The initial methodology for the Maryland Hospital Acquired Conditions (MHAC) program estimated the number of Potentially Preventable Complication (PPC) above the statewide average, or “excess PPCs,” for each hospital and calculated the percentage of inpatient hospital revenue associated with these excess PPCs. Hospitals with higher PPC costs than the statewide average received penalties and hospitals with lower PPC costs than the statewide average collected rewards. Because the initial program was required to be revenue neutral, this process resulted in unpredictable payment adjustments as the amount of revenue available for rewards was determined by the penalties assessed within the program.
On January 1, 2014 the State of Maryland entered into a new All-Payer Model demonstration contract with the Center for Medicare and Medicaid Innovation. This new contract included a requirement that the State of Maryland reduces the rate of PPCs by 30% over the 5-year contract term.
The MHAC program was implemented in state fiscal year (FY) 2011 to link hospital payment with hospital performance using 3M’s Potentially Preventable Complication (PPC) classification system. PPCs are post-admission complications that may result from hospital care and treatment, such as accidental puncture/laceration during an invasive procedure or infections related to central venous catheters. In contrast to complications resulting from underlying disease progression, PPCs are considered potentially preventable. 3M identified 65 PPC measures through secondary diagnosis codes not present when patients are admitted to hospital.
– Key Program Components of Current MHAC Methodology
– Determine hospital scores based on observed-to-expected PPC ratios rather than excess PPC costs. The expected number of PPCs for each hospital is calculated by multiplying the base year statewide PPC rate by the number of discharges at each hospital, adjusted for diagnosis and severity of illness categories.
– Prioritize PPCs according to All-Payer Model priorities by grouping PPCs into tiers and weighting them according to their level of priority.
– Key Program Components of Current MHAC scoring
– Measure hospital performance as the better of attainment or improvement to determine payment adjustments.
– Determine payment rewards/penalties through a preset point scale developed with base year scores. This approach improves the financial predictability of the program and allows for statewide rewards to exceed penalties to adequately reward hospitals with better or improved performance.
– Focus payment adjustments on higher and lower performing hospitals by making adjustments only at the top and bottom end of the score distribution.