Maryland finalizes expansion of all-payer system

Maryland’s unique all-payer hospital payment model will expand beyond hospital walls beginning next year under a finalized deal with the federal Centers for Medicare & Medicaid Services announced Monday.

The new Total Cost of Care All-Payer Model will focus on bringing primary care physicians and nursing homes into the program as it looks to better manage population health and reduce hospital admissions from chronic conditions.

“Everything we have done here before has been hospital-focused,” said Robert Neall, Maryland’s health secretary. “This is an extension into the entire continuum of health care. … People get more access and attention at the front door rather than going to the hospital after something terrible has happened.”

Maryland’s existing all-payer model contract replaced the state’s longtime federal waiver that allowed it to set rates for procedures for all payers, including Medicare and Medicaid. By shifting to a contract instead of a waiver for the rate setting, the federal government was allowed to require Maryland to meet certain cost-saving and quality-improvement goals.

To date, the state has met most of the contract’s requirements, including saving the federal government more than $900 million in Medicare costs, reducing hospital readmissions nearly 8.5 percent and reducing hospital-acquired conditions 47 percent.

The new model will include an increased focus on managing chronic conditions, including diabetes, hypertension and heart disease.

“A lot of care really starts in the community, and improving health really starts in the community,” said Donna Kinzer, executive director of Maryland’s Health Services Cost Review Commission, which sets hospital rates. “We were at the point where we needed to move outside of hospitals.”

The new contract will start Jan. 1, 2019. The contract runs for five years with the option to extend it an additional five years if Maryland meets certain benchmarks.

Those benchmarks include savings of $1 billion over the course of the first five years. The contract is expected to save an average of $300 million a year.

Included in that start date, a new primary care program will focus on incentivizing doctors to participate in more active management of chronic conditions.

Programs will be designed to help coordinate care for patients across both hospital and nonhospital settings, including mental health and long-term care facilities.

Focusing on helping people before they have to go to the hospital is a feature that drew praise from both the Maryland Hospital Association and MedChi, Maryland’s medical society.

“Over the past five years, Maryland’s hospitals have laid the foundation for linking quality health care with cost containment,” said Bob Atlas, president and CEO of the Maryland Hospital Association. “During this time, the model has saved Medicare and patients hundreds of millions of dollars and has enabled hospitals to invest in innovative, proactive initiatives. Now, Maryland’s hospitals stand ready and committed to continue our work with the state by engaging our care partners to meet the health care needs of every Marylander — allowing them to live healthier, more fruitful lives.”  

“MedChi, The Maryland State Medical Society applauds Governor Hogan on this amazing accomplishment,” said Gene Ransom, CEO of MedChi, in a statement. “Our members appreciate that the all-payer contract agreement includes the Maryland Primary Care Program and other Care Redesign Programs that will help Maryland physicians achieve new value based Medicare requirements.”