about getting the hospitals to go onto global budgets, developing policy, making sure the changing policy at the statewide level fit the new system and educating everyone on the new system.

What will you focus on in the year ahead?

We want to stay focused on care management and population health. We want to do this efficiently and effectively while looking for opportunities to collaborate in and across systems by using scalable solutions.

What can other hospital systems around the country take away from this model?

This is a unique agreement between Maryland and the federal government which puts the hospitals more at risk but gives a clear incentive to manage volume across the board. [To] what degree are other hospital systems on the risk spectrum is probably the better question. Do they have shared savings agreements with payers? Have they formed their own insurance companies? … If other systems are taking a great deal of risk now, they can be doing things similar to what we are doing. We have the biggest incentive anywhere in the country to manage risk, so I think before long we will be in the position where other providers will be learning from us.

Daniel Casciato is a freelance writer and copywriter from Pittsburgh, PA.

Sidebar: Maryland All-Payer Model

In January 2014, the Centers for Medicare & Medicaid Services and the state of Maryland announced a joint initiative to test an all-payer hospital payment system that is accountable for the total hospital cost of care on a per-capita basis. During the five-year test period, Maryland hospitals must achieve significant cost reductions and quality improvements.

The goals include:

• Save Medicare $330 million. This is based on comparing Maryland’s Medicare per-capita total hospital cost growth to the nation’s. 
• Limit annual all-payer per-capita total hospital cost growth to 3.58%. 
• Shift virtually all hospital revenue into global payment models.
• Reduce the state’s aggregate Medicare 30-day unadjusted all-cause, all-site hospital readmission rate to the national rate.
• Achieve annual aggregate reduction of 6.89% in 3M’s 65 Potentially Preventable Conditions for a cumulative reduction of 30%.
• Submit an annual report demonstrating the state’s performance on various population health measures.

If these goals aren’t met, Maryland hospitals will transition over two years to the national Medicare payment systems.

Source: Centers for Medicare and Medicaid Services. Maryland All-Payer Model. https://innovation.cms.gov/initiatives/Maryland-All-Payer-Model/.