​​Potentially Avoidable Utilization (PAU) Savings​ Policy


The Maryland Health Services Cost Review Commission (HSCRC or the Commission) operates a potentially avoidable utilization (PAU) savings policy as part of its portfolio of quality programs. PAU is defined as hospital care that is unplanned and could be prevented through improved care, care coordination, or effective community based care.  With the introduction of the Total Cost of Care Model and global budgets, reducing PAU became a central focus in order to ensure that care is being delivered in the most appropriate setting. To this end, the Commission sets a prospective statewide PAU savings adjustment that limits inflation on revenue related to PAU visits based on the previous year’s PAU performance. In contrast to the HSCRC’s other quality programs that reward or penalize hospitals based on performance, the PAU Savings policy assumes that hospitals will be able to reduce their potentially avoidable utilization as care transforms in the state under the Total Cost of Care Model. Therefore, the policy is currently penalty only.



The PAU Savings Policy builds on the former Readmission Shared Savings Policy (RSSP)​ implemented in conjunction with the Admission-Readmission Revenue (ARR) programIn Rate Year 2017 (beginning in July 2016), the savings program transitioned to focus more broadly on potentially avoidable utilization and the policy was renamed PAU Savings. The PAU Savings policy is also important for maintaining Maryland’s exemption from the Centers for Medicare & Medicaid Services (CMS) quality-based payment programs, as this exemption allows the state to operate its own quality programs on an all-payer basis.  In Rate Years 2020 and 2021, HSCRC underwent a process to change the measurement of PAU to better reflect hospital investments in community-care by assessing preventable admissions on a per capita basis. 

Current PAU Savings Policy

While hospitals have achieved significant progress in transforming the delivery system to date, there needs to be a continued emphasis on care coordination, improving quality of care, and providing care management for complex and high-needs patients. To this end, the current PAU Savings Policy defines potentially avoidable utilization as sending readmissions, hospital admissions that might have been avoided with access to high-quality outpatient care, and avoidable hospitalizations for pediatric patients. The latter two are measured using the Agency for Health Care Research and Quality’s Prevention Quality Indicators (PQIs) and Pediatric Quality Indicators​ (PDIs) measurement approaches.  Reducing PQI admissions is critical for success in meeting Medicare financial targets under the All-Payer Model. PDIs were added in Rate Year 2021.

Key program components of PAU methodology:

Define PAU as PQIs, PDIs, and readmissions in inpatient and observation stays greater than or equal to 24 hours.

  • Inpatient and observation status readmissions: PAU hospital readmissions rates include the number of 30-day all cause inpatient and observation stay readmissions. Readmissions are accounted for by assessing the percent of each hospital's revenue that is associated with readmissions. Readmissions are flagged after avoidable admissions so that readmission revenue calculations exclude readmissions that are also avoidable admissions. 
  • Prevention Quality Indicators: The rate of admissions with PQI 90 (Overall Composite)
  • ​Pediatric Quality Indicators: The rate of admissions with PDI 90 (Overall Composite)

Commission staff recognize that COVID-19 has had a significant impact on our hospitals. COVID cases were removed from the datasets used to calculate CY21 PAU performance for PQIs, PDIs, and readmissions.

For detailed webinar on HSCRC Quality Initiatives, please visit the Quality Overview​ Page.​

Key PAU Savings Policy Documents​

Rate Year 2024

​Communications an​d​ Memos ​ ​
​TypeDocument TitleDate
Data Workbook​s​​ ​ ​
ResultsRY2024_PAU_Savings_Scaling_Final .xlsx
Updated October 18, 2023

Rate Year 2022

​Communications an​d​ Memos ​ ​
​Type Document Title Date
Data Workbook​s​​ ​ ​
Results RY2022_PAU_Savings_Scaling.xlsx​
Updated June 11, 2021

Rate Year 2021

​Communications an​d​ Memos ​ ​
​Type Document Title Date
​Final Policy

Memos​ PAU RY21 Updates Memo 
Sep 20, 2019
Data Workbook​s​​ ​ ​
Results RY2021 PAU Savings Scaling
Updated July 09, 2020

Rate Year 2020

​Communications an​d​ Memos ​ ​
​Type Document Title Date
​Final Policy Please see the RY2020 Update Factor
Memos​ PAU RY2020 and RY2021 Updates Memo 05102019.pdf​
May 10, 2019
Data Workbook​s​​ ​ ​
Results Corrected v2 RY2020 PAU Savings  Results Excel Workbook​
Corrected RY2020 PAU Savings Results Excel Workbook
UPDATED RY2020 PAU Savings Results Excel Workbook
Aug 1, 2019
Jun 20, 2019
May 31, 2019
​Results (old) Draft RY2020 PAU Savings Results Excel Workbook ​ ​May 2, 2019

Rate Year 201​9 ​

​Communications an​d​ Memos ​ ​
​Type Document Title Date
​Final Policy RY 2019 Final PAU Savings Recommendation Jul ​7, 2018
Memos​ RY 2019 PAU Savings Memo​ Jul ​7, 2018
Data Workbook​s​​ ​ ​
Results RY 2019 PAU Savings Excel Workbook Jul ​7, 2018​

Rate Year 201​8

​Communications an​d​ Memos ​ ​
​Type Document Title Date
​Final Policy RY 2018 Final PAU Savings Recommendation Jun 14, 2017
Memos​ RY 2018 PAU Savings Memo​ Jun 15, 2017
Data Workbook​s​​ ​ ​
Results ​See RY 2018 PAU Savings Memo ​​Jun 15, 2017

 ​Rate Year 201​7
​​ Jun 22, 2016
​Communications and​ Memos ​ ​
​Type Document Title Date
​Final Policy RY17 PAU Savings Final Recommendation​​ Jun 02, 2016
Memos​ RY17 Quality Program and PAU Savings Scaling Memo
Jun 22, 2016
Data Workbook​s​​ ​ ​

RY17 PAU Saving​s Adjustments and Results​​


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