ANNAPOLIS, Md. (AP) — Maryland officials on Monday announced federal approval of a new contract for the state’s unique all-payer health care model.
Maryland is the only state that can set its own rates for hospital services, and all payers must charge the same rate for services at a given hospital. The policy has been in place since the 1970s, though Maryland modernized its one-of-a-kind Medicare waiver four years ago to move away from reimbursing hospitals on a fee-for-service basis to a fixed budget.
“The new Maryland Model will expand health care access and affordability — and ultimately improve quality of life — for Marylanders, especially those with chronic and complex medical conditions,” said Gov. Larry Hogan, a Republican.
The state’s current model was approved in 2014, with a focus on hospitals. However, because the current model doesn’t provide comprehensive coordination across the entire health care system, the federal government required the state to develop a new model to include health care that patients receive in the hospital and in the community.
Donna Kinzer, executive director of the Maryland Health Services Cost Review Commission, said the new model is moving beyond hospitals to include community providers such as nursing homes to focus on comprehensive care coordination. It will include hospital and non-hospital settings, including mental health and long-term care.
Kinzer said the model has reduced unnecessary hospital readmissions by nearly 14 percent and reduced hospital-acquired conditions, while reducing the growth in hospital costs per capita.
“So it achieved its focus of improving health care delivery while saving money and reducing the growth in health care expenditures,” Kinzer said in a teleconference call with reporters.
The new model will take effect Jan. 1 and last through 2023. The contract can be extended for an additional five years, pending a review of the terms.
Maryland’s current model already has saved Medicare more than $586 million through 2016, compared to national spending, and the new model is expected to provide an additional $300 million in savings per year by 2023 and a total of $1 billion over five years, the state health department said.
“This is a tremendous opportunity to transform the way health care is delivered and how people get their health care and their level of health improved over time,” said Robert Neall, Maryland’s health secretary.
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