CMS announced it’s allowing Maryland to expand its All-Payer Program to outpatient services, which will make it the first state to be fully at risk for the total cost of care for Medicare beneficiaries.
The Maryland Total Cost of Care (TCOC) Model, which is built upon the state’s inpatient all-payer model, sets a per capita limit on Medicare total cost of care for the state.
CMS said TCOC will save Medicare more than $1 billion by the end of 2023 and “creates new opportunities for a range of non-hospital health care providers to participate in this test to limit Medicare spending across an entire state.”
Maryland launched its all-payer model, which focused on reducing Medicare costs for inpatient care, in 2014. The model offers global budgets for hospitals with a fixed amount of revenue. CMS said a global budget encourages hospitals to cut unnecessary hospitalizations and reduce other healthcare costs.
It's one of many methods providers and payers are pursuing to offer reimbursement based more on value than volume. TCOC echoes another trend in the industry with its focus on addressing population health factors and extending treatment beyond hospitals to include other care settings and community organizations.
Earlier this year, Maryland Gov. Larry Hogan (R) said the all-payer model led to reduced unnecessary readmissions and hospital-acquired conditions and decreased the growth of hospital cost per capita. However, a study in Health Affairs in April found the program wasn't as successful at rural hospitals. The model didn't reduce hospital use or spending among rural acute hospitals between 2010 and 2013.
Nevertheless, CMS said TCOC creates more incentives for healthcare providers to offer coordinated, patient-centered care. In announcing TCOC's approval, Hogan said the model will expand healthcare access and affordability and improve quality of life.
TCOC includes a hospital payment program that will test population-based payments, a care design program that will let hospitals make incentive payments to non-hospital healthcare providers and the Maryland Primary Care Program, which will incentivize providers to offer “advanced primary care services.” The primary care program will also give performance-based incentive payments to providers that reduce hospitalizations and improve the quality of care for Medicare beneficiaries.
TCOC also selected six high-priority areas to focus on for population health: substance misuse, diabetes, hypertension, obesity, smoking and asthma.
Maryland will test TCOC from 2019 to 2026. During the final three years, CMS and Maryland will decide whether to expand the model, create a different test or return to the national prospective payment systems. CMS extended Maryland’s all-payer contract through 2019 earlier this year.
The Maryland model is just one example of an all-payer model being tried. A recent Commonwealth Fund report found OneCare Vermont’s all-payer accountable care organization is pushing high-risk Medicaid beneficiaries to use primary care, behavioral health and pharmacy benefits more when compared to other beneficiaries. The Vermont project includes the state’s three largest payers — Medicare, Medicaid and Blue Cross and Blue Shield of Vermont.
It’s not all positive for the Vermont program though. The Commonwealth Fund study warned the ACO won’t likely see savings at the beginning of the Medicaid contract. The first year was expected to be 1.5% above budget. That means OneCare would owe money back to the state.