ANNAPOLIS — Maryland officials will submit a plan to the federal government aimed at allowing them to hang onto about $1 billion in Medicare reimbursements received under a unique agreement with Washington, the chairman of a panel that sets hospital billing rates told lawmakers Tuesday.
John Colmers, chairman of the state’s Health Services Cost Review Commission, updated lawmakers on the status of talks with the federal Center for Medicare and Medicaid Services on the state’s Medicare waiver.
“I will say that we have been very greatly encouraged by those discussions with CMS,” Colmers told the Senate Budget and Taxation Committee. “They are excited, I would say, about the opportunity to see a state as a whole take on this challenge of reducing health care costs and improving care. Now, there are a lot of difficult steps between where we are now and getting it completed.”
Maryland is the only state in the nation to have the Medicaid waiver agreement, which has been in place since 1977. It allows Medicare and Medicaid payments to be based on rates set by the state commission, instead of national federal payment principals.
However, Maryland must meet tests showing that cumulative growth in state payments doesn’t exceed the rate of growth in Medicare payments nationally.
The state aims to keep a cushion of how much Medicare payments could grow before exceeding the national limit. Maryland has tried to maintain a 10 percent minimum, but it is projected to fall under 2 percent.
As the state gets closer to failing to meet the standard, officials are searching for ways to make changes to keep the waiver.
“The bottom line is that, again, these discussions with Medicare around the waiver test are largely around how is it that we can redesign our delivery system to result in better care, a lower cost and better health, and the waiver test is a way of achieving that,” Colmers said.
In effect, Colmers said, incentives under the system now are based mostly on volume, and the state is looking at making changes designed to improve quality.
Patrick Redmon, executive director of the state commission, said part of the problem is the state has been focused on health care expenses on a per-case basis.
“The recognition that we’ve seen under the Affordable Care Act is that that’s not really the way to measure efficiency in health care,” Redmon said. “We need to look at episodes of care — even better, look at providing care to a population in an efficient manner, not just in limited episodes.”
As an example of Maryland’s difficulties in reaching the waiver requirement, Redmon cited efforts to reduce the number of patients who spend a day in a hospital. As a result, those simpler and less-expensive cases have moved out of hospitals, leaving more- expensive cases to be counted in the waiver evaluation process.
“It’s a logical, very sound policy, but it makes us deteriorate on the waiver test as we currently have it,” Redmon said.
The waiver enables the state to create an all-payer system for Medicare, Medicaid, private insurers and the uninsured. Hospitals are paid based on the rates set by the HSCRC, regardless of the payer. It also makes it possible for the state to operate its uncompensated care program.
The annual financial impact of losing the Medicare waiver to the state’s hospitals is about $1 billion in lost Medicare reimbursements, according to a 2011 analysis by the Maryland Department of Legislative Services.