​​Potentially Avoidable Utilization (PAU) Savings​ Policy


The Maryland Health Services Cost Review Commission (HSCRC or Commission) operates a potentially avoidable utilization (PAU) savings policy as part of its portfolio of value-based payment policies. PAU is defined as hospital care that is unplanned and can be prevented through improved care, care coordination, or effective community based care.  With the introduction of the new All-Payer Model and global budgets, reducing PAU through improved care coordination and enhanced community-based care became a central focus. To this end, the Commission sets a statewide PAU savings adjustment, equivalent to the percentage of hospital inpatient revenue the state expects to save through PAU reduction in that year. In contrast to HSCRC’s other quality programs that reward or penalize hospitals based on performance, the PAU Savings policy is intentionally designed to assure savings to payers.


The PAU Savings Policy builds on the former Readmission Shared Savings Policy (RSSP)​ implemented in conjunction with the Admission-Readmission Revenue (ARR) program. In Rate Year 2017, the savings program transitioned to focus more broadly on potentially avoidable utilization and the policy was renamed PAU Savings. The PAU savings policy is also important for maintaining Maryland’s exemption from the Centers for Medicare & Medicaid Services (CMS) quality-based payment programs, as this exemption allows the state to operate its own programs on an all-payer basis.  

Current PAU Savings Policy

While hospitals have achieved significant progress in transforming the delivery system to date, there needs to be a continued emphasis on care coordination, improving quality of care, and providing care management for complex and high-needs patients. To this end, the current PAU Savings Policy includes readmissions and hospital admissions for ambulatory-care sensitive conditions in the PAU definition. Ambulatory care sensitive conditions are conditions for which good outpatient care could potentially prevent the need for hospitalization or for which early intervention can prevent complications or more severe disease, such as hypertension or bacterial pneumonia. These admissions are measured using the Agency for Health Care Research and Quality’s Prevention Quality Indicators (PQIs) measurement approach.  Reducing PQI admissions is critical for success in meeting Medicare financial targets under the All-Payer Model. 

Key program components of PAU methodology:

​Define PAU as inpatient readmissions costs for the receiving hospital, outpatient readmissions, and PQIs. 
  • Inpatient and observation status readmissions: PAU hospital readmission rates include the number of 30-day all cause inpatient and observation stay readmissions at each hospital, regardless of where the original (index) admission occurred. Assigning readmissions to the receiving hospital should incentivize hospitals to work within their service areas to reduce readmissions, regardless of where the index stay took place. Additionally, the savings associated with readmission reductions will accrue to the receiving hospital. This is unlike the Readmission Reduction Incentive Program (RRIP) where readmissions are counted for hospitals discharging patients who are later admitted.
  • Prevention Quality Indicators: The number of admissions with at least 1 PQI.

Key program components of PAU scoring:

  • As the PAU Savings policy is applied prospectively, the HSCRC sets a targeted dollar amount for savings, and thus guarantees a fixed amount of savings statewide.  
  • All Maryland hospitals contribute to the statewide PAU savings; however, each hospital’s reduction is proportional to the hospital’s PAU revenue (i.e., hospital revenue associated with PQI admissions and observation stays or readmissions) in the most recent year. 
  • The PAU savings adjustment amount is not related to year-over-year improvement in PAU during the rate year, hence providing an incentive for all hospitals to reduce PAU. Hospitals that reduce their PAU beyond the savings benchmark during the rate year will retain 100 percent of the difference between their actual reduction and the savings benchmark. 
  • Cap the PAU savings reduction at the statewide average reduction for hospitals with higher socio-economic burden measured using percent Medicaid and Self-Pay/Charity inpatient utilization.

For detailed webinar on HSCRC Quality Initiatives, please visit the Quality Overview​ Page.​

Key PAU Savings Policy Documents​

Rate Year 2020

​Communications an​d​ Memos ​ ​
​Type Document Title Date
​Final Policy

Memos​ PAU RY2020 and RY2021 Updates Memo 05102019.pdf​
May 10, 2019
Data Workbook​s​​ ​ ​
Results Corrected v2 RY2020 PAU Savings  Results Excel Workbook​
Corrected RY2020 PAU Savings Results Excel Workbook
UPDATED RY2020 PAU Savings Results Excel Workbook
Aug 1, 2019
Jun 20, 2019
May 31, 2019
​Results (old) Draft RY2020 PAU Savings Results Excel Workbook ​ ​May 2, 2019

Rate Year 201​9 ​

​Communications an​d​ Memos ​ ​
​Type Document Title Date
​Final Policy RY 2019 Final PAU Savings Recommendation Jul ​7, 2018
Memos​ RY 2019 PAU Savings Memo​ Jul ​7, 2018
Data Workbook​s​​ ​ ​
Results RY 2019 PAU Savings Excel Workbook Jul ​7, 2018​

Rate Year 201​8

​Communications an​d​ Memos ​ ​
​Type Document Title Date
​Final Policy RY 2018 Final PAU Savings Recommendation Jun 14, 2017
Memos​ RY 2018 PAU Savings Memo​ Jun 15, 2017
Data Workbook​s​​ ​ ​
Results ​See RY 2018 PAU Savings Memo ​​Jun 15, 2017

 ​Rate Year 201​7
​​ Jun 22, 2016
​Communications and​ Memos ​ ​
​Type Document Title Date
​Final Policy RY17 PAU Savings Final Recommendation​​ Jun 02, 2016
Memos​ RY17 Quality Program and PAU Savings Scaling Memo
Jun 22, 2016
Data Workbook​s​​ ​ ​

RY17 PAU Saving​s Adjustments and Results​​