Maryland all-payer hospital program saves $586M in 3 years
The global budgeting, all-payer program adopted for most of Maryland’s hospitals has succeeded in keeping the growth in hospital revenue and Medicare expenditures below the rest of the nation through its first three years, while also reducing readmissions and complications.
The report from the Maryland Health Services Cost Review Commission said the program—which moved hospitals to a fixed payment system for services provided in inpatient, outpatient and emergency departments, regardless of payer—has already met many of its targets, saving Medicare $586 million from 2014 to 2016.
“The Maryland Model is on track to meet the targets of the All-Payer Model Hospital Agreement with CMS,” the report said. “Provider-led delivery system transformation has continued to accelerate over time.”
One of the most important targets of the all-payer program was limiting hospital revenue growth to 3.58 percent per capita per year. The report found hospitals came in well under that limit, with growth capped at 1.47 percent for 2014, 2.31 percent in 2015 and 0.8 percent in 2016.
The program was also supposed to save at least $330 million in Medicare hospital expenditures over five years. It took only three years to the state to exceed this target, saving a cumulative $586 million—including $311 million in 2016 alone.
Other targets met or exceeded by the Maryland program included:
· Hospitals had to keep the total cost of care growth in Medicare below the national average. Through 2016, the state’s growth was 2.08 percent lower than the rest of the country, resulting in cumulative savings of $461 million.
· Rates of hospital-acquired conditions were required to reduced by 30 percent. By 2016, they were down by 44 percent.
· By the fifth year of the model, the state would be required to move 80 percent of its hospital revenues to global or population-based budgets. The state exceeded this target in the model’s first year and as of 2016, 100% of hospital revenue came from the global budget system.
The one area where Maryland hasn’t already hit its target is in reducing readmissions. Before the model began, the state’s readmission rates were higher than national average, so the program called for the state to close this gap by the model’s fifth year. Hospitals are on track to hit this goal, the report said, with 79 percent gap having been eliminated as of 2016—but haven’t met the target yet.
An earlier study from University of Pittsburgh health policy professor Eric Roberts, PhD, had looked at the program’s first two years, finding while it had helped contained costs, it hadn’t affected utilization by patients. Roberts and his coauthors had cautioned, however, that they may have missed the program’s impact on metrics like reduced readmissions and emergency department visits by examining only the first two years after implementation.
John joined TriMed in 2016, focusing on healthcare policy and regulation. After graduating from Columbia College Chicago, he worked at FM News Chicago and Rivet News Radio, and worked on the state government and politics beat for the Illinois Radio Network. Outside of work, you may find him adding to his never-ending graphic novel collection.