Maryland: Meanwhile, MD's All-Payer system was just expanded quite a bit.

I admit to not knowing a whole lot about how Maryland's "All-Payer" system works aside from every payer (Medicare, Medicaid, private insurance) having to pay the same amount for the same services at a given hospital. Here's a general summary from Wikipedia:

All-payer rate setting is a price setting mechanism in which all third parties pay the same price for services at a given hospital. The system does not imply that charges are the same for every hospital. It can be used to increase the market power of payers (such as private and/or public insurance companies) to mitigate inflation in health care costs. All-payer characteristics are found in the health systems of France, Germany, Japan, and the Netherlands. Maryland also uses such a model.

Since the late 1970s, Maryland has operated an all-payer system for hospital services. An independent commission establishes the rate structure for each hospital. That eliminated hospital cost shifting across payers and spread more equitably the costs of uncompensated care and medical education and limited cost growth, but per capita Medicare hospital costs are among the country's highest. It appears that the system eliminated price competition between hospitals and led them to divert high-cost patients to alternative settings, where prices remained unregulated.

Medicare's participation in the system is authorized by the Social Security Act and is tied to a growth limit in payment per admission. The Medicare waiver created incentives to increase the volume of services. Medicare pays higher rates for hospital services in Maryland than it does under the national prospective payment systems.

On January 10, 2014, the Centers for Medicare and Medicaid Services(CMS) and the State announced a new model that will focus on overall per capita expenditures for hospital services as well as on improvements in the quality of care and population health outcomes. For 5 years beginning in 2014, Maryland will limit the growth of per capita hospital costs to the lesser of 3.58% or 0.5% less than the actual national growth rate for 2015 through 2018. The change is forecast to save Medicare at least $330 million. 3.58% is Maryland's historical 10-year growth rate of per capita gross state product.

OK, that's where things stood until yesterday, when GOP Governor Larry Hogan signed a new all-payer bill into law:

Governor Larry Hogan, together with Seema Verma, Administrator of the federal Centers for Medicare and Medicaid Services (CMS), today signed and officially enacted Maryland’s Total Cost of Care All-Payer Model, known as the “Maryland Model,” in a signing ceremony at the Maryland State House.

Governor Hogan and Administrator Verma were joined by Maryland Department of Health Secretary Robert Neall, Senate President Thomas V. “Mike” Miller, Speaker of the House Michael Busch, as well as numerous healthcare industry representatives and advocates. The Maryland Model is an innovative approach to healthcare provider payment that is unique to Maryland and made possible via a contract between CMS and the state. The new model contract is expected to provide an additional $300 million in savings per year by 2023, totaling $1 billion in savings over five years.

“We are thrilled to be here today to officially execute and enact our unique and innovative Maryland Model, which is the only one of its kind in the nation,” said Governor Larry Hogan. “Today, we are taking another major step forward in our efforts to ensure that every Marylander has access to quality healthcare. It is my hope that these actions will be an example to the nation that when both sides of the aisle and all levels of government come together to develop innovative solutions, we can make real progress toward addressing our healthcare challenges and making care more accessible and more affordable.”

“This Model is a step towards aligning the entire delivery system toward paying for value over volume,” said CMS Administrator Seema Verma. “Maryland has led the way by adopting the first alternative payment model to shift hospital payments to full global budgets. Success under this new Model will require both hospitals and physicians to be equally committed to payment transformation and care redesign. We look forward to seeing the great work to come and to continuing to partner with you Governor Hogan, and the whole state of Maryland in this bold initiative.”

Maryland’s previous All-Payer Model, approved in 2014, has already saved Medicare more than $586 million through 2016, compared to national spending. Under the current model, hospitals have successfully reduced unnecessary readmissions and hospital-acquired conditions while decreasing the growth in hospital cost per capita. The new Maryland Model will expand this successful approach across the healthcare system when it takes effect on January 1, 2019 and extends through the end of 2023. The contract can then be extended for an additional five years, pending a review of the terms.

The Maryland Model aims to control the growth in healthcare costs, both at hospitals and community providers, while improving patient outcomes and quality of care. To achieve this comprehensive coordination across the entire healthcare system, the Maryland Model will:

  • Coordinate care across both hospital and non-hospital settings, including mental health and long-term care
  • Invest resources in care that is focused on the patient and enhance primary-care teams to improve individual patient outcomes ​
  • Set a range of quality and care improvement goals and provide incentives for providers to meet them
  • Concentrate system and community resources on population health goals to help address opioid use and deaths, diabetes, hypertension, and other chronic conditions
  • Encourage and facilitate programs focusing on the unique needs of Marylanders across geographic settings and other key demographics

The Maryland Model provides a significant incentive across the health system to provide greater coordinated care, expanded patient-care delivery, and collaboration of chronic disease management, while improving the quality of care at lower costs to the consumer.

Again, I'm not an expert on how Maryland's all-payer system works or exactly what changes here, so I'll leave it at that. If you know more about it, feel free to post a comment below.