Md. hospitals use software to assess complications

Maryland hospitals are warily eyeing the July start date of a new reimbursement program by the state that takes the concept of not paying for hospital-acquired adverse medical conditions to a much larger scale.

Naming its plan the Maryland Hospital Acquired Conditions, or MHAC, program, the state is pressing providers to demonstrate they are reducing complication rates on 52 potentially preventable conditions, otherwise they risk losing a percentage of their reimbursements. Hospitals that perform well will be rewarded with bonus payments. The Maryland Health Services Cost Review Commission, the rate-setting authority in the state, estimated that in 2008 complications throughout the state’s 47 hospitals cost $522 million.

In the past nine months, the state had assessed complication rates for each hospital using a software tool developed by 3M Co. that defines the 52 complications. The hospitals in May were given their reports—explaining which clinical cases had complications and how many of those were considered “at risk” for losing money through the new MHAC program. Those cases are the baseline data the state plans to use this year to determine whether providers are reducing their complication rates. Reimbursements based on those determinations will begin in fiscal 2011, which starts July 1, 2010.

Robert Murray, executive director of the commission, said the program was developed using feedback from the hospitals, and the state is striving to ensure that reimbursement rewards or penalties are distributed fairly. All the data have been risk-adjusted to account for different case mixes and hospital size. The program is more about improving outcomes than it is about penalizing hospitals, he said. Before this tool, “they didn’t have something systematic to benchmark their performance. Now they do,” he said.

Providers would still prefer more time to assess that tool, however. Since May, providers have been analyzing their reports and trying to determine if they also deem that the 3M tool accurately depicts complications and whether those complications were truly preventable by the hospital, according to Michael White, a physician who is chief medical officer for 300-bed Washington County Hospital in Hagerstown. But it is a lengthy process, he added.

Washington—which is at risk for losing 1.63%, or about $2 million of its revenue, according to its baseline report—was given 1,500 cases from the state but has only been able to review eight cases so far, White said. Based on their research, not all of those cases had truly preventable complications, and it has indicated that doctors and staff have to do a better job of coding, he said.

White added that the state’s desire to reduce complications and improve safety is the same as hospitals’ goals. “Any preventable complication is a tragedy,” he said. But the MHAC program is moving forward with too many issues unresolved. “We’re sort of paralyzed by the enormity and breadth of this.”

Because the commission has rate-setting authority, hospitals in Maryland are exempt from the CMS’ nonreimbursement policy; the MHAC program is the state’s way to align itself with federal initiatives.

The program is similar to the CMS’ reimbursement policy that doesn’t pay for 11 hospital-acquired conditions, so-called “never events,” but Maryland is going beyond just deeming that it will not pay for certain errors, said Murray. “Our goal is to use incentives” to affect performance, he said.

While the state is still unsure how much money hospitals stand to gain or lose, those involved in preliminary negotiations for a reimbursement rate estimate that there’s $100 million at stake either way. The final amount will be hammered out in negotiations with providers and other stakeholders in the state.

Still, the program is moving forward too quickly, hospital representatives say. Providers would like more time to review the clinical cases that are being considered preventable, said Beverly Miller, senior vice president of professional activities at the Maryland Hospital Association. “It takes a long time to go through all of these, which is the process we’re in right now.”

The other aspect providers are struggling with is how much it will cost to be ready for the new reimbursement program, according to Barbara Epke, vice president of LifeBridge Health, the parent system of 439-bed Sinai Hospital of Baltimore, which is at risk for 0.75%, or $2.4 million, of its revenue, according to its baseline report. Hospitals will have to either buy the 3M tool or contract with a third-party vendor to collect data for them. The software is a concern because it is new and hasn’t been completely validated by hospitals yet, said Epke, who is based at Sinai. “You’re creating your structure of comparison, and you want to know it’s valid,” she said.

The state has several quality initiatives under way and there’s “real recognition” among hospitals that they want the state to perform well, she added. But tying the software to payment without fully exploring all the cases that are being used in the baseline report has left the providers struggling. “I can’t even tell you the man-hours yet, but we’re scrambling,” she said.

Reimbursing providers based on quality is hardly a new concept, with various pay-for-performance initiatives under way at the federal level and in other states. Bloomington, Minn.-based insurer HealthPartners has been using quality reimbursement since 1997. The Partners in Quality program issued $20 million in bonus incentives in 2007, said Babette Apland, HealthPartners' senior vice president for health and care management.

HealthPartners pays the incentives based on performance for specific clinical measures that have been vetted by the Institute for Clinical Systems Improvement, Bloomington, Minn., a healthcare research organization. Transparency and communication have been crucial in developing the program, she added. “It’s very important to create consensus that the measurement itself is valid.”

Eventually real healthcare payment reform will have to have outcomes as its core, Apland said. “I think we do see P4P as the beginning of that journey.”

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