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Hogan signs new all-payer health care contract

Gov. Larry Hogan and Centers for Medicaid and Medicare Services Administrator Seema Verma sign the contract for the Maryland Total Cost of Care All-Payer Model. The program is unique in the United States. (Bryan P. Sears / The Daily Record)

Gov. Larry Hogan and Centers for Medicare and Medicaid Services Administrator Seema Verma sign the contract for the Maryland Total Cost of Care All-Payer Model. The program is unique in the United States. (Bryan P. Sears / The Daily Record)

ANNAPOLIS — Maryland and federal leaders Monday signed and enacted the Maryland Total Cost of Care All-Payer Model, an extension of Maryland’s unique hospital global budget system that will be expected to bring increased cost savings while expanding the program beyond hospitals.

Over the course of five years, the model is expected to save more than $1 billion while improving health outcomes across the state.

“We’re taking a major step forward this morning in our efforts to ensure every Marylander has access to quality health care,” Gov. Larry Hogan said. “The Maryland Model is a patient-centered approach which will expand health care access and affordability, and it will improve quality of life for our citizens, particularly those with chronic and complex medical conditions.”

The new model, a contract with the federal Centers for Medicare and Medicaid Services, will take effect Jan.1, 2019, and run for five years with an option to extend it another five years.

The contract includes benchmarks and goals for finding Medicare and Medicaid savings, improving patient outcomes and better managing population health. It does this by providing incentives across the health care system.

The current iteration of the model, which just affects hospitals, saved Medicare more than $1 billion in hospital spending growth, according to the Maryland Hospital Association.

The hope is that the new model will expand savings and improve health outcomes by getting physicians and other health entities outside of hospitals on board with the value-based system over the traditional fee-for-service model in use elsewhere.

The new model is expected to achieve $1 billion in savings by 2023 while averaging more than $300 million a year in savings.

“Transformation can’t stop at the hospital walls,” said Seema Verma, the administrator of the Centers for Medicare and Medicaid Services. “The objective is clear: The state will continue to bring all Medicare costs down while improving quality of care.”

Getting to the contract signing took years of negotiations between the state, multiple federal administrations and stakeholders including doctors and hospitals. The final agreement was reached last May while a draft agreement was reached last summer.

But while getting to the signing was difficult, stakeholders warn that finding savings and improving health outcomes could be even more difficult.

“It’s a doable challenge but not an easy lift,” said Bob Atlas, president and CEO of the Maryland Hospital Association. “The hospitals are up to it.”

Hospitals have a head start on the new program. They were responsible for the entirety of the previous model, finding cost savings and beginning the shift to value-based care.

Maryland Secretary of Health Robert Neall agreed that there will be challenges, but he said the state will meet them.

“It was a chore to get this far, but now the real work begins,” he said. “I’m hoping that (Marylanders) will see a real difference in their ability to get health care.”

The new model is all about the “trifecta” of improving health care access, quality and affordability, Neall said.

Critically, the new model will work on aligning doctors with the value-based system. In the first iteration of the model, hospitals were focused on cutting costs and meeting their budgets while the doctors still had a fee-for-service system in place.

A Maryland Primary Care Program will bring doctors into the fold alongside hospitals. It will begin concurrent with the new model in January.

Gene Ransom, CEO of MedChi, the state medical society, praised the new model for working to expand beyond hospitals.

“We’re very excited that this new Maryland Primary Care Program, which is part of this waiver, will allow for increased access and better service for Medicare patients in Maryland,” he said.

The model is unique to Maryland. While several states, including Maryland, adopted all-payer models through federal waivers during the 1970s, today Maryland is the only state that continues to use any form of the system.

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