- In the first years of Maryland's global budget program, rural hospitals showed a nearly 9% reduction in outpatient visits but no change to inpatient utilization, readmission rate or emergency department visits, according to a new study in Health Services Research.
- It's not certain what caused outpatient visits to drop, but it could stem from increased efforts to prevent hospitalizations, more coordinated care or a shift of services to other locations that generally aren't possible for inpatients, according to the analysis.
- Maryland's program has had a "rather limited" impact, possibly because the incentives "are not strong enough to promote profound health care delivery transformation," the study authors said.
Health policy analysts have been watching the results from Maryland closely. The state's unique all-payer approach was intended to help control costs and level the playing field by removing private payer-provider negotiations from the mix.
The approach has promise. Reimbursement rates from private payers vary widely and on average are more than double what Medicare pays, according to RAND research published last week.
And the lackluster results could be attributed to the way the global budget program focuses on payments to hospitals and not physicians, Eric Roberts, assistant professor of health policy and management at the University of Pittsburgh Graduate School of Public Health said in an editorial accompanying the study.
"While the model placed spending in each hospital under an annual all‐payer budget, it was not truly 'global' in that it did not include spending incurred by physicians or on services provided outside of the hospital (hospitals account for 45 percent of non‐drug medical spending in Maryland), and because only hospitals bore direct risk for spending and outcomes," he wrote. "Qualitative research suggested that these design features led to a misalignment of hospital and physician incentives that may have hindered hospital‐physician coordination in the program's early years."
Farzad Mostashari, founder of accountable care organization company Aledade, wrote on Twitter the study showed hospital behavior didn't change dramatically under the all-payer program. "Policy is hard, and have to applaud Maryland leaders for trying, but 'the art of the possible' in politics meant that hospitals have had too much say in the design of their global budgets," he said.
Maryland is the only state to attempt a global budget for hospitals. The method sets a rate that all payers use for hospital services.
Maryland's rural hospitals came under a global budget in 2010 with the Total Patient Revenue program. The rest of the state’s hospitals followed suit four years later under the Global Budget Revenue program. The newer iteration of the all-payer program made adjustments intended to better align physician and hospital interests.
The program continues to evolve. Beginning this year, new incentives for providers outside of hospitals aim to improve care coordination and incorporate population health aspects.
Earlier research showed some successes in the all-payer model. Hospital spending per Medicare beneficiary rose at a slower clip than in other states and hospitals have exceeded some of the program's quality goals.