ANNAPOLIS – Maryland Governor Larry Hogan signed a new healthcare contract in conjunction with the federal government that will create fixed payments for health care providers with the goal of providing faster and better treatments to the state’s population on July 9.
After coming to terms with the Centers for Medicare and Medicaid Services (CMS), the agency within the U.S. Department of Health and Human Services that work with states on Medicare deals, in May on a new contract, the new deal will the continuation of an “unique” way of thinking of healthcare in the United States: be paid for keeping patients healthy.
“We are taking a major step forward this morning in our efforts to ensure that every Marylander has access to quality healthcare,” Hogan said.
The current model, known as the “Maryland All-Payer Model Contact” started during the Martin O’Malley administration and is set to expire on Dec. 31.
It created a cap on how much a hospital would receive for standard treatments while earning incentive payments for occupancy efficiency, patient experience, and other healthcare measurements. That allowed hospitals to move patients out of urgent care faster and spend less in total cost.
The “Maryland Model” as it is being dubbed, will expand on the original concept, adding physician offices, nursing homes, and emergency care units into the fixed rate global budget system. The similar quality and care incentives will stay, allowing providers to earn more if the state’s goals for care are met while requirements of addressing opioid deaths, diabetes, hypertension and other chronic conditions will also be considered.
The contract is for five years with the option of a five-year renewal, and will effectively begin on Jan. 1, 2019. If the new system is successful, according to Hogan, the state will save up to $300 million a year, totaling to about $1 billion by the end of the five-year contract.
“The Maryland Model is a patient-centered approach which will expand healthcare access and affordability, and it will improve the quality of life for our citizens particularly those with chronic and complex media conditions,” Hogan said.
“The Maryland Model provides incentives across the health care system to provide more coordinated care, expanded patient care delivery and coordination of chronic disease management with providers, nursing homes, clinics and other parts of our health care system to help control health care spending for all while improving the quality of care at a lower cost for the consumer.”
Hogan said that he and members of his administration were in “numerous” meetings in the past year with federal officials on establishing a new contract.
Maryland is the only state that can set its own fixed rates for hospital services, regardless of where one receives care. A Medicare wavier since the 1970s allowed the state to find new solutions for their healthcare system.
“Under the new Maryland Model, the objective is clear. The state will continue to bring all Medicare expenditures down while improving quality of care,” CMS Administrator Seema Verma. “This is the first CMS model to will hold a state fully at risk for total Medicare cost for all residents. The state and CMS have agreed on the goals, and now, it’s our job to get out of the way and give the maximum state flexibility to achieve success.”
Meanwhile, there was limited pushback by democratic and Republican politicians in the state senate. The results of the original all-payer model, $554 million savings to Medicare in three years reported by the CMS, makes it easy for all sides to agree to the expansion in the new contract, Hogan said.
“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.” U.S. Senator Ben Cardin said.