By Dan Paloski
In 2010, Maryland’s Health Services Cost Review Commission worked with hospitals on alternatives to traditional fee for service payment. A subset of hospitals, typically sole providers in defined service areas, entered into a three-year agreement to participate in the Total Patient Revenue (TPR) reimbursement model. Instead of the usual charge per case payment, hospitals are given a global revenue cap primarily based on revenue from the prior fiscal year. If hospitals treat patients effectively and are able to lower costs, they keep the savings. If not, they must bear the financial risk. Ten hospitals currently participate in the TPR program. One of those participants is Union Hospital, 122-bed, not-for-profit in Elkton, Md.
Ken Lewis, MD, JD, CEO of Union Hospital, said they chose to get involved in the TPR plan because the hospital’s board of directors, management and physician leadership believed that the reimbursement paradigm must shift from payment for volume to payment for value. They feared that misaligned financial incentives would be a major barrier to this transition.
“The TPR model begins to bridge the gap between our vision for care delivery and how we are paid,” Dr. Lewis said. “Under TPR, we are rewarded for improvements in resource utilization, chronic disease management and care transitions.”
To get started, Dr. Lewis said the CEOs and CFOs of the TPR hospitals met and agreed to form a collaborative to share best practices, strategies and some of the costs for collecting data and program development. The collaborative also engaged a consulting firm to identify discrete patient populations and disease states for their initial focus.
“We recognized that Union Hospital would need to make significant investments in care management, IT and performance improvement staffing. Budget priorities were adjusted and TPR-related expenses have been tracked and reported to our Finance Committee,” said Dr. Lewis.
Since the program began, Union Hospital has undergone a number of changes in order to reduce costs. According to Dr. Lewis, Union Hospital has added case management to their emergency department and started or expanded programs in palliative care, home visits, and patient navigation. He also said they are working on extending the hours of their employed primary care practices and approved a mid-level provider recruitment program. In addition, Dr. Lewis said that new information technology and the addition of clinical documentation analysts are allowing their medical staff leaders to better address variations in provider performance and improve utilization. Rapid cycle improvement training is being incorporated into their management culture to improve quality and reduce expenses. The collaborative is also in the process of developing a care transitions model to reduce readmissions. Dr. Lewis said training of its care management staff will begin this fall.
Preliminary results from the TPR program have been encouraging, according to Dr. Lewis.
“We are effectively reducing readmissions at Union Hospital and throughout the collaborative,” said Dr. Lewis. “In FY12, our hospitalists’ readmission rates decline 23% compared to the prior year. Total admissions for TPR hospitals have declined 13.2% since 2010, compared to a 6% reduction for non-TPR organizations.”
Dr. Lewis emphasized there has been no sacrifice in clinical quality. He said that despite an increase in a case mix that exceeds that of non-TPR hospitals, hospitals in the collaborative have performed well under Maryland’s Hospital Acquired Conditions measures. Dr. Lewis said seven of the 10 hospitals in the collaborative have received additional statewide scaling revenue based on Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) and clinical process of care results.
As the TPR program enters its final year, Dr. Lewis said the TPR hospitals are working with the Health Services Cost Review Commission on a successor model for TPR. Dr. Lewis sees TPR as an evolutionary step toward population-based health care delivery.
“Long term success will not occur unless physicians and incorporated into the reimbursement methodology,” Dr. Lewis said. “Shared savings opportunities for medical staff and other providers could be part of a demonstration project. Performance measures need to be refined. Hospital leaders throughout the TPR collaborative are energized by the opportunities to provide better, more cost effective care to our communities.”