CMS, Maryland Work to Modernize State’s Healthcare System

CMS and the state of Maryland have launched a new initiative designed to modernize Maryland’s unique all-payor rate-setting system for hospital services aimed at improving patient health and reducing costs.

It will replace Maryland’s 36-year-old Medicare waiver and allow the state to adopt new policies that reduce per capita hospital expenditures and improve health outcomes as encouraged by the Affordable Care Act (ACA). Under this model, Medicare is estimated to save at least $330 million over the next five years.

Maryland operates the nation’s only all-payor hospital rate regulation system based on a 36-year-old Medicare waiver. Under the new model, Maryland hospitals will commit to achieving significant quality improvements, including reductions in Maryland hospitals’ 30-day hospital readmissions rate and hospital acquired conditions rate. Maryland will limit all-payor annual per capita hospital growth, including inpatient and outpatient care, to 3.58 percent, below historical trends. Maryland will also limit annual Medicare per capita hospital cost growth to a rate lower than the national annual per capita growth rate per year for 2015-2018. This opportunity is available through the authority of the CMS Innovation Center, which was created by the ACA to test payment and service delivery models.

By shifting away from traditional fee-for-service (FFS) payment, Maryland’s new model encourages collaboration between hospitals and physicians to improve patient care, promote innovative approaches to prevention, and accelerate efforts to avoid unnecessary admissions and readmissions, officials from Maryland’s Department of Health and Mental Hygiene say.

We recently reported that Maryland, probably the most regulated state in the United States, has the lowest average charges of all the states among its 10 most expensive hospitals.

Source: CMS, January 10, 2014

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