Maryland hospital payment system

The Maryland hospital payment system is an all-payer system that has been in place since the late 1970s. Under this system, all payers, including Medicare, pay the same amount for a specific service at a particular hospital. An independent commission sets the rate structure for each hospital, eliminating cost shifting and ensuring equitable distribution of costs for uncompensated care and medical education. However, per capita Medicare hospital costs in Maryland are among the highest in the country.

In 2014, the Centers for Medicare and Medicaid Services (CMS) and the State of Maryland announced revisions to the system. The new model focuses on overall per capita expenditures for hospital services, as well as improvements in the quality of care and population health outcomes. For a period of five years, Maryland will limit the growth of per capita hospital costs to 3.58% or 0.5% less than the national growth rate. This change is expected to save Medicare at least $330 million. Additionally, Maryland plans to reduce its hospital readmission rate for Medicare beneficiaries to the national average and aims to achieve a 30% reduction in preventable conditions associated with hospital care over five years.

The Health Services Cost Review Commission, responsible for rate-setting, will update its procedures to reduce the incentive for increased volume of services. Hospitals will receive only a fraction of the standard rate for services provided above a calculated limit, while bonuses will be given for keeping services under the limit. The commission also aims to shift towards population-based payment models that reward providers for improving health outcomes, enhancing quality, and controlling costs.

In rural areas, Maryland already operates a "Total Patient Revenue" model, which establishes fixed global budgets for certain rural hospitals based on their historical cost trends. This model helps ensure financial stability for these hospitals.

Overall, the Maryland hospital payment system has undergone revisions to control costs, improve quality of care, and promote population health outcomes. These changes aim to create a more sustainable and efficient healthcare system in the state.