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Maryland's all-payer model achieves $429 million in hospital savings, study shows

Figure exceeds the model's five-year hospital savings requirement of $330 million, the study said.

Susan Morse, Associate Editor

As it enters its fourth year, Maryland's all-payer model is exceeding expectations required by the Centers for Medicare and Medicaid Services, according to a Health Affairs study.

The state achieved an estimated $429 million in total Medicare hospital savings to date, exceeding the model's five-year hospital savings requirement of $330 million, the study said.

From 2013 through August 2016, the hospital spending growth rate underlying the savings was more than 4 percent below the national growth rate.

It was also lower than the long-term growth rate of the state's economy, 2.31 percent in 2015 for hospitals, compared to Maryland's 3.58 percent per year.

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Also, hospital spending for all insurers was kept in check, indicating that Medicare savings achieved were not shifted to the private sector, the authors said.

However, non-hospital utilization rose in 2015 as hospitals referred more patients for home health and skilled nursing facility services and provided increased levels of care management, the study said.

Maryland estimates that the $429 million in hospital savings was partially offset by an additional $110 million in non-hospital spending, resulting in a net savings of $319 million in Medicare total cost of care.

Non-hospital costs are expected to rise as the delivery system begins to invest in better ambulatory care.

Maryland hospitals have reduced potentially preventable complications by 48 percent, exceeding the five-year 30 percent reduction target.

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In 2013, Maryland's Medicare all-cause readmission rate was more than 7.9 percent above the national rate.

The Centers for Medicare and Medicaid Services model limits per capita hospital spending by moving from fee-for-service to a capitated model. Total hospital revenue for all payers is set at the beginning of the year.

It is seen as a model for other states. Vermont last year initiated an all-payer ACO model.

While CMS's administration changes bring uncertainty to value-based models, experts agree the Medicare Access and CHIP Reauthorization Act will remain.

"The Medicare Access and CHIP Reauthorization Act (MACRA), along with the flexibility provided under the model and its amendment, are essential to Maryland's long-term transformation efforts," the study's authors said.

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As 2016 ended, Maryland submitted a progression plan to CMS to extend the model beyond hospitals. Last year CMS approved an amendment to the all-payer model to give hospitals the opportunity to share data and resources and to offer incentives to hospital-based and community-based providers.

"The premise behind global hospital payments is simple: providing fixed, predictable revenues allows hospitals flexibility to invest in care and health improvement activities that reduce avoidable utilization and improve value for consumers and purchasers," the Health Affairs authors said.

Maryland hospitals saved money in reducing readmissions by transitioning patients home or to post-acute settings after discharge. They used case managers in emergency departments to connect patients to primary care resources. Hospitals have expanded their efforts to include more proactive treatment of chronic conditions such as diabetes, heart disease, and pulmonary disease.

They also formed regional partnerships. Currently, 10 regional partnerships provide preventive services, chronic care management, and other care supports for high-needs patients, and are organizing care management across geographic areas.

The state invested in these public/private partnerships to expand infrastructure.

Finally, hospitals received data analytics from Maryland's private health information exchange, the Chesapeake Regional Information System for our Patients or CRISP.

CRISP analytics derive from administrative and other data collected by the state, real time encounter notifications and actionable care coordination information from hospitals, and information from electronic health records. 

Twitter: @SusanJMorse

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