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The Maryland Health Services Cost Review Commission (HSCRC or Commission) operates a potentially avoidable utilization (PAU) savings policy as part of its portfolio of value-based payment policies. PAU is defined as hospital care that is unplanned and may 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 through improved care coordination and enhanced community-based care became a central focus. To this end, the Commission sets a prospective statewide PAU savings adjustment that limits inflation on revenue related to PAU visits. 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.
The PAU Savings Policy builds on the former Readmission Shared Savings Policy (RSSP) implemented in conjunction with the Admission-Readmission Revenue (ARR) program. In Rate Year 2017, 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 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.
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 and hospital admissions for ambulatory-care sensitive conditions. 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 diabetes complications or community-acquired pneumonia. These admissions are measured using the Agency for Health Care Research and Quality’s Prevention Quality Indicators (PQIs) measurement approach. Reducing PQI admissions is critical for success in meeting Medicare financial targets under the All-Payer Model. In Rate Year 2021, HSCRC added pediatric quality indicators (PDIs) from AHRQ that are similar to PQIs.
Define PAU as PQIs, PDIs, and readmissions in inpatient and observation stays greater than or equal to 24 hours.
RY17 PAU Savings Adjustments and Results