AHEAD HGB (002) NG Edits (003) 10.21.2024 414pm (002)

Connecticut Hospital Global Budget (HGB)

Overview

  • The HGB aims to reform hospital payment structures in Connecticut to control costs and enhance healthcare services.

Recommendations

Global Budget Methodology

  • Connecticut should adopt the Medicare global budget methodology.

  • Key aspects of the proposed methodology will focus on elements from Medicare.

Payment Structure for Participating Hospitals

Payment Framework

  • Payments consist of 26 bi-weekly payments under the Medicare global budget.

  • Global budget baseline determination:

    • Based on historical revenue from the three most recent years, weighted as follows:

      • Base Year (BY) 1: 10%

      • BY2: 30%

      • BY3: 60%

  • Exclusions from HGB:

    • Payments outside of the Fee-for-Service (FFS) framework including supplemental payments, professional services, GME, behavioral health, and rehab services.

    • Limited benefit categories like tuberculosis and family planning are also excluded.

    • TBD: Inclusion of Medicare crossovers and third-party liability/other insurance needs to be determined.

Adjustments in Payment Methodology

Types of Adjustments

  1. Transformation Incentive Adjustment (TIA)

    • Provides incentive for early participation with additional revenue for care management and transformation.

    • A 1% TIA applied to hospitals' Medicare global budget in the first two performance years.

    • Hospitals are required to repay TIA if they exit the model before the sixth performance year.

  2. Annual Payment Adjustment (APA)

    • Adjusts the HGB Baseline payment annually, affecting Performance Year global budget payments.

    • Similar to current settlement agreements with considerations for changes in state policies and FFS payment factors.

    • TBD: Specific percentages and reasons for the annual adjustment will need exploration.

  3. Volume-Based Adjustment

    • Reflects changes in demographics, market dynamics, and unplanned volume fluctuations; incentivizes hospitals to improve patient health.

    • Adjustments include:

      • Market Shift: Accounts for shifts in patient choices and technology.

      • Service Line and Unplanned Volume Adjustments: Allow hospitals to retain some revenue through strategic shifts based on volume changes.

    • TBD: Connecticut will define mechanisms and set a similar threshold (recommended 5%) to Medicare.

  4. Demographic Adjustment (DA)

    • Modifies HGB to account for shifts in population size and medical risk using Hierarchical Condition Category (HCC) scores.

    • Adjustments are annual based on claims data and historical patient population risks.

    • TBD: Determine target populations for Connecticut Medicaid.

  5. Social Risk Adjustment (SRA)

    • Provides additional resources to hospitals serving higher adversity patient populations.

    • Hospitals with SRA above the state median may receive up to 2% adjustment based on performance.

    • TBD: Determine specific percentages and rationale for adjustments.

  6. Effectiveness Adjustment (EA)

    • Aims to reduce avoidable hospital utilization.

    • Incentivizes improvement in care effectiveness based on hospitals' performance.

    • Strategy includes improved transitional care and collaboration with community organizations.

  7. Health Equity Improvement Bonus (HEIB)

    • Up to 0.5% reward for hospitals that improve health equity measures related to readmissions and PQI-92 metrics.

    • Rewards are tiered for performance improvements; targets will increase over time.

  8. Total Cost of Care (TCOC) Adjustment

    • Starts in Performance Year 3 with incentives for managing TCOC.

    • By Performance Year 4, the TCOC adjustment becomes bi-directional, allowing for penalties/rewards based on specified growth targets.

    • TBD: Identify cost benchmarks and outcome measures.

Examples

Dempsey HGB Example

  • Financial Adjustments for Performance Years:

    • Current HGB for PY1: $93,402,113, adjusting through various factors (SLA, APA, DA).

Bristol HGB Example

  • Financial Adjustments for Performance Years:

    • Current HGB for PY1: $23,541,611 with performance adjustments applied.

Day Kimball HGB Example

  • Financial Adjustments for FFY 22-24 resulting in baseline adjustments and final HGB figures.

Sources

  • Lewin 508 Report

  • Guide States Advancing All-Payer Health Equity Approaches and Development (AHEAD) Model (cms.gov)