The Centers for Medicare and Medicaid Services (CMS) has agreed to extend and update Maryland’s all-payer model. CMS describes that model — the only of its kind in the United States — as one in which “all third parties pay the same [hospital] rate.”

For almost four decades, Maryland has operated under a Social Security Act waiver that exempts it from the Inpatient Prospective Payment System and Outpatient Prospective Payment System. As such, Maryland can set rates for these services.

CMS says that under the new agreement, “Maryland hospitals have committed to achieving significant quality improvements, including reductions in Maryland hospitals’ 30-day hospital readmissions rate and hospital-acquired conditions rate.”

Furthermore, says CMS, “Maryland has agreed to limit all-payer per capita hospital growth, including inpatient and outpatient care, to 3.58 percent. Maryland has also agreed to limit annual Medicare per capita hospital cost growth to a rate lower than the national annual per capita growth rate per year for 2015-2018.” CMS projects that this new plan will save Medicare “at least $330 million over the next five years.”

On May 14, Maryland Governor Larry Hogan announced the extension of the Maryland all-payer model. He claims that from 2014 through 2016, the model saved Medicare $586 million. He says the revised model will save $1 billion over the next five years.

The goals of the model are to coordinate care from hospital to non-hospital settings; enhance primary care teams; set new quality standards; concentrate on population health issues such as opioid abuse; and focus on other health issues in the state.

“It has been a pleasure working with Governor Hogan, and CMS applauds his leadership on this serious effort to drive down costs, improve the quality of care, and put patients first,” said CMS Administrator Seema Verma in a statement. “The Trump Administration is ushering in a new era of state flexibility and local leadership, and we welcome state-level innovations such as the All-Payer Model.”
 

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