Maryland Model for Hospital Payment

In 2014, Maryland and the Center for Medicare & Medicare Innovation (CMMI) negotiated a waiver that established a per capita expenditure rate for Medicare hospital services and a limit on the growth of inpatient and outpatient hospital costs for all payers to 3.58 percent. The waiver projects Medicare savings over five years to be $330 million. To implement the model, the state rate-setting commission will replace fee-for-service models with population-based payment models that reward providers for improving health outcomes, enhancing quality, and controlling costs. Although the new model has just been introduced, several early adoptees of the new payment models have observed significant reductions in preventable hospitalizations. With these new incentives, hospitals are expected to form more creative partnerships with public health agencies, community health organizations, and long-term care providers. To read more about this innovative program, see this brief summary [link].