Maryland hospital experiment saves Medicare $100 million

[Greenbeard]

Interesting preliminary results from a statewide experiment Maryland launched last year (they put all of their hospitals on a budget; see this older thread: Maryland hospitals targeting HEALTH):

Hospitals save $100 million in Medicare costs

Maryland hospitals collectively generated more than $100 million in Medicare savings in the first year of an experimental payment system being watched closely by the federal government as a possible national model for reducing health care costs.

The state's medical institutions agreed last year to a five-year agreement with the U.S. Centers for Medicare and Medicaid Services. It drastically changed the way they did business and aimed to curb costs, in part by reducing expensive hospital stays and handling more patient care at the doctor's office.

"Hospitals at the blink of an eye really changed their systems into something that hasn't been broadly tested before — and we are pleased with the first year results," said Carmela Coyle, CEO of the Maryland Hospital Association.

Hospital officials — and health care advocates — also contend that the new cost-cutting effort has not come at the expense of patient care.

The new agreement radically altered Maryland's reimbursement system. Rather than tying reimbursement to admissions, the new system gives hospitals a pool of money that will grow in tandem with the state's economy. . .

The state's hospitals were able to cut costs by better coordinating care with patients, Coyle said. That meant making sure they had prescriptions and follow-up doctor appointments before leaving the hospital. Care coordinators called patients after discharge to make sure they continued care.

"We begin to look at not just the clinical barriers to health, but the non-clinical barriers as well," Coyle said. "Sometimes what is preventing someone from doing well is the lack of transportation to be able to get to their doctor's appointments."

The hospitals also have reduced the hospital readmissions rate faster than the rest of the nation and cut infections and other hospital-acquired conditions by 26 percent, Coyle said.

This is one to keep an eye on.

 

[Neomalthusian]

Interesting preliminary results from a statewide experiment Maryland launched last year (they put all of their hospitals on a budget; see this older thread: Maryland hospitals targeting HEALTH):

Hospitals save $100 million in Medicare costs

This is one to keep an eye on.

Wasn't really clear how they calculated those savings. Synthetic control?

For that matter it's not really that clear what the price controlling mechanism is. A lot of persuasive sounding language like you'd hear in a hospital board room. I'm all about cost control, don't get me wrong. I just kind of prefer cutting to the chase.

 

[Greenbeard]

Wasn't really clear how they calculated those savings. Synthetic control?

Their deal has a number of stipulations, but one of them is that per capita Medicare FFS spending in hospitals in Maryland must grow slower than that of the rest of the country (which has been growing extremely slowly--indeed, flirting with dipping negative).

For that matter it's not really that clear what the price controlling mechanism is. A lot of persuasive sounding language like you'd hear in a hospital board room. I'm all about cost control, don't get me wrong. I just kind of prefer cutting to the chase.

The price controlling mechanism in Maryland is that the state actively sets hospital prices. Some of the mechanisms for those hospitals keeping health care costs down to make these global budgets and price targets feasible are covered in both articles.

 

[jaeger19]

Their deal has a number of stipulations, but one of them is that per capita Medicare FFS spending in hospitals in Maryland must grow slower than that of the rest of the country (which has been growing extremely slowly--indeed, flirting with dipping negative).



The price controlling mechanism in Maryland is that the state actively sets hospital prices. Some of the mechanisms for those hospitals keeping health care costs down to make these global budgets and price targets feasible are covered in both articles.

Yep... bears watching because it sounds like BS to me.

Look at this objectively. Hospital prices are set by insurance companies and for a lot of care its a prospective payment.. in other words.. the more efficient you are.. the less costs... the more money you make.

So if there really were cost cutting measures that could be made... why now? Why not before when they could have made MORE money.

I suspect that patient care has been compromised but the hospital has gotten better with manipulating its outcome and efficiency measures.

Very reminiscent when some in my state claimed that paying teachers based on "merit" was going to reduce costs and create better students... and the teachers simply taught to the test. manipulated scores and students etc.

 

[Greenbeard]

Look at this objectively. Hospital prices are set by insurance companies and for a lot of care its a prospective payment.. in other words.. the more efficient you are.. the less costs... the more money you make.

So if there really were cost cutting measures that could be made... why now? Why not before when they could have made MORE money.

Because the business model has changed. If an upfront investment in a setting outside the hospital can improve someone's health and avoid a hospital admission, under the old model the revenue from that admission disappears. Savings to the system from better health and more cost-effective interventions would be a net loss for the hospital.

Under the new model, the system's savings are their gain. And that in turn is enabling them to change the way they do business.

Ambulances used to make frequent trips to the Morris H. Blum Senior Apartments, a subsidized low-income housing facility in downtown Annapolis, Md., whose residents would be transported to the emergency department of the nearby Anne Arundel Medical Center.

To reduce those ED visits, in October 2013 the hospital opened a one-doctor clinic inside the apartment building, based on the patient-centered medical home model. It focuses on proactively helping patients manage their own health.

“We realized a high number of frequently admitted patients were coming from the same address,” said Victoria Bayless, Anne Arundel's CEO. “We found a residence in our own backyard whose main access to primary care was calling 911.”

The hospital spent about $185,000 to build the clinic, receiving an $800,000 state grant to help with operations. It serves residents with chronic conditions such as congestive heart failure, diabetes, chronic obstructive pulmonary disease and end-stage renal disease. Up to 20 patients visit the clinic each day, and the staff also makes house calls inside the building.

During those calls, clinic staffers can determine whether patients' back pain is caused by a bad mattress, check the refrigerator and make suggestions to improve patients' diets, and see what medications patients are taking and whether they are at risk for harmful interactions.

In the first year of operation, medical 911 calls fell 13% and ED visits dropped 8%. “We expect it to drop again,” Bayless said. “We're finding a lot of illness and disease that has gone untreated.”

St. Agnes has made a number of care-delivery changes in response to the new GBR system. It has hired navigators to work with patients before and after discharge to make sure they see a primary-care doctor within seven days and fill their prescriptions. The hospital is working on delivering patients' medications to their bedside prior to discharge. Even though the hospital is not paid for these care-coordination services, this could save the hospital money by reducing readmissions.

Doctors Community Hospital, in Lanham, Md., has identified patients who frequently needed emergency care and opened facilities tailored to them. It launched free clinics for congestive heart failure and COPD patients, offering four-week educational programs to teach them how to manage their conditions. There is also a clinic for sickle-cell anemia patients—a population with a high readmission rate. Camille Bash, the hospital's chief financial officer, said the readmission rate for sickle-cell patients has dropped from about 33% to 10% or less.

 

[jaeger19]

Because the business model has changed. If an upfront investment in a setting outside the hospital can improve someone's health and avoid a hospital admission, under the old model the revenue from that admission disappears. Savings to the system from better health and more cost-effective interventions would be a net loss for the hospital.

Under the new model, the system's savings are their gain. And that in turn is enabling them to change the way they do business.

Yeah,,, according to your link.. you are wrong...

The change in medicare wasn't the reason... it was the money from state taxpayers.

The hospital spent about $185,000 to build the clinic, receiving an $800,000 state grant to help with operations. It serves residents with chronic conditions such as congestive heart failure, diabetes, chronic obstructive pulmonary disease and end-stage renal disease.

 

[Greenbeard]

Yeah,,, according to your link.. you are wrong...

The change in medicare wasn't the reason... it was the money from state taxpayers.

The point here is that the business model for hospitals in Maryland has shifted.

In the past, they had no financial reason to offer lower cost care in settings outside of the hospital to prevent higher downstream (i.e., inpatient) spending. Such interventions might've been better for the patient's/population's health and they may have saved the system as a whole money, but they deprived the hospital itself of that revenue. Saving that money was money out of their pocket and so there was no business case for doing what they've now started doing.

Under the new model, the healthier the population and the more cost effective the intervention, the better for the hospital's bottom line.

Yes, the state is helping to support some of the upfront investments hospitals are making in addressing the health needs of the local population outside of their walls. But the reason the hospitals are bothering to address those needs at all is that lowering costs and providing care in more convenient/appropriate settings is now in their financial interest. And many are taking the state up on its various offers to help them make the this transition in how they provide care and do business.

The model isn't perfect but it does fundamentally change the incentives/business case at work in delivering care. Which is why hospitals in the state are getting even more serious about the population health management concept than hospitals nationwide already have.

 

[JumpinJack]

Interesting preliminary results from a statewide experiment Maryland launched last year (they put all of their hospitals on a budget; see this older thread: Maryland hospitals targeting HEALTH):

Hospitals save $100 million in Medicare costs



This is one to keep an eye on.

As long as the care is good, that's a good thing.

 

[jaeger19]

The point here is that the business model for hospitals in Maryland has shifted.

In the past, they had no financial reason to offer lower cost care in settings outside of the hospital to prevent higher downstream (i.e., inpatient) spending. Such interventions might've been better for the patient's/population's health and they may have saved the system as a whole money, but they deprived the hospital itself of that revenue. Saving that money was money out of their pocket and so there was no business case for doing what they've now started doing.

Under the new model, the healthier the population and the more cost effective the intervention, the better for the hospital's bottom line.

Yes, the state is helping to support some of the upfront investments hospitals are making in addressing the health needs of the local population outside of their walls. But the reason the hospitals are bothering to address those needs at all is that lowering costs and providing care in more convenient/appropriate settings is now in their financial interest. And many are taking the state up on its various offers to help them make the this transition in how they provide care and do business.

The model isn't perfect but it does fundamentally change the incentives/business case at work in delivering care. Which is why hospitals in the state are getting even more serious about the population health management concept than hospitals nationwide already have.

no offense but no.. its really not any fundamental change.

Since the advent of prospective payment systems.. and the increases in uninsured people.. there has been financial incentives to prevent higher "inpatient" spending. Especially for chronic conditions like diabetes, congestive heart failure, and copd where the payment under the DRG can be abysmal.

There certainly is an incentive to treat a patient a patient in a fee for service arena where you are payed for every test you order and every service you provide. And if you have a high uninsured population its beneficial to treat them in a lost costly environment.

Nothing.. nothing new in the concept . Its why since 2000 there has been an explosion of urgent care.. and outpatient services. In a PPS system.. you have little control over your billing. If a patient comes in and needs y and z then it comes out of the payment.. if they need uv wxy and z.. then you lose money..

If you see that person on a outpatient basis, then you get to bill for uvwxy and z AND if a patient walks in and needs just y and z.. guess what.. if you order uvwxy and z.. you get paid for each code.

See.. nothing has really fundamentally changed here.. its just that the hospital has been able to capitalize on the 800 thousand of OPERATING money... not initial investment... but operating money mind you.

Honestly its mostly a sham..

Reimbursement has changed were outpatient is more lucrative.. and hospitals are taking advantage of that over declining reimbursements in a PPS system. And because we NEVER as a medical profession want to admit that we are changing our structure because of money.. and that patient care will be compromised.. we always say how much more efficient blah blah blah.. it is.

Outpatient care takes the inside track - Modern Healthcare

 

[jaeger19]

As long as the care is good, that's a good thing.

that's the problem.. often the care suffers.

Its the unintended consequences of these reimbursement schemes. So hospitals now get reimbursed for discharging their patients to lower levels of care.." making communities more healthy"...

the intended idea is that the hospital gets reimbursed more for providing a better service.. if they spend more in the hospital say in giving patient rehab.. that patient is better at discharge and then can go home.. rather than a rehab center. And if they follow up better with the patient with home health and services and coordinate care better.. then the patient is better able to stay at home and isn't re admitted.
Sounds great.

The problem is.. that what appears to be occurring as I have seen it.. and other providers and systems.. is that hospitals are NOT providing better or more comprehensive care in the hospital.. but simply saying that they are better and discharging them to lower levels of care than the patient actually qualifies for. For example.. my patient suffered a CVA (stroke) and was paralyzed on one side.. they kept him in a rehab till he was good enough to go to assisted living.. then sent him to assisted living for 6 months with home health 2 x week.

What he should have gotten was either to stay in the rehab.. OR sent to a skilled nursing facility.. both places where he could have received 7 day a week therapy for two hours a day.

Instead.. he was sent to assisted living to pad the hospitals scores.. and he is nowhere as good as he would be if he had gone to rehab or snf for even another 4 weeks. Of course there is no statistic that measures.. "what he COULD have been".. and thus.. it will look good on paper.

 

[Greenbeard]

no offense but no.. its really not any fundamental change.

Yes, it really is. The old financial model is based on filling beds (revenue is fundamentally driven by service volume). PPS doesn't change that, it just incentivizes doing it at a quicker pace.

Maryland's hospitals, on the other hand, are now on global budgets. Their financial health is improved by keeping people out of inpatient beds (which many of them are doing in large part by expanding their use of community-based interventions, before a hypothetical admission and after a real discharge).

Old world: make money when people are sick. New world: make money when people stay healthy. Big difference.

 

[JumpinJack]

that's the problem.. often the care suffers.

Its the unintended consequences of these reimbursement schemes. So hospitals now get reimbursed for discharging their patients to lower levels of care.." making communities more healthy"...

the intended idea is that the hospital gets reimbursed more for providing a better service.. if they spend more in the hospital say in giving patient rehab.. that patient is better at discharge and then can go home.. rather than a rehab center. And if they follow up better with the patient with home health and services and coordinate care better.. then the patient is better able to stay at home and isn't re admitted.
Sounds great.

The problem is.. that what appears to be occurring as I have seen it.. and other providers and systems.. is that hospitals are NOT providing better or more comprehensive care in the hospital.. but simply saying that they are better and discharging them to lower levels of care than the patient actually qualifies for. For example.. my patient suffered a CVA (stroke) and was paralyzed on one side.. they kept him in a rehab till he was good enough to go to assisted living.. then sent him to assisted living for 6 months with home health 2 x week.

What he should have gotten was either to stay in the rehab.. OR sent to a skilled nursing facility.. both places where he could have received 7 day a week therapy for two hours a day.

Instead.. he was sent to assisted living to pad the hospitals scores.. and he is nowhere as good as he would be if he had gone to rehab or snf for even another 4 weeks. Of course there is no statistic that measures.. "what he COULD have been".. and thus.. it will look good on paper.

That has been going on for years in accordance with insurance company policies. Pregnant women used to stay a night or two after birth. Some ins. cos. years ago started refusing to pay for overnight stays unless there was a medical emergency. And similar things. It sounds very normal to me, according to the way things are, now. When ins. cos. took over. I guess maybe not all policies and ins. cos. did that, so it's considered new, now. Or maybe to an even greater degree than before.

The results aren't in yet. So hopefully we'll see if it works out. I hope so. But it may end up being as you say....not great care. Our health care system is so screwed up....it's frustrating.

 

[jaeger19]

Yes, it really is. The old financial model is based on filling beds (revenue is fundamentally driven by service volume). PPS doesn't change that, it just incentivizes doing it at a quicker pace.

Maryland's hospitals, on the other hand, are now on global budgets. Their financial health is improved by keeping people out of inpatient beds (which many of them are doing in large part by expanding their use of community-based interventions, before a hypothetical admission and after a real discharge).

Old world: make money when people are sick. New world: make money when people stay healthy. Big difference.

Yeah no... sorry old bean but I am not getting paid because people ARE NOT coming to see us. Getting people into outpatient rather than inpatient services has been a trend for more than a decade.. well before this "fundamental change"..

as my article pointed out.

 

[buck]

Yeah no... sorry old bean but I am not getting paid because people ARE NOT coming to see us. Getting people into outpatient rather than inpatient services has been a trend for more than a decade.. well before this "fundamental change"..

I wish I cold remember what it was.. but there are other examples of Green giving credit to Obamacare for things that started well before Obamacare. However, as they are still going on, it's all due to Obamacare. :roll:

I've had similar conversations with him about this. I believe one was related to technology and another to insurance companies offering telephone nurses to help their insureds potentially avoid going to the hospital and giving medical advice.

 

[jaeger19]

I wish I cold remember what it was.. but there are other examples of Green giving credit to Obamacare for things that started well before Obamacare. However, as they are still going on, it's all due to Obamacare. :roll:

I've had similar conversations with him about this. I believe one was related to technology and another to insurance companies offering telephone nurses to help their insureds potentially avoid going to the hospital and giving medical advice.

Yep... but we need to admit it happens both ways... now people will blame things that have been happening for years before Obamacare.. on Obamacare.. because now they are paying attention to their insurance.

 

[Greenbeard]

Yeah no... sorry old bean but I am not getting paid because people ARE NOT coming to see us. Getting people into outpatient rather than inpatient services has been a trend for more than a decade.. well before this "fundamental change"..

as my article pointed out.

The significance here isn't just the ongoing shift from inpatient to outpatient care, this is the widespread introduction of services with no revenue stream associated with them in service of population health management. In a fee-for-service world, (1) the opportunity cost of providing a service that isn't billable means doing the right thing can and does result in a loss of revenue (plus any direct spending associated with that service), and (2) savings achieved by delivering care better/more efficiently don't accrue to the provider who facilitated them, again meaning a loss of revenue.

In other words, you can (and, under this financial model, should) offer services no one otherwise pays for because in effect no service line, inpatient or outpatient, has a revenue stream associated with it anymore. You can address social determinants of health, you can provide enhanced care coordination and integration of services, you can meet needs in innovative ways because now you get the savings you achieve and you can do it by providing services nobody used to pay for.

Hospitals around the country are gingerly stepping in this direction under ACO models, risk-based contracting, the readmissions reductions penalties, etc. but Maryland has gone way beyond the rest in the scale at which it's re-shaping the financial incentives facing hospitals.

I wish I cold remember what it was.. but there are other examples of Green giving credit to Obamacare for things that started well before Obamacare. However, as they are still going on, it's all due to Obamacare. :roll:

This is a first-in-the-nation statewide hospital budgeting model that's saved $100 million for Medicare in the first year alone (and yes, it's made possible by authority under the ACA). It didn't start "well before Obamacare," it started last year. This financial model and the new care delivery models it's supporting--not to mention the savings it's achieved--exist because of Obamacare. This isn't disputable.

 

[buck]

Yep... but we need to admit it happens both ways... now people will blame things that have been happening for years before Obamacare.. on Obamacare.. because now they are paying attention to their insurance.

True. I have seen that happen too.

 

[jaeger19]

The significance here isn't just the ongoing shift from inpatient to outpatient care, this is the widespread introduction of services with no revenue stream associated with them in service of population health management. In a fee-for-service world, (1) the opportunity cost of providing a service that isn't billable means doing the right thing can and does result in a loss of revenue (plus any direct spending associated with that service), and (2) savings achieved by delivering care better/more efficiently don't accrue to the provider who facilitated them, again meaning a loss of revenue.

In other words, you can (and, under this financial model, should) offer services no one otherwise pays for because in effect no service line, inpatient or outpatient, has a revenue stream associated with it anymore. You can address social determinants of health, you can provide enhanced care coordination and integration of services, you can meet needs in innovative ways because now you get the savings you achieve and you can do it by providing services nobody used to pay for.

Hospitals around the country are gingerly stepping in this direction under ACO models, risk-based contracting, the readmissions reductions penalties, etc. but Maryland has gone way beyond the rest in the scale at which it's re-shaping the financial incentives facing hospitals.



This is a first-in-the-nation statewide hospital budgeting model that's saved $100 million for Medicare in the first year alone (and yes, it's made possible by authority under the ACA). It didn't start "well before Obamacare," it started last year. This financial model and the new care delivery models it's supporting--not to mention the savings it's achieved--exist because of Obamacare. This isn't disputable.

Sorry Greenbeard but we have been doing that since the advent of PPS systems... for example.. there is no revenue stream for therapy in the hospital under a PPS system...

Its provided because it decreases the patients length of stay.. and that reduces cost.

Hospitals have been moving things into outpatient because it makes them more money for years.. and that includes things that don't have a revenue stream because its cheaper in an outpatient system and at least SOME of the services are reimbursed under a fee for service model.

Sorry man.. but its not what you think it is...

By the way.. I'd bet dollars to donuts that the 100 million that was "SAVED" was probably paled in comparison to the amount made by pushing these services to outpatient and charging under fee for service.

not to mention the 800 thousand the state had to kick in for "operating costs"..

 

[jaeger19]

This is a first-in-the-nation statewide hospital budgeting model that's saved $100 million for Medicare in the first year alone (and yes, it's made possible by authority under the ACA). It didn't start "well before Obamacare," it started last year. This financial model and the new care delivery models it's supporting--not to mention the savings it's achieved--exist because of Obamacare. This isn't disputable.

poop... its a name.. that's it and doesn't substantially do anything different.. any more than "no child left behind" substantially improved education. As I point out.. the processes that it supposedly changed have been going on for some time well before Obamacare. And that's indisputable.

 

[Greenbeard]

Sorry Greenbeard but we have been doing that since the advent of PPS systems... for example.. there is no revenue stream for therapy in the hospital under a PPS system...

Paying a defined fee for an inpatient episode is not an unrelated concept, and the goal when that concept was rolled out three decades ago was similar: move way from the incentives of fee-for-service and shift the incentive toward minimizing resource use over the course of the episode.

The difference is that the incentive there is around managing an inpatient episode, it's not a population health concept. The fundamental financial incentive to fill beds remains, and there's no reason to do anything (e.g., provide community-based interventions) that doesn't minimize the costs of an inpatient episode. Preventing readmissions, and admissions for that matter, is a revenue loser. As are most interventions that produce overall savings for the system.

The global budgets Maryland is using extend the concept you're getting at far beyond a single inpatient episode. It becomes the basis for an entire delivery system based on population health management, inside and outside of the hospital. Under their model, hospitals become the anchors of "Regional Partnerships for Health System Transformation." New financial model, new approach to care delivery.

By the way.. I'd bet dollars to donuts that the 100 million that was "SAVED" was probably paled in comparison to the amount made by pushing these services to outpatient and charging under fee for service.

Outpatient hospital services are under the same global budget as inpatient services in Maryland.

 

[jaeger19]

Paying a defined fee for an inpatient episode is not an unrelated concept, and the goal when that concept was rolled out three decades ago was similar: move way from the incentives of fee-for-service and shift the incentive toward minimizing resource use over the course of the episode.

The difference is that the incentive there is around managing an inpatient episode, it's not a population health concept. The fundamental financial incentive to fill beds remains, and there's no reason to do anything (e.g., provide community-based interventions) that doesn't minimize the costs of an inpatient episode. Preventing readmissions, and admissions for that matter, is a revenue loser. As are most interventions that produce overall savings for the system.

The global budgets Maryland is using extend the concept you're getting at far beyond a single inpatient episode. It becomes the basis for an entire delivery system based on population health management, inside and outside of the hospital. Under their model, hospitals become the anchors of "Regional Partnerships for Health System Transformation." New financial model, new approach to care delivery.



Outpatient hospital services are under the same global budget as inpatient services in Maryland.

Please provide that information... your linked article did not state that Maryland did away with the Medicare outpatient fee for service model"..

I want to hear exactly how Maryland pays the hospital for care it did not provide..

Thanks.

 

[Greenbeard]

Please provide that information... your linked article did not state that Maryland did away with the Medicare outpatient fee for service model"..

All hospitals/health systems in Maryland have signed global budget contracts, for inpatient and outpatient, with the state as of last summer. For instance, here's Johns Hopkins': AGREEMENT BETWEEN THE HEALTH SERVICES COST REVIEW COMMISSION AND JOHNS HOPKINS HEALTH SYSTEM REGARDING GLOBAL BUDGET REVENUE AND NON-GLOBAL BUDGET REVENUE.

 

[jaeger19]

All hospitals/health systems in Maryland have signed global budget contracts, for inpatient and outpatient, with the state as of last summer. For instance, here's Johns Hopkins': AGREEMENT BETWEEN THE HEALTH SERVICES COST REVIEW COMMISSION AND JOHNS HOPKINS HEALTH SYSTEM REGARDING GLOBAL BUDGET REVENUE AND NON-GLOBAL BUDGET REVENUE.

Thanks.. its as I expected.

Number on.. the global budget is dependent on the number of folks treated .i.e market share.. their severity and the costs of the hospital. So the hospital has an incentive to increase costs..

Secondly.. its not truly global.. only certain services fall under the global budget... other services fall under a fee for service model.. in which..

For non-GBR revenues, approved revenues will be based on unit rates and volumes of services, and cost plus mark up plus fixed overhead for supplies and drugs, as specified in the Order Nisi.

Please note the "cost plus" mark up PLUS fixed overhead for supplies and drugs. This is likely a great avenue for cost shifting to make up for any reduction in payment that may or may not come from the global budget.

and you combine that with 800,000 from the taxpayers for OPERATING COSTS in an outpatient facility? Yeah.. I have serious doubts of actual savings.

By the way.. thanks for the link.

 

[Greenbeard]

Thanks.. its as I expected.

Number on.. the global budget is dependent on the number of folks treated .i.e market share.. their severity and the costs of the hospital. So the hospital has an incentive to increase costs..

Market share is zero sum. You don't get an increase to your budget for increasing volume, you get an increase only if you can show that your volume increased because another hospital's decreased. If you talk to folks in MD hospitals, you'll find this is one of their bigger concerns with this model: that the state will be slow or reluctant to reflect legitimate shifts in market share in adjustments to their global budget. And that's important precisely because they no longer get more revenue just for doing more or filling more beds.

Secondly.. its not truly global.. only certain services fall under the global budget... other services fall under a fee for service model.. in which..

Almost all hospital services offered to MD residents fall under the budget. Hopkins is a major AMC, meaning they offer certain quaternary care services that most hospitals do not. Some of those extremely high cost, specialized services--namely organ and bone marrow transplants--are not included in the hospital's budget. That said, they're still subject to rate-setting by the state, as well as further adjustments to the rates such that additional marginal revenue from another case falls as volume grows (the variable cost factor they allude to).

Other hospitals without some of those quaternary services, e.g. St. Agnes, don't have any revenue for MD residents excluded from their budgets.

 

[jaeger19]

Market share is zero sum. You don't get an increase to your budget for increasing volume, you get an increase only if you can show that your volume increased because another hospital's decreased. If you talk to folks in MD hospitals, you'll find this is one of their bigger concerns with this model: that the state will be slow or reluctant to reflect legitimate shifts in market share in adjustments to their global budget. And that's important precisely because they no longer get more revenue just for doing more or filling more beds.



Almost all hospital services offered to MD residents fall under the budget. Hopkins is a major AMC, meaning they offer certain quaternary care services that most hospitals do not. Some of those extremely high cost, specialized services--namely organ and bone marrow transplants--are not included in the hospital's budget. That said, they're still subject to rate-setting by the state, as well as further adjustments to the rates such that additional marginal revenue from another case falls as volume grows (the variable cost factor they allude to).

Other hospitals without some of those quaternary services, e.g. St. Agnes, don't have any revenue for MD residents excluded from their budgets.

Number one.. it doesn't work that way..

If one month there is 100 people that get treated.. and I treat 70 people and you treat thirty...

and the next month there is 200 people and I treat 170 and you treat 30. My costs have gone up and your costs are the same.. so that global payment better take into account growth.. and it can't take away from you.. because your costs did not decrease.

And that's important precisely because they no longer get more revenue just for doing more or filling more beds.

I see.. so you are saying that if I treat 170 people.. I will get the reimbursement based on treating 70 people? Or will that global payment STILL be adjusted upward to reflect more people?

Sorry dude..but it looks like the more people treated.. the more costs.. incurred the higher your global payment.

furthermore.. it does not appear that only high cost procedures are exempt from the outpatient fee for service model. From the reading it appears only certain diagnosis are included in the outpatient global payment.. otherwise its business as usual.

And that makes sense.. because medicare requires a copayment of 20%... it only covers 80% of outpatient services.. so if no bill is being generated if services are not being paid on a fee for service... how does the state get around the medicare requirement for a 20% copay?