The federal government has approved a plan Maryland has been testing for the past four years to control health costs by shifting more care out of hospitals and better coordinating care with doctors, nursing homes, and community groups, state officials announced May 14.
The Centers for Medicare and Medicaid Services has been closely watching the state’s pilot program, first implemented in 2014, as a possible model for other states.
The program scrapped a hospital payment model that reimbursed them for the volume of services they provided in favor of annual spending budgets that hospitals were not allowed to exceed. The medical institutions began working with doctors, social workers, community groups, and others to ensure patients took their medications, made follow-up visits and took other preventive measure that would keep them out of hospitals.
The pilot program resulted in substantial cost savings and improved care for patients, state officials said. The program saved $586 million in health costs between 2014 and 2016 and is now expected to continue to save an additional $300 million a year.
Under the agreement with the Centers for Medicare and Medicaid, the new five-year program will start in January with the option to extend after 2023.
The approval by the federal government builds on a unique arrangement the state has had with the federal government since 1977, when it became the only state in the nation with a waiver from federally set Medicare rates. The state has been allowed to set its own rates for Medicare patients as well as rates charged to private insurers. Under the agreement, the state’s Health Services Cost Care Commission sets the rates hospitals charge insurers.
The state launched the pilot program looking for a way to update the arrangement after rising healthcare costs made it difficult to meet a waiver test that required the state to show that Medicare costs grew more slowly in Maryland than elsewhere. Without a new way of doing things, many predicted the state’s health system would wind up in turmoil and hospitals might close.
State officials said they hope the new program gives patients more say in their care and holds hospitals, who are penalized for things such as too many readmissions, more accountable.
“The new Maryland Model will expand healthcare access and affordability—and ultimately improve quality of life—for Marylanders, especially those with chronic and complex medical conditions,” Gov. Larry Hogan said in a statement. “Maryland continues to lead the nation in innovative healthcare delivery, and the expansion of our successful model is a huge step forward in our efforts to ensure that every Marylander has access to quality care.”
The new pact offers doctors and nursing homes bonuses and incentives to help coordinate preventive care for patients. That might mean working with a nursing coordinator to set up follow-up appointments or call a patient to make sure they have picked up a prescription. Convincing nursing homes, physicians and other providers to keep costs in check was essential to making the new agreement work, state officials have said.
Providers would have quality goals to meet, under the new agreement. There would be a focus on addressing opioid use and overdoses and chronic conditions, such as diabetes and hypertension. People with chronic conditions tend to use the health system more frequently, especially when the conditions aren’t managed, driving up costs.
