To achieve the twin goals of funding population related utilization changes and realigning budgets for market shifts, the HSCRC developed four core volume funding methodologies: the Demographic Adjustment, Market Shift Adjustment, the CDS-A, and the Complexity and Innovation policy.
Taken together, these policies ensure a competitive hospital market where money follows the patient but only such that statewide volume on net does not grow for anything other than population growth and various forms of healthcare innovation. All methodologies together result in adequate volume funding statewide while maintaining the Model’s status as population-based.
The HSCRC has developed a Complexity and Innovation policy that adjusts Global Budgets to support highly specialized, innovative care in Maryland. It creates a prospective budgetary amount, inclusive of a 100 percent variable cost factor for supplies and drugs, for certain cases deemed high intensity or innovative based on historical growth (e.g. organ transplant cases, CAR-T).
Cases eligible for assessment in the Complexity and Innovation policy are
- In-state inpatient cases where academic medical centers comprise 95% or more of an ICD-10 procedure code
- Cases have a case-mix index of 1.5 or greater
Market Shift Adjustments:
The Market Shift Adjustments (MSAs) mechanism is part of a much broader set of tools that links global budgets to populations and patients under the State’s new All-Payer Model. Specifically, the MSA provides the criteria to reallocate funding to account for shifts in cases between regulated hospitals, with the objective of ensuring the funding follows the patient and the hospitals continue to have a competitive interest in serving patients efficiently and effectively. The MSA does not currently address all volume changes, only those the Commission can quantify as shifts between hospitals and only volumes the Commission deems appropriate to evaluate, i.e. the Commission does not evaluate readmissions and preventable admissions in the MSA because doing so would incentivize competing for care that is potentially avoidable.
Marketshift Consolidation Policy
The HSCRC developed a demographic adjustment to provide funding increases and decreases to recognize anticipated changes in hospital volume based upon projected age-adjusted population changes at the ZIP code level, while disallowing increases in utilizations due to potentially avoidable utilizations (PAU). This adjustment is used to prospectively amend acute hospitals’ GBRs for the forthcoming fiscal year and capped by the Maryland Department of Planning estimates of statewide population changes to align with the per capita constraint of the All-Payer Model (APM) and the Total Cost of Care (TCOC) Model parameters.
Rate Year 2016 Demographic Adjustment Memo
Rate Year 2016 Demographic Adjustment Data
Demographic Adjustment Overview
Innovative Drug Funding (CDS-A):
The CDS-A is a schedule that measures volume and changes in use of certain high-cost physician-administered outpatient drugs (mostly oncology and infusion). Under the CDS-A, the HSCRC works with stakeholders to establish a standard Statewide list of high use, high costs drugs that is updated annually and includes pre-populated templates for each hospital.
HSCRC adjust GBRs:
- Prospectively through the annual update factor to reflect differentially higher inflation for innovative drugs identified in the CDS-A
- Retrospectively to adjust the GBR for the change in the volume of these drugs from the prior period (50% permanent, 50% one-time)
Together these approaches ensure funding at 100% of Average Sales Price.
Analysis of Drug Inflation - Process Memo
Deregulation is the movement of a hospital service from a HSCRC regulated space to and unregulated space (most often outpatient services but also chronic and rehab). A service is presumed to be regulated if the building is on the campus of a hospital.
The purpose of deregulation is to adjust the GBR when the flow of patients to unregulated settings changes. This allows the HSCRC to eliminate duplicate funding for services that were once performed in regulated setting and are moving to unregulated settings.
Deregulation Slides Volume Subgroup Meeting