Maryland’s All-Payer Hospital Model saved Medicare $586 million in hospital payments and $461 million in total care costs between 2014 and 2016, according to a new report by the state Health Services Cost Review Commission for the Maryland Department of Health.
The contract between the state and CMS also reportedly improved quality and reduced patient complications.
The Maryland model is on track to meet CMS-imposed targets for savings and patient safety. “The state aims to improve beyond these results and continue to reduce costs while improving quality of care in Maryland through the completion of the current model term and continue under a new Total Cost of Care Model,” the report says.
Launched in 2014, Maryland’s all-payer model focused on enhancing quality, improving health outcomes and containing Medicare cost growth for inpatient and outpatient care. The program regulates what hospitals can charge to have CMS pay for a larger share of Medicare costs. The idea is to have all insurers — public and private — pay a similar amount for services.
Earlier this year, CMS extended the all-payer contract for hospitals through 2019. Maryland is seeking a 10-year agreement with CMS that includes outpatient services.
The $586 million savings in hospital expenditures through the first three years was 5.5% below national average growth and the $461 million savings in total cost of care was 2.1% below the national average growth.
In a press release announcing the results, the Maryland Department of Health said the per capita Medicare savings model “maintains financial stability in rural hospitals and provides opportunities for healthcare providers to transform their delivery of care while improving health outcomes and quality of care.” It also allows for greater coordination of care and puts primary care at the center.
The effort includes collaboration involving players in the healthcare system in the Stakeholder Innovation Group. Commission Chairman Nelson Sabatini said the coalition of hospitals, providers, community organizations and state and federal leaders has created provider-led strategies to improve care delivery.
When agreeing to the contract, CMS included these requirements:
- All-payer per capita total hospital revenue growth must be limited to 3.58% per year
- Five-year Medicare-per-beneficiary total hospital cost savings must equal or exceed $330 million
- Total Medicare spending-per-beneficiary growth must fall below certain national growth rates
- The aggregate Medicare 30-day all-cause readmission rate must be reduced to at or below the national average
- The rate of hospital-acquired conditions must be reduced by 30%
- Hospital payment must transition away from volume-based payments
- Maryland must submit a plan at the end of 2016 to move beyond hospitals and limit the growth in total hospital and non-hospital spending for Medicare.
Donna Kinzer, executive director of the commission, said the effort “puts patients at the center of delivery system innovations.” The program allows the state to focus statewide population health efforts on specific chronic conditions, such as diabetes and hypertension, as well as reducing opioid use.
“Care coordination, enhancement of primary care delivery system and management of chronic disease are central to the success of our model and central to the improvement of health for all Marylanders,” Kinzer said.