CMS OKs Maryland’s All-Payer Alternative Payment Model Expansion

May 16, 2018 - CMS greenlighted an expansion of an all-payer alternative payment model in Maryland that allows the state to set hospital reimbursement rates, the office of Governor Larry Hogan recently announced.

Maryland’s unique alternative payment model, known as the Total Cost of Care All-Payer or Maryland Model, has been operating since 2014. And the state will now be able to extend the model until the end of 2023, with another opportunity to renew the contract between CMS and the state for another five years after that.

As part of the extension, CMS also approved an expansion of the Maryland all-payer alternative payment model. The global budget payment model only applied to hospitals in the previous iteration, but physician practices and nursing homes will be able to join the model starting in 2019.

“The new Maryland Model will expand healthcare access and affordability – and ultimately improve quality of life – for Marylanders, especially those with chronic and complex medical conditions,” said Governor Hogan. “Maryland continues to lead the nation in innovative healthcare delivery, and the expansion of our successful model is a huge step forward in our efforts to ensure that every Marylander has access to quality care.”

With the approval, policymakers intend for the Maryland Model to continue reducing costs and improving patient outcomes.

Maryland’s Health Services Cost Review Commission recently reported that the previous iteration of the alternative payment model met and exceeded its five-year goal of decreasing Medicare spending on hospital care by $330 million.

The model actually reduced Medicare spending on hospitals by $586 million during its operation, and further reduced Medicare spending on total cost of care by $416 million.

The commission also found that the model decreased potentially preventable conditions under the hospital-acquired conditions program by 44 percent.

Federal officials and Governor Hogan anticipate the next phase of the all-payer alternative payment model to generate an additional $300 million in savings per year by 2023, totaling $1 billion in healthcare savings over five years.

“This approval is the result of a sustained and coordinated federal-state effort to recognize the success of Maryland’s system that manages the total cost of patient care in a cost-effective way, while maintaining quality and results,” said Senator Ben Cardin (D-MD), a member of the Senate Finance Health Care Subcommittee, which has oversight responsibility for CMS.

“There is no one-size-fits-all answer, but the Maryland Model can show other states how to successfully reward quality over quantity by moving away from ‘per admission’ and concentrating on best managing a patient’s short-term and long-term care.”

While the Maryland all-payer alternative payment model generated cost savings the first five years of implementation, critics have questioned if the model can truly improve outcomes.

A recent JAMA Internal Medicine study found that the all-payer alternative payment model did not decrease hospital admissions, readmissions, observation stays, emergency department visits, or outpatient use. The researchers also did not observe any significant difference in primary care use.

“Together, these findings provide no clear evidence that Maryland hospitals met their budgets by reducing hospital utilization or enhancing primary care beyond changes that would have been expected in the absence of global budgets,” they wrote.

However, the most recent expansion of the Maryland Model could address some of the issues identified in the JAMA Internal Medicine study. Researchers explained that the hospital-centric model may have had a limited effect on hospital and primary care utilization because it did not contain incentives to change physician behavior.

The expansion coming in 2019 will allow physician practices to opt into the all-payer alternative payment model.

Researchers also posited that hospitals needed more time to adjust and implement best practices for the global budget payment model. The extension of the model should also give hospitals more time to fully implement those best practices to reduce hospital utilization and shift services to primary care.

The expanded Maryland Model also aims to address more than just cost savings and hospital utilization. Governor Hogan explained that the model intends to coordinate care between hospital and non-hospital settings, including mental health and long-term care.

The model also expects to promote patient-centered care, define quality improvement goals and incentives, and support programs that focus on community needs. Hogan also anticipates the model to advance population health management to address opioid use and deaths, diabetes, hypertension, and other chronic conditions.

Maryland launches the next iteration of the all-payer alternative payment model on Jan. 1, 2019.