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January 22, 2018

Maryland's global payment program hasn't changed care delivery—yet, study finds

Daily Briefing

    A new JAMA study finds while Maryland's global payment program curbed health care spending, it has not changed how patients receive care—but experts say it may be too early to see the full effects.

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    How the model works

    Maryland had a unique payment system for nearly 40 years under which all payers reimbursed hospitals at the same rates, which were set by a state commission.

    But facing rising health expenditures and high readmission rates, CMS and Maryland in 2014 reached a five-year deal that went even further: Under the setup, all payers set global budgets for hospitals to cover both inpatient and outpatient care for each year. The idea is that the fixed, predictable revenues mean hospitals have flexibility to invest in care improvements and make care more valuable for patients and payers.

    The program was voluntary, but within six months, every hospital in the state signed up to scrap fee-for-service reimbursement.

    Since the program launched, hospitals in the state have taken steps to advance population health and keep readmission rates down. For example, hospitals as of 2017 formed 10 regional partnerships to provide preventive care and chronic care management, among other services.

    The state is also supporting public-private partnerships to boost infrastructure. For instance, the state has a private health information exchange, called the Chesapeake Regional Information System for our Patients, aimed at supporting better care coordination among payers, health systems, and providers.  

    Study details

    To determine the effects of the program over the past two years, researchers compared data from Medicare beneficiaries in eight counties where hospitals had switched to the new program with data on beneficiaries in 27 out-of-state counties nationwide.

    The researchers found that, when compared to other hospitals nationwide, the Maryland hospitals did not curb hospital visits (defined as admissions and observation stays), 30-day readmissions, or ED visits, nor did they boost the use of outpatient or primary care services by much more than then would have been expected without the program. However, the hospitals did meet their budget goals, the researchers found.

    Eric Roberts, an assistant professor of health policy and management at the University of Pittsburgh and the lead author on the study, cautioned that the study had several limitations. For instance, the study may not have captured all the program's benefits because it assessed only data on Medicare beneficiaries, a large number of whom suffer from chronic conditions. In addition, Roberts cited the challenges of finding hospitals comparable to the Maryland ones, adding that hospitals nationwide have all received some incentive under the Affordable Care Act to curb hospital use and cut readmissions.


    According to Roberts, "The takeaway so far may be that when hospitals change the way the health care delivery system works you don't necessarily get a broader transformation that people had hoped for. … At least not right away."

    In fact, in an accompanying editorial, Johns Hopkins Bloomberg School of Public Health's Joshua Sharfstein and Elizabeth Stuart, as well as the American Enterprise Institute's Joseph Antos, said it could be another five to 10 years before the new model effectively changes how health care is delivered in the state. Sharfstein, a former Maryland health secretary who supported the model, also pointed out that study didn't cover a full two years of the new model, as the model wasn't rolled out at each hospital at the same time.

    The editorial authors added that prior research on the model indicated it curbed hospital readmissions. Overall, they said the model merits continued observation, noting that its next phase will focus on nonhospital costs and physician incentives to pursue value-based care.

    "In this case, there is ample reason for many in the health care system to watch the continued evolution of Maryland's efforts as they seek to control costs, improve outcomes, and raise expectations for what state-based reform can achieve," they wrote (Rappleye, Becker's Hospital CFO Report, 1/17; MacDonald, FierceHealthcare, 1/17; Cohn, Baltimore Sun, 1/16; Diamond, "Pulse," Politico, 1/18).

    Learn more at tomorrow's webconference

    Medicare's pay-for-performance programs (Hospital Readmissions Reduction, Hospital-Acquired Conditions Reduction, and Value-Based Purchasing) place up to 6% of your hospital's Medicare inpatient revenue at risk.

    Join the Financial Leadership Council for our Pay-for-Performance Update webconference on Tuesday, Jan. 23 at 3 pm ET, where we'll discuss how these programs have impacted hospitals' finances since FY 2013.

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