Aligning State Health Planning and CON Regulation with Maryland s Hospital Payment Model HFMA Fall Institute October 5, 2016
Health Care Service Capacity and Use Maryland and the U.S.A. 2 Service Capacity Metrics U.S.A. Maryland Hospitals per hundred thousand population 1.6 0.8 Average beds per hospital 160 221 Hospital beds per thousand population 2.5 2.0 Average annual occupancy rate of hospital beds 62.8% 69.9% Nursing homes per hundred thousand population 4.9 3.8 Average beds per nursing home 109 122 Nursing home beds per thousand population 5.4 4.6 Average annual occupancy rate of nursing home beds 82.3% 89.7% Home health agencies per hundred thousand population 3.9 0.9 Hospices per hundred thousand population 1.3 0.5 2 2014
Population Use of Health Care Facilities 3 Maryland s hospital admission rate and average length of stay are lower than the nation s (probably). Maryland s nursing home use rate, home health agency use rate, and hospice use rate are all lower than the national average. Sources for slides 2 and 3: AHA Hospital Statistics C. Harrington, H. Carillo, and R. Garfield, Dept. of Social and Behavioral Sciences, University of California, San Francisco, and Kaiser Family Foundation, Nursing Facilities, Staffing, Residents and Facility Deficiencies 2009 through 2014. Long-Term Care Providers and Services Users in the United States: Data from the National Study of Long-Term Care Providers, 2013-2014, Vital and Health Statistics, Series 3, No. 38, February 2016, U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Health Statistics Sengupta M, Valverde R, Rome V, Park-Lee E, Caffrey C, Harris-Kojetin L. Long-Term Care Services in the United States: 2013 Overview State Web Tables and Maps. Hyattsville, MD: National Center for Health Statistics. 2015. Maryland Health Care Commission inventories (hospitals, nursing homes, home health agencies, and hospices) U.S. Bureau of the Census, 2014 Population Estimates 3
Hospital Use Maryland and the U.S.A 4 Hospital Admissions per 1,000 Population All Hospital Unit Admissions (Excludes NH Unit Admissions) U.S. and Maryland 1994-2014 AHA Hospital Statistics AHA Hospital Statistics 1
Hospital Length of Stay Maryland and the U.S.A 5 Hospital Average Length of Stay All Hospital Unit Admissions (Excludes NH Unit Admissions) U.S. and Maryland 1994-2014 AHA Hospital Statistics AHA Hospital Statistics 5 1
Licensed General Hospital Beds Maryland 6 Licensed Acute Care Hospital Beds Maryland FY 2007 FY 2017 MHCC/HSCRC 6 1
Eqivalent ADC Observation Patient Census Maryland General Hospitals 7 Equivalent Average Daily Census Observation Patients Maryland General Hospitals CY 2012- CY 2015 MHCC/HSCRC AHA Hospital Statistics 7 1
Problem Statement and a Question 8 The current hospital CON regulatory model is not well suited to a payment model based on hospital revenue budgeting and population-based planning performed in the context of revenue caps and mandatory savings objectives. Should a hospital need approval to change bed or operating room capacity or undertake other expansion/replacement/ modernization projects in a state with all payor revenue budgeting and adjustment of budgets over time based on shifts in market share? 8
Answer 9 NO, if we believe that the new payment model does not incentivize the pursuit of greater service volume as a clear path to financial success and/or clinical excellence. Implications Most CAPEX needs should be funded from GBR GBR must provide sufficient fiscal and debt capacity for maintenance and ordinary replacement & modernization of physical plant & equipment Capital spending component of GBR should be within a reasonable range of total revenue (6 12%) Hospitals should be at risk for capital investment decisions 9
MHA Capacity, CON, and Capital Funding Task Force Core Ideas 10 A CON process is needed to determine the most efficient use of limited resources A limited amount of revenue in the payment system should be set aside for capital expenditures Response The scope of CON regulation of hospital CAPEX should be revisited. Allow hospitals greater flexibility to determine efficiency of resource deployment in their own institutions There is a logic to CAPEX limits given the spending limits of the new payment model. The question is: How do HSCRC/MHCC prioritize CAPEX needs to make the set aside work? 10
Task Force Recommendations CON Regulation 11 The capacity for health care services, not just hospitals, should be determined by consistent rules and regulations to create parity across all providers All freestanding ambulatory surgical facility establishment that includes operating rooms should be CON regulated. A technical work group should review and recommend revisions to the SHP and other MHCC regulations that determine service capacity, in the context of the new waiver. The timeline for MHCC decision on a CON application be enforced. 11
Task Force Recommendations CON Regulation Response 12 Disagree with premise of first recommendation. Parity is the state or condition of being equal, especially regarding status or pay. (Oxford Dictionary) Perfect parity does not exist in CON regulation because we have licensure rules, docketing rules, and some providers are subject to market pricing and others are not. Disagree with policy change in second recommendation. Hospitals have the ability to establish ASCs with one OR or no ORs just like any other person. Freestanding ASCs have a more legitimate parity complaint in Maryland, because of hospital charge regulation. 12
Task Force Recommendations CON Regulation Response 13 No objection to rethinking the process historically used for development and updating of the SHP. But hospitals cannot be given exclusive stakeholder status. Current real deadline for CON reviews is 150 days if no evidentiary hearing and 210 days if an evidentiary hearing. Court order can be sought if no decision in those time frames. No objection to enforcement of these time frames e.g., deemed approval if no decision within 150 days (uncontested) or 210 days (contested). But should be subject to agreement by all parties. Extensions of time should be grantable by applicants and interested parties. 13
Task Force Recommendations Capital Funding Methodologies 14 A certain amount should be set aside from cumulative allpayer savings (an add-on to rates) to form a pool to fund CONapproved projects. Members recommended that this amount be separate and distinct from the annual update process. The capital pool should be calculated on a cumulative basis any monies not spent in a given year should be carried over to subsequent years. CON approval, along with a partial or full rate application, is required before accessing funding from the capital pool. 14
Task Force Recommendations Capital Funding Response 15 CAPEX funding pool should be limited to major capital projects that require extraordinary increases in GBR, as implied by third recommendation. Non-qualifying projects should be deregulated from CON requirements and deemed ineligible for a partial rate application or full rate application seeking additional revenue for capital costs. The issue of how to prioritize major CAPEX remains if problems in fairly administrating the capital pool approach are to be avoided. Rolling over pool funds to next year must be flexibly applied. Cycles of capital investment and inflation are undoubtedly related but not precisely calibrated. 15
Questions? Paul E. Parker Director, Center for Health Care Facilities Planning and Development Maryland Health Care Commission (410)764-3261 paul.parker@maryland.gov 16