Maryland's Medicare patients are among the most costly in the nation and are more likely than those in many states to return to the hospital soon after leaving. That could be changing as Maryland adopts a new payment model under a special agreement with the CMS.
The state agreed that its hospitals would be paid for inpatient and outpatient care under global budgets by all payers. Last year was the first under the five-year deal. Now, researchers and CMS officials have published early results in the New England Journal of Medicine that estimate Medicare saved $116 million in 2014 as a result. Quality also generally improved from the prior year.
The results are preliminary but affirm previous research that shows favorable trends in cost and quality under the reimbursement model. In Massachusetts, global budgets under the state's Blue Cross and Blue Shield plan since 2009 saved 6.8% through 2012 and quality gains were bigger than those seen nationally or regionally, a study published last year found.
Global budgets are considered a more flexible form of financing for hospitals than fee-for-service, which generally limits reimbursement to the treatment of illness and injury. Global budgets may allow hospitals to pay more attention to disease prevention and management, with the aim of ultimately improving health and reducing healthcare costs.
For the Anne Arundel Medical Center in Annapolis, Md., the global budget allowed for further investment in primary care and health information technology that will help “keep patients out of the hospital,” CEO Victoria Bayless said.
Anne Arundel Medical Center made investments even before the switch, such as community clinics created with the local housing authority, which helped reduce 911 calls and hospital admission rates, she said. The hospital has also worked to improve access to support for patients as they leave the hospital to prevent a return trip. It also now targets the most frequent visitors for extra help. “We're trying a lot of different things,” she said.
But global budgets also create an incentive for hospitals to hold down spending by stinting on care. To counter that in Maryland and elsewhere, hospitals have agreed to meet performance on quality measures as a safeguard for patients.
Maryland's per capita spending for Medicare patients fell by 1.08%, while nationally such spending grew by roughly the same percentage.
Meanwhile, the rate at which Medicare patients returned to Maryland hospitals, or readmissions, dropped by 5%, which was faster than average improvement across the U.S.
The article on the results was authored by Ankit Patel, Dr. Rahul Rajkumar and Dr. Patrick Conway of the CMS; John Colmers and Dr. Joshua Sharfstein of Johns Hopkins University; and Donna Kinzer of Maryland's Health Services Cost Review Commission. “Both the state of Maryland and its hospitals deserve credit for these promising early results,” they wrote.
Maryland hospitals were not required to deliver any savings in the first year, but the agreement with the CMS commits them to $330 million in savings over the five-year deal.
Maryland also agreed to hold hospital spending growth below 3.58%, which reflects the annual growth of the state's economy based on a decade of historical data. Hospital spending increased 1.47% in the first year, which the authors said could be the result of changes to healthcare delivery and unexpectedly slower growth in adjusted costs for patients admitted to the hospital.
The state's hospitals also reported gains in quality beyond the reduction in readmissions. They improved their performance on several measures of potentially preventable infections and complications. Accidental punctures or lacerations during surgery, for example, fell by 32%.
They saw increases, however, in infections from central venous catheters and catheter-related urinary tract infections and Maryland is planning to target those areas for improvement.
