Global Budget Revenue (GBR) Potentially Avoidable Utilization (PAU) Efficiency Adjustment

Under the new All-Payer Model in Maryland, hospitals have chosen to have their revenues regulated under global models as the system moves from a system focused on cost-per-case to a system that has a three part aim of promoting better care, better health, and lower cost. In order to tie the global models to population and patient centered metrics and to provide for other changes required to the revenue budgets, the HSCRC makes a number of annual adjustments to the hospitals' global revenue budgets.

The GBR PAU Efficiency Adjustment is one such adjustment that is applied to the demographic adjustment that is needed to recognize expected changes in hospital service volume due to population change as well as population aging. The GBR PAU Efficiency Adjustment reduces the amount that hospitals receive in their global budget based on historical performance on PAU (see components below) and provides for marginal cost allowances that are lower than average cost to provide for expected per capita efficiencies under the new Model through application of an additional reduction to the demographic adjustment. See also GBR Adjustments.

Components of PAU

PAU is defined as hospital care that is unplanned and can be prevented through improved care, care coordination, or effective community based care or care cost increases.  

Key program components of PAU methodology:
  • Define PAU as inpatient readmissions costs for the receiving hospital, outpatient readmissions, and PQIs. 
    • Inpatient and observation status readmissions: PAU hospital readmission rates include the number of 30-day all cause inpatient and observation stay readmissions at each hospital, regardless of where the original (index) admission occurred. Assigning readmissions to the receiving hospital should incentivize hospitals to work within their service areas to reduce readmissions, regardless of where the index stay took place. Additionally, the savings associated with readmission reductions will accrue to the receiving hospital. This is unlike the Readmission Reduction Incentive Program (RRIP) where readmissions are counted for hospitals discharging patients who are later admitted.
    • Prevention Quality Indicators: Ambulatory care sensitive conditions are conditions for which good outpatient care could potentially prevent the need for hospitalization or for which early intervention can prevent complications or more severe disease, such as hypertension or bacterial pneumonia. These admissions are measured using the Agency for Health Care Research and Quality’s Prevention Quality Indicators (PQIs) measurement approach. ​The number of admissions with at least 1 PQI.
  • Previous years of the adjustment included complications in the PAU measure.